‘REDUCE HOME PRICES, OR ELSE...’
Govt may withdraw Sales and Services Tax exemption if homebuyers do not benefit
THE SST exemption granted to developers will be withdrawn if they fail to cut property prices, says the finance minister. The developers’ association, however, is optimistic a formula that benefits consumers can be worked out before the tabling of the 2019 Budget in November.
THE government will withdraw the Sales and Services Tax (SST) exemption given to developers if property prices are not reduced, said Finance Minister Lim Guan Eng.
“I hope developers will pass on the expected savings from the exemption to homebuyers in the form of reduced home prices.
“If this does not happen, then the government may have to rethink the exemption given and find new ways to make homes affordable, especially to first-time buyers,” said Lim in his keynote speech at the Rehda Institute CEO Series 2018 here.
Real Estate and Housing Development Association (Rehda) president Datuk Soam Heng Choon said the association was conducting a study on the amount of savings property developers would get from the government’s new policies.
“The amount of savings will then be passed on to consumers. We expect to present the study in a month’s time, before the 2019 Budget announcement,” he said.
Soam said Rehda noted that the SST exemption on construction materials and services would provide a six per cent direct savings to consumers.
Lim said building new low- and medium-cost homes alone would not by itself be enough. This was because strict lending and high deposit requirements kept the take-up rate low, he added.
“While data suggests only 20 to 30 per cent applicants failed in their home loan applications last year, unofficial calculations suggest the number could be as high as 60 to 70 per cent instead.
“For low-cost home buyers, many of them do not even have the documentation to apply for loans and they are not included in the official data,” he said.
The government and the private sector should come up with a creative way to overcome this financial barrier to homeownership without adding too much burden on prospective first-time buyers, he added.
Lim said the government had asked Bank Negara Malaysia to reassess its strict lending guidelines.
“While the government is sensitive to concerns over rising household debt, we believe not all debt is bad.
“Debt backed by a decent home priced right should make homerelated debt sustainable,” he said.