Treasury to raise land rental rates

The Treasury Department will raise rental rates on state land across the country. The adjusted rates will be based on the new appraisal prices for 2016-19 to better reflect current market levels.

The department also plans to raise lease rates for commercial buildings on state land to 50-60% of the market value if the rates are far below market levels, said director-general Chakkrit Parapuntakul.

The Treasury Department charges lease rates for commercial buildings at 30-40% of market value.

Lease and rental fees on several state-owned land plots in prime locations are relatively low as they are based on antiquated rates. A building in a wet market in Samut Prakan province, for example, is rented at two baht per square wah per month.

Apart from rental and lease fee rises, the department will determine whether present utilisation of state land and buildings is being maximised, as several lease and rental contracts of government plots, ostensibly for agricultural purposes, are in fact being used for commerce.

The Treasury Department charges lower lease and rental rates on land and buildings for residential or agricultural use than for commercial purposes, said Mr Chakkrit.

The department holds more than 100,000 rental and lease contracts with tenants and lessees and thousands of contracts are estimated to have been misused, he said, adding that the problem will be solved when rates are brought in line with actual usage.

The Treasury Department recently estimated its annual revenue would double to 10 billion baht, underpinned by its five-year plan through 2020 to raise the efficiency of state land use and its adjustment of rental rates.

The department earns revenue of 5 billion baht a year, with 4 billion from rental fees and the rest from other sources, including coinage. Renting land to state enterprises contributes 3 billion baht in revenue each year to the Treasury Department.

In a related development, Mr Chakkrit said the department will apply the Suan Phueng model in addressing the problem of encroachment on state land and in other areas.

The department has converted squatters in Suan Phueng district, a popular tourism destination in Ratchaburi province, into tenants, earning revenue from them in the process.

The department also possesses land in several areas with high economic potential that squatters have taken up, including Koh Samet, Koh Samaesarn in Chon Buri province and Pak Chong in Nakhon Ratchasima.

Source: Bangkok Living