Budget 2014 Highlights (Property Sector)
(Prime Minister’s speech on property sector)
Goods and Services Tax (GST)
Sale, purchase and rental of residential properties as well as selected financial services are exempted from GST.
Increasing Home Ownership
The recent sharp increase in the prices of houses has affected the ability of the rakyat to purchase houses. In addition, speculative activities have an impact on house prices and can adversely affect the real estate market in the long term.
To increase the ability of the rakyat to buy a house and ensure stable house prices, as well as to control excessive speculative activities, the Government will implement the following steps :
Review Real Property Gains Tax (RPGT).
For gains on properties disposed within the holding period of up to three years, RPGT rate is increased to 30%, whereas for disposals within the holding period up to four and five years, the rates are increased to 20% and 15%, respectively. For disposals made in the sixth and subsequent years, no RPGT is imposed on citizens, whereas companies are taxed at 5%.
For non-citizens, RPGT is imposed at 30% on the gains from properties disposed within the holding period of up to 5 years and for disposals in the sixth and subsequent years, RPGT is imposed at 5%.
Minimum Price For Foreigners
Increase the minimum price of property that can be purchased by foreigners from RM500,000 to RM1,000,000;
Price Transparency
Increase transparency in property sales price, where property developers will have to display detailed sales price including all benefits and incentives offered to buyers such as exemption of legal fees, stamp duty, sales agreements, cash rebates and free gifts; and
Developer Interest Bearing Scheme (DIBS)
Prohibit developers from implementing projects that have features of Developer Interest Bearing Scheme (DIBS), to prevent developers from incorporating interest rates on loans in house prices during the construction period. Therefore, financial institutions are prohibited from providing final funding for projects involved in the DIBS scheme.
To further increase access to home ownership at affordable prices, an estimated 223,000 units of new houses will be built by the Government and the private sector in 2014. The Government will allocate RM578mil to the National Housing Department (JPN) for the implementation of Program Perumahan Rakyat which involves the construction of 16,473 housing units. In addition, JPN will construct 600 units for Program Perumahan Rakyat Disewa and Perumahan Rakyat Bersepadu with an allocation of RM146mil.
PR1MA will provide 80,000 housing units with an allocation of RM1bil. The sales price of PR1MA houses are 20% lower than market prices. Meanwhile, SPNB will build 26,122 units of affordable houses, comprising 15,122 units of affordable houses, 3,000 units Rumah Idaman Rakyat and 8,000 units of Rumah Mesra Rakyat. The Government will introduce a new category of Rumah Mesra Rakyat, with sales price between RM45,000 and RM65,000 for which the Government will provide a subsidy between RM15,000 to RM20,000 per unit.
The Government will also introduce the Private Affordable Ownership Housing Scheme (MyHome) as a step to encourage the private sector to build more low and medium-cost houses. The scheme provides a subsidy of RM30,000 to the private developers for each unit built. Among the criteria for the scheme are:
- Build at least 20% low-cost houses and 20% medium-cost houses in a housing project;
- The maximum price of low-cost houses is RM45,000 and medium-cost houses is RM170,000;
- The minimum built-up area of low-cost houses is 800 square feet and the medium-cost houses, 1,000 square feet, with a minimum of 3 bedrooms and 2 bathrooms;
- Provide parking, surau, hall and recreational park; and
- Open to first-time buyers with a monthly household income of RM3,000 for low-cost houses and a maximum of RM6,000 for medium-cost houses.
Preference will be given to developers who build low and medium-cost houses in areas with high demand and limited to 10,000 units in 2014. The scheme is for housing projects approved effective from 1 January 2014 with an allocation of RM300mil under the supervision of Ministry of Urban Wellbeing, Housing and Local Government.
Currently, PR1MA housing projects, housing in newly opened areas and 1Malaysia Civil Servants’ Housing Programme are eligible to apply for grants at 10% of the project cost, from the Facilitation Fund. For 2014, the Government will provide a total of RM4bil to the Facilitation Fund as an initiative to promote private, high-strategic impact projects.
