Bring­ing back the buy­ers

Bud­get 2018 mea­sures to tackle af­ford­able hous­ing is­sues and spur rental mar­ket

The Star Malaysia - StarBiz - - Front Page - By THEAN LEE CHENG leecheng@thes­

PETALING JAYA: Sev­eral mea­sures from Bud­get 2018 are ex­pected to boost the prop­erty sec­tor, which has seen slow sales in the last few years.

Be­sides adding more num­bers to the list of af­ford­able hous­ing un­der the dif­fer­ent agen­cies, for the first time in 60 years, the Gov­ern­ment has pro­posed a 50% tax ex­emp­tion on rental in­come not ex­ceed­ing RM2,000 per month from the 2018 to 2020 as­sess­ment. The Gov­ern­ment has pro­posed the Res­i­den­tial Rental Act.

The pro­posed leg­is­la­tion and the rental tax ex­emp­tion are sig­nif­i­cant. They un­der­score the di­vi­sion of the res­i­den­tial prop­erty sec­tor into three ar­eas, namely home own­er­ship, res­i­den­tial in­vest­ment and the spec­u­la­tive mar­ket.

Home own­er­ship is highly-val­ued in Asia, said prop­erty con­sul­tancy group Khong & Jaa­far group man­ag­ing di­rec­tor Elvin Fer­nan­dez.

“Home own­er­ship takes prece­dence over many eco­nomic and so­cial is­sues un­like Western democ­ra­cies,” said Fer­nan­dez.

“It is not a case of be­cause you can­not af­ford to buy a house there­fore, you rent it,” he said.

Sin­ga­pore has for­warded this con­cept of home own­er­ship during the ten­ure of its Prime Min­is­ter the late Lee Kuan Yew and to­day the city-state has a home own­er­ship rate of about 90%, ac­cord­ing to the Sin­ga­pore sta­tis­tics depart­ment.

The HDB hous­ing makes up the bulk of the mar­ket, at 80%, the re­main­ing 20% are pri­vate hous­ing.

The as­so­ci­a­tion of val­uers, prop­erty man­agers, es­tate agents and prop­erty con­sul­tants in the pri­vate sec­tor, Malaysia bud­get com­mit­tee chair­man James Wong said there is the con­cept of house-own­ing democ­racy and Malaysia is one of them.

“The pro­posed Act will pro­mote the growth of the rental mar­ket com­pared with home own­er­ship,” said Wong.

The sec­ond sig­nif­i­cant mea­sure is the pro­posed ex­ten­sion of the fi­nanc­ing scheme in­tro­duced by PR1MA to pri­vate sec­tor de­vel­op­ers, sub­ject to cer­tain cri­te­ria.

The ex­ten­sion of this scheme un­der­scores the Gov­ern­ment’s en­cour­age­ment of hav­ing more af­ford­able homes be­ing con­structed.

The ob­jec­tive of this PR1MA scheme was to help buy­ers who have fi­nanc­ing is­sues by us­ing some of their con­tri­bu­tion un­der the Em­ploy­ers Prov­i­dent Fund.

When this scheme was in­tro­duced in Oc­to­ber 2016, pri­vate de­vel­op­ers wanted to be in­cluded. Their ra­tio­nale was they too were man­dated by the Gov­ern­ment to build af­ford­able homes.

Mah Sing group, who prides it­self as Malaysia’s lead­ing devel­oper for af­ford­able hous­ing, was euphoric.

The pri­vate devel­oper held three si­mul­ta­ne­ous pre­views of three projects lo­cated in the Klang Val­ley, Penang is­land and Jo­hor.

Mah Sing’s group man­ag­ing di­rec­tor Tan Sri Leong Hoy Kum said buy­ers have showed in­ter­est on an av­er­age of 95% on all the projects by plac­ing an earnest de­posit.

Leong said judging from the re­sponse, the bud­get has “re­vived sen­ti­ments and con­fi­dence in the mar­ket.”

Prices be­gin from less than RM350,000 for M Cen­tura in the Klang Val­ley and M Vista@ South­bay, Penang. Both are high-

rise res­i­den­tial projects while Fern in Meridin East, Jo­hor are landed units with prices start­ing from slightly more than RM400,000.

“We also would like to ap­plaud the Gov­ern­ment’s com­mit­ment in en­hanc­ing ed­u­ca­tion by pro­vid­ing higher al­lo­ca­tion in Bud­get 2018 for the ed­u­ca­tion sec­tor as well as ap­prov­ing the con­struc­tion of 10 more schools in Jo­hor and Se­lan­gor. In fact, one of the schools, SJK (C) Sim Mow Yu will be built in our Meridin East town­ship,” Leong said.

The third mea­sure aimed to open up prop­erty own­er­ship among the civil ser­vice.

Un­der this pro­posal, the Pub­lic Sec­tor Home Fi­nanc­ing Board (Lem­baga Pem­bi­ayaan Peruma­han Sek­tor Awam) which is un­der the Fi­nance Min­istry, is al­lowed to fi­nance prop­er­ties con­structed on waqf or land do­nated for Is­lamic re­li­gious or char­i­ta­ble, benev­o­lent pur­poses.

The bud­get also al­lowed the Pub­lic Sec­tor Home Fi­nanc­ing Board to “have joint-loan for hus­band and wife or child with a con­di­tion that all ap­pli­cants must be pub­lic ser­vants.”

The board also “al­lows joint-home fi­nanc­ing be­tween hus­band and wife or child, with a con­di­tion at least one of the ap­pli­cants is a pub­lic ser­vant.”

“The non-pub­lic ser­vant needs to se­cure loans from the fi­nan­cial in­sti­tu­tions or agen­cies that pro­vide fi­nanc­ing fa­cil­i­ties who agree to be the sec­ond mort­gage holder,” ac­cord­ing to the bud­get.

CBRE|WTW di­rec­tor Heng Kiang Hai said the mea­sures pro­posed un­der the Pub­lic Sec­tor Hous­ing Board would help to boost home own­er­ship among the civil ser­vice ex­ten­sively.

“This will ef­fec­tively lower the bar­rier and/ or in­crease the loan amount el­i­gi­bil­ity of civil ser­vants, thereby mak­ing af­ford­able a higher range of houses for this group,” Heng said.

CBRE|WTW man­ag­ing di­rec­tor Foo Gee Jen said the move would help the young peo­ple in the civil ser­vice be­cause they can now de­pend on their fa­ther or mother to have a joint loan.

As for the party who is not in the civil ser­vice, the ques­tion is which com­mer­cial bank will agree to be the sec­ond mort­gage holder. The com­mer­cial bank may im­pose a higher rate of in­ter­est to com­men­su­rate the risk, ac­cord­ing to Foo.

Show­ing strong in­ter­est: The crowd at Mah Sing’s sales pre­view of M Cen­tura. The devel­oper held si­mul­ta­ne­ous pre­views of three projects in the Klang Val­ley, Penang is­land and Jo­hor over the week­end.

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