2 measures can help fuel demand
THE key highlights in the 2019 Budget are expected to fuel demand for housing in the affordable price segment, said Henry Butcher Malaysia. “The substantial allocation of RM1.5 billion for the building of affordable homes is indeed welcoming news for those in the lower- to middleincome groups who have not been able to purchase their dream home amid the rapid rise in house prices over the past five years.
“Nevertheless, it is noted that a similar allocation of RM1.5 billion was announced in the 2018 Budget by the previous administration but due to weaknesses in implementation, the affordable homes targets were never met. With new hands on deck, it is anticipated that the cherished hopes of the lower- and middle-income groups of owning a home can now be fulfilled,” said the firm.
To alleviate the huge overhang of unsold houses, there will also be a six-month stamp duty exemption for first time purchase of units costing between RM300,000 and RM1 million.
Henry Butcher said although the impact is not expected to be substantial, the two measures will
The government’s efforts to increase households’ disposal income will boost consumer spending. LIM POH YIT
Titijaya Land Bhd deputy group managing director
help, to a certain degree, revive interest in the housing market.
On the stamp duty on transfer of properties above RM1 million, which will be raised to four per cent from three per cent, it said this is a dampener for the high-end market.
This would increase the acquisition costs for buyers in the segment, which is already seeing slow sales.
“In consideration for the exemption of building materials from the Sales and Service Tax (SST), the Real Estate and Housing Developers’ Association (Rehda) has pledged that developers will reduce the cost of houses by at least 10 per cent.
“There are a multitude of factors which influence how property developers price their properties. Cost is obviously a major consideration but demand as evidenced by the sales take-up rate is also a factor that a developer will not ignore. As it is, even without the SST exemption, developers are already giving discounts, rebates and other goodies, besides easy payment schemes and even developer financing schemes to lure buyers.
“To really attract buyers, the proposed 10 per cent price reduction will have to be over and above what the developers are currently offering to the buyers,” it said.
Henry Butcher said the government’s plans to hold scheduled and staggered sales of land via auctions to the highest bidders to generate revenue will hopefully increase the supply of landbank for housing development and help keep a cap on rising land costs in major towns.
The government also said the Real Property Gains Tax (RPGT) structure will be amended in that locals as well as permanent residents will now be levied a a five per cent rate (previously zero per cent) if the sale of property takes place after the fifth year. For non-citizens who are not permanent residents as well as companies, the tax rate will be set at 10 per cent (previously five per cent). Low- and low-medium cost and affordable houses costing RM200,000 and below will be exempted.
Henry Butcher said the objective of RPGT is to deter short-term speculative activities and therefore penalises the people who flip the properties after a short period of owning them.
It said although the five/10 per cent tax rate is not substantial and will probably not deter people from continuing to buy properties, genuine buyers who have held the properties for a long time, such as five years and more, should not be penalised.
“Perhaps the government could introduce a new tier and limit the five/10 per cent tax on those who own the property for less than seven or 10 years. Those who dispose of their properties after ten years should be exempted from any RPGT,” it said.
Rehda president Datuk Soam Heng Choon told NST Property that the RPGT chargeable on profits made from the disposal of properties from the sixth year and onwards would dampen the market but only temporarily.
“Previously, if you sell your house after the fifth year you will not be subjected to the RPGT. Now, you will be taxed five per cent on the gain no matter when you sell it. Of course, this will be negative for the market. But if the owner already has made a handsome profit, then it shouldn’t be a problem for them when they sell,” he said.
Sarkunan Subramaniam, managing director of Knight Frank Malaysia, said the exemptions and initiatives, in particular the stamp duty waiver on the instrument of transfer and loan agreement for residential homes valued up to RM300,000 for two years and the six-month stamp duty charges waiver for properties priced from RM300,001 to RM1 million are expected to kick-start the housing market moving into next year and beyond.
“Although the review of property taxes will increase the disposal and transfer costs, the impact towards the property market is insignificant,” said Sarkunan.
Titijaya Land Bhd deputy group managing director Lim Poh Yit said the government’s efforts to increase households’ disposal income would boost consumer spending and economic activity in the country.