Of this, I propose that RM1bil is allocated to the Housing Facilitation Fund under Public Private Partnership Unit (UKAS). Developers who receive this grant must abide by the terms and conditions as well as the sales prices which are set by the Government.
The Government will also carry out a refurbishment program and improve comfort and beautify government-owned low-cost housing. Among the measures to be implemented include lift maintenance, repainting the house, cleaning up drains and landfill space and repair playgrounds.
To this end, a sum of RM100mil will be provided to 1Malaysia Maintenance Fund under the Ministry of Urban Well-being, Housing and Local Government. The Government will also allocate RM82mil to rehabilitate 20 abandoned housing projects involving 8,197 houses.
To further strengthen the real estate market and increase opportunities for the rakyat to own houses, the Government will implement a more effective and comprehensive approach. In this regard, I am pleased to propose the establishment of the National Housing Council to develop strategies and action plans in a holistic manner; coordinate legal aspects and property price mechanism; and ensure provision of homes in a more efficient and expeditious manner. The Council members will comprise Federal Agencies, State Governments, the National Housing Department, PR1MA, SPNB and the private sector.
Source: StarProperty.my
With no more DIBS , and the 30% RPGT on the gains from properties disposed within the holding period of up to 5 years for non citizen , looks like speculative buyings in penang property market is coming to an end . Developers can no longer depend on non citizens such as singaporeans to buy properties !
So who’s going to buy all the high end properties that have reached to the point of over supply in penang ? Prices will be going down BIG time !
Now its a waiting game to see how low will the property prices fall . Hold on to your money ppl.
Actually what the government has done is good for the property market in the long run. No more speculation and bubbles means that the property market will slowly but surely go up. Will people want to sell within 6 years? People will buy and hold because what other alternative investment yields better than property now? The market will not fall by much if at all in my own opinion.
30% RPGT only make the sub sale properties price increase, example initial owner plan to earn 100k but think about the 30% then he will add up 30k tax for selling price. unless RPGT increase to 90% then sure no more speculator in property market == ,or The maximum price of low-cost houses is RM45,000 and medium-cost houses is RM170,000, The minimum built-up area of low-cost houses is 800 square feet and the medium-cost houses, 1,000 square feet, pg island land so expensive u think developer can do that? ==
buy 500k property then sell to foreigners 1 mil, this easy money game wont end,and land in pg island become smaller for building, land sure become more expensive, sure price will keep increase ==
@yeahright
Still nothing la for 1 mil cap for foreigner. Developer can offer bigger size to compensate. And 1 mil convert to SGD still tiny sum for Singaporean.
30% reduce for early profit seeker still got profit. Just that lesser. that’s won’t stop much of speculator. The point is Gov will become richer as well.
Without DIBS will hurt first time buyer. But Dev still have tricks under their sleeve. They can rebate by monthly to buyers not to bank directly. DIBS just a marketing name, they do rebrand what they want.
let’s see what going on next year:-)
@Alan
AGREED.
What the govt did is good, but at the end of the day you can’t control too much, the govt will use RPGT and other non-tax mechanism to do it, however the prices of property will continue to be driven by demand, as when a country grow economically there will be a demand for property, so expecting prices to drop to a significantly low level, i’m doubtful but minor correction its a possibility.
Its a simple mechanism, when there is any drop in prices this will create demand as i’m sure theres a lot out there waiting to but so what the govt did is just to stop speculative buying but i’m sure they don’t want prices to fall to significantly low level cause that would indicate that the economy itself has a problem.
for a low income country with still do not have good affordable housing scheme being introduced, all these actions are like driving foreigner spending away. developers would start to take a rest and let the demand & supply forces to do the correction jobs. so let see how would suffer.
prohibit DIBS? What about those projected already stated DIBS during booking but haven’t sign S&P?
Now the big game is subsales demand. Who is going to invest from subsales with higher risk and lower return? Every month need to fork out 4-5k interest every month while waiting for next buyer?
