April 18, 2011
Nation's Building News

The Official Online Newspaper of NAHB

Global Opportunities
Incentives to Boost Homeownership in Other Countries Vary for Builders, Consumers

An informal survey of NAHB international members reveals that incentives to boost homeownership varies from country to country, with European and Japanese respondents indicating that the incentives offered by their countries largely went to consumers with few going to builders or building industry partners.

The survey explored what tax and financing incentives, if any, were available to builders, building industry partners and consumers to boost housing production and homeownership in various countries.

International members from eight countries — China, Canada, France, the Cayman Islands, Sweden, the Netherlands, Japan, and Kenya — responded. Those from Canada, Japan, France, Sweden and the Netherlands indicated that the homeownership rate of their countries was within a few percentage points of the U.S. homeownership rate of 66.5%.

While the Cayman Islands and Kenya do not appear to have official reporting concerning homeownership, an international member from the Caymans estimated a fairly high rate of ownership, 75%-80%, in his country.

Respondents from Kenya, on the other hand, reported that their country had a relatively low homeownership rate, primarily because of extremely low average wages, high housing costs and a mortgage system that required a 20% downpayment plus an additional 10% (on average) in related fees.

A member from China reported that his country, with its unparalleled demand for new housing, does not incentivize home purchases and also restricts citizens to two residences per family. He also reported that China heavily taxes home purchases by non-citizens, charging the equivalent of five years’ worth of income tax.

According to the survey:

  • France — In France, “social landlords” or owners of low-income housing, can get a 15-year property tax exemption on new buildings and pay less tax on the construction work and materials — 5.5% instead of 19.6%. Home owners benefit from that same VAT tax reduction for renovation work on their homes. Households also can qualify for tax credits or tax cuts in return for energy-efficiency or accessibility work on their homes. France does not tax the capital gain on property transfer of a primary home, and owners of rental properties can receive a tax credit — usually for new construction — up to specific ceiling amounts.

  • Sweden — Sweden offers a 30% reduction on loans made to buyers of all apartments and houses. Those purchasing homes pay an annual tax — not more than the equivalent of $800 U.S. Sweden waives the tax for five years for those building a new house and halves the tax rate for them the following five years. For residents remodeling their homes or apartments, Sweden offers a 50% tax reduction up to a maximum of the equivalent of $14,000 U.S. per taxpayer in the household.

  • Netherlands — The Dutch give remodeling consumers a reduction in the sales tax on work done by professional renovators. The Netherlands, like the U.S., allows home owners to deduct the interest they pay on mortgages, but this deduction is partially offset by the requirement that purchasers add a percentage of the value of the property — the “notional rental value” — to their taxable income. The incentive operates under the assumption that the property has the potential to generate income. The country also offers limited subsidies and grants for installing photovoltaics, solar heating and energy-saving triple glazing, the respondent said.

  • Japan —Japan allows a non-taxable gift of up to $187,500 U.S., and such gifts often are used for downpayments. Japan also offers green building incentives, including tax relief of up to 300,000 yen ($3,500 U.S.) for buildings that meet Japan’s Energy-saving Act requirements. The same incentive is available for remodeling that increases the thermal insulation of windows, walls, roofs, ceilings or floors. An additional tax break of up to $62,500 U.S. is also available to home owners who install photovoltaics. Finally, the country offers lower-cost loans and financial incentives for “long-life” houses, as well as a “Flat 35S” loan interest reduction scheme.

  • Canada — Few incentives are offered in Canada. Several provinces and municipalities offer a five-year tax break to builders of infill properties. And while consumers cannot deduct their mortgage interest, they can borrow a portion of their Registered Retirement Savings Plan without penalty to aid in a downpayment on a new or existing home.

  • Cayman Islands — To lower construction and homeownerships costs in the Caymans, the government has cut duties on building-related materials and products from 22% to 25%. And while there is no direct taxation in the Caymans, a stamp duty tax was lowered from 7% to 5% for a short period in order to stimulate home sales. The duty is based on the value of either the land or the existing home. Consumers tend to buy land, pay the duty, then build, in order to avoid paying a much higher amount of tax on the home.

  • Kenya — With an annual demand for 150,000 homes and a supply of 35,000 homes, Kenya has an overwhelming housing shortage. According to a respondent, the government recently proposed nearly 30 incentives, to be introduced over time, to boost housing production. Tax rebates are already available to developers who build projects with 20,000 or more housing units for low-income residents whose monthly income is less than $416.00 U.S. per month. Such low-cost homes must cost less than $19,037.22 and the footprint must be 30 square meters or larger.

    The government also has lowered the import duty on cement from 50% to 25% and waived the import duty on coiled steel to lower construction costs. The country also offers deductions on capital expenditures for business owners who build housing for their employees. To boost homeownership, consumers can assign retirement benefits toward mortgages, and interest income on up to $35,694.79 U.S. that is part of a Home Ownership Plan is tax-exempt. Interest on owner-occupied property is deductable up to $1,784.74 U.S. per year.

    Only about 8% of Kenyans can qualify for home loans — typically 15-year mortgages — because lenders require a 20% downpayment plus an additional 10% to cover fees.

A Comparison




Reporting Period




Q4 2010



70%  (per Scotia Capital) 



16 million1

None reported




56% (member reported)
65.5% (U.S. Department of Commerce)



(as of 1999)




(member reported)









not available


Cayman Islands

not available

(member estimate)



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