New projects maybe have chance.. but still need to work harder.
the problem is bank stop given loan under DIBS project, if u already sign the offer letter from bank then consider safe, or u can buy by cash with DIBS project ==
I think the rich investors dont mind to wait for 5 years. Government should do something to those who own more than 2 properties, either tax them heavily or not entitled to get bank loan
If the project not yet approved, chances are no more DIBS. but i believe developer will provide some sort of rebate to compensate buyers. don’t worry too much.
The risk without DIBS is project delay or abandon… you have to bear interest till complete.
@Tan
rich investors still want to get richer. holding an empty property for 5 years is not a good investor.
DIBS is an undertaking given by Developer to the Bank on the interest charged.
The workaround with Developers’ verbal commitment to pay the interest is subject to the exposure of not-keeping-to-promise from the Developers.
During bad times, if someone is in trouble, do you think such promise still worth anything ??
So, anyone get the confirmation from developer or bank regarding DIBS status for those approved project or stamped SPA?
Is very clear what. Bank will stop “funding” those DIBS project. Those have sign the loan offer letter from DIBS project = safe lol. Those still looking for good package of -2.5,-2.45…in big dept shit laio lol. Those flipper want to sell in 3 years (newly completed) earn lesser lol provided they can find buyer.
Who gain = Sub-sales (more than 5years old unit), rental will increase in maybe next 2 years as more ppl will look see look see to search for good bargain unit.
eat banana lol
only increase in BLR will see the price drop and end of the speculation.
@pakpak
Increase BLR will punish the genuine buyer and the existing owners.
You bought bargain unit, who is going to buy from you? Subsales is the first to go down. Own stay is different story lo..
Do you think foreigh buyer are stupid like penang pls.
Many bank already reject the DIBS scheme involved housing loan and for PB start to ONHOLD many loan since sep.
Next year the fuel price will increase, OPR interest rate will increase 0.25 point by this dec or next march, buyer need to pay more for interest, nobody will buy the old subsale project.
Hahaha, from today onward the stupid speculator and greedy speculator club sifu eating cili padi
While I agree with some of you, I don’t see the possibility of house prices going south drastically. Don’t forget the government itself through its investment arm Khazanah Nasional Berhad is actively involved in the property market. Having the control stakes in I&P and SP Setia groups, builders of luxurious homes for the upmarket, merger of these two certainly sets to make Khazanah the giant in Malaysia. That is why I would say what the government intend to do is only half-hearted, an eye-wash to blur the rakyat’s vision.
don’t forget about gst, it will cost developer more(buyer) to build the building…
observed mudah.com, start to see new property high end, expensive condo more than one million suddenly advertised for sale, i think speculator purchased try to sell the property ASAP to avoid Tax pay.
with malaysia and world economy in a growth phase at the moment, i dont see how the price will drop…. the best can happen is price stagnant
@gandlf
Agreed, for those still waiting for price to drop drastically which is unlikely to happen but price stagnating or slowing down the pace may possible. morever, land in Penang is scarcity and the petrol price has increased, indirectly, it brings up the material and building cost. don’t forget, inflation is one of key factor to escalate the market price.
On my opinion, if the market has slight of price correction, it would say that it is considered quite good and genuine buyer could consider on buying in instead of dreaming on unreality in big drop.
what gov did in budget 2014 was to slow down the price movement, not to kill it… no gov in this world would do that… we know that construction field has too many other fields that supporting it… if construction got prob, malaysia will be in big trouble… what i am trying to say here is that, only economy crisis will cause prop price to drop (if any)…
not to forget that malaysia has high young population
RPGT can be waived once in a lifetime… is that true? this is what my lawyer told me… still valid for 2014?
@Tomato
yup, still valid
Last time seller gain some profit will pay some tax, this times Government will not get the tax frm seller bcos too much. If transaction property market active government still can earn the stamp duty. But now will cause transaction property market not active cant collect more stamp duty & tax.
Don’t hope price will drop…
Contractor buy cement, bricks, mosaic, toilet bowl, wires, paint, even a screw also need to pay extra 6% after one year plus.
They need to lock in stock start next Monday.
Hope to complete the project earlier.
Developer will start saying if U not buy now, after one year plus U cannot effort to buy with the pricing we have today as cost of material was in increase, water n electricity price also need pay GST 6%.
Someone out there please keep n buy more property, GST is a good sign of price increase.
If property price drop 10%, I buy two more unit tomorrow. If price drop 20%, I buy five unit more in the next morning.
So, say CHEESE from my side
RPGT need to pay when difference between Old N new SNP, if someone sell n received UNDER TABLE money that not stated in SNP, both will saving on stamp duty n tax.
So, I hope most of people will still waiting for price drop but I already prepare my check book by now.
Good night everyone.
Sweet dream to someone having a same dream like me.
one more thing, labour cost also increased due to mega project such as mrt, lrt etc have been given a priority to get the resources…. plus malaysia is no longer favourite desstination for indonesia labours…
i am happy that gov introduces all the measures to curb high property price… the price currently moves tooooo fast… this is not healthy… but to expect price drop, very unlikely with current situation… not until we hv another economic crisis (well, even this cannot guarantee the price will drop)
RPGT is to put a break on the property trend. It’s a good sign.
DIBS has been abused. It’s should have been removed.
The government finally took action this time.
To buyer, it is the time to do NOTHING.
Sit back and watch.
Not matter how the prices of properties will go up finally if there is not war or big economy crisis. The gov was trying to reduce the Speed of properties price increase.
@Tan
brandless quoted
With RGPT the price of house wont drop because sellers will add the 30% 20% or 15% on top of the selling price pass on to new buyers, so don’t be happy. The only way to curb and make property price drop is not depend on RGPT but depend on the all the new buyers, don’t buy 2nd hand subsale then the price will drop to rock bottom. Buyers you decide for your faith.
1 mil loan for 30 yrs:
interest:4.25% monthly = 4919
4.5% monthly. = 5066
4.75% monthly = 5216
5% monthly. = 5368
lower loan amount will see smaller increment… the above blr figures is a possible increment for blr during normal economy condition… so, blr factor does not impact much….
again only when economy crisis that need to have high blr, people will feel the impact… take note that not all economy crisis will cause blr to increase…
@gandlf
All you guys sounds like expert. However the truth is you guys are just guessing here and there.
The truth is:
1) Interest rates wont stay low forever and this will CERTAINLY affect the property sector. Cheap money won’t be there forever as well. It is just a matter of time before the credit crunch comes.
2) The economy is not exactly growing at a promising rate. We might even be stagnating and eventually MNC will be firing employees. Unemployment will increase and the people with debts and unemployed won’t be able to repay their loan furthermore with a higher interest/loan repayment per month.
Conclusion:
The property sector will CERTAINLY BE IMPACTED GREATLY.
You guys can talk east talk west, the fact is that things are not getting better. Instead of trying to predict the direction for the property sector, just accept the truth the boom is over for now.
@lol
economy is a guessing game… it is so complicated and assumptions are needed to reach a conclusion… u also just made a few assumptions above which i hv no prob with that… we just need to understand the situation to makesure our assumptions relevant to current scenario…
if economy crisis happen, BLR wont increase but sure will decrease, like economy crisis happen in 2009 BLR drop to 5.8, stock, share price drop, then many investor no more holding power cheap cheap sell their properties.
buyer can at the 30%, who want buy, current price aso already 30% than market price, if more than 60% than market do u hink any one afford.
REHDA big guy, very sad with RPGT increase, more worry abts flat 30% tax rate for foreigner, its hurt developer promote aboard.
This greedy developer last time never bother of local ppls, so sombong built high end property and promote in oversea ppls, i still remember some idiot sales guy told me penang property all for foreighner not for local, now u start to feel the pain. Good lesson learn, from now on goverment need to control the hoysing price from goung up crazy, for sure price need to go up, not double increase anymore.
Fed and state must put requirement for developer to built more affordable home,,,,more control need to take such ad those buy 3rd property, stamp duty need to be increase too.
@lalazai
it depend, 1997 economy crisis blr increase
I think we need to be clear in our mind, are we hoping for PRICE DROPING or PRICE STABLIZATION.
PRICE DROPING is typically due to major disaster, which not just on property, but also lost of job, or worse…WAR.
Don’t hope, hence praying for the wrong thing !!
@8u44
i hope for price stable…
@8u44
Some people are hoping for price increase, some are hoping for price stabilization, while some are hoping for price dropping, with a few extremists hoping for price crashing!…:D Depending on where you stand, different people different hope.
However, our hope or prayer will not change the course of future events, but gov policy will….:)
I’m also hoping for price stability.
The way our pricing now is like a car driving with high speech on the expressway. Nobody date to jump in not jump out.
A gentle drive allows time for preparation.
@gandlf
Penang is a glam place to stay, with majority of Chinese people staying here compare with other states in Malaysia,i would rather to pay more even the price is higher ,if ever the property price drop by 10%,i will snap up another 2 properties at least, because I like you guys (Chinese community).I live and work in Macau,the property price here went up 700% since 2004,no matter how the government implemented very very heavy tax and curbing on it still useless,with the scarcity of land,insufficent housing supplies,increasing material cost and future mega infrastructure,it is unlikely to drop,whereas,buy and keep for another 5 to 10 years,for your own or your dependents,it will not go wrong.
@surrin
Price will still go up regardless whatever action taken. If it can curb property
pricing, property in H.Kong and Singapore will not be sky-high now.
One guy do not understand and started comparing wages in S’pore and H.
Kong to Malaysia.
lol …cant compare with HK and Singapore, if compare, pg properties consider cheap d, see what surin said? will snap up another 2 properties at least ==, pg lang so rich or properties cheap?
BG outlined,
Stop subsidy sugar price=reduce diabetes
Or
Stop eating rice =to create inflation
New RGPT =property price rocket to the sky
latest outlined,
Stop subsidy sugar price=reduce diabetes
Or
Stop eating rice =to create inflation
New RGPT =property price rocket to the sky
The answer is clear,the developer will probably slow down their future project which I think, with the less supplies in the market,especially in PG island,i do not see any reason property price here will drop and do not forget other elements such as world heritage,international city(pls check the fly destinations from PG to other countries)and of course the upcoming inflation.
@lalazai
Another one don’t get it. My POINT is if you can control the price of property,
prices of property in H.Kong and Singapore will not go up so high. IF you can
control the price in these two places it will be stagnant and not sky-high
today. Now got it ?
agree. look at china. 6 years want to stop rising and implement many rules to keep property rise in check, but failed miserably. it keeps on rising no matter price control, interstate buyer cannot buy and then also one person can’t buy 2 properties. all these were useless as there is a lot of demand even without speculators.
unless people die and penang become ghosttown, then it cannot drop.
once drop a bit many malaysian working overseas will come back and buy.1 million malaysian working overseas remember. the rise in property prices is not by foreigners either.
who is lining up at Vertiq, Penang world city, city mall, sandilands, times square none of these have any foreigners as they cannot buy under 1 m. it’s locals buying, speculating and fliping.
@Believe
I live in sydney and Australia is one of the country in the work implements high income and capital gain tax.
The average housing price went up 10-15% each year in the last 10-15 years. Landed property 10km away from sydney cdb will cost you AUD $1.3 mil.
So given that Australia impose such a high tax, why there are still so many people migrate to Australia each year? Because sydney and melbourne are one of worlds most liveable city.
Penang is one of the most liveable city in Asia.
So I personally don’t worry so much about the penang property price.
You might forgeting Penang is part of Malaysia dude
I think increasing RPGT is good.