Four-unit limit for bulk sales by developers
The Government has implemented a measure to control bulk sales of property to try and curb the proliferation of “property clubs” that have been walking away with handsome profits, especially in the Klang Valley.
Minister of Urban Wellbeing, Housing and Local Government Datuk Abdul Rahman Dahlan said developers selling more than four units of their properties to a single buyer or group must now obtain prior approval from the Controller of Housing.
The move is likely to affect the activities of these property clubs which normally enter into a tacit agreement with the developers to take up a large portion of their units before the launch of a project.
Because the property club buys in bulk, it gets a steep discount and pays a smaller down-payment compared to an individual house buyer.
The benefits accrued are then passed on to its members.
When the project nears completion members divest their property at a much higher price.
Speaking after launching Sime Darby Property’s housing income index, Rahman said bulk buying was not against the law but it created a false demand causing unnatural price spikes.
“The new condition would palliate those effects. I will call for a meeting with the Real Estate and Housing Developers’ Association of Malaysia (Rehda) stakeholders in a month’s time,” he said.
Abdul Rahman also said the new enforcement would be made compulsory in all real-estate advertising and sale permit materials.
The existence of property curbs came to light last year when developers announced huge take-ups in the first days of a project launch, causing an artificial demand.
This resulted in unsuspecting house buyers rushing to take up the remaining units, also causing a spike in property prices.
In a related development, Abdul Rahman said the Government may increase its RM300mil allocation for the MyHome scheme which will be launched on April 1.
The scheme will subsidise the purchase of low-cost houses by first-time buyers who earn less than RM3,000 a month.
Source: StarProperty.my
Well, this is a good start. At least the gov is acknowledging that the “economically unproductive activities” of property clubs being the middlemen between investors and developers are not doing any good to our economy…:)
Of course, restricting 4 units per bulk purchaser is as good as no control, because the property clubs will soon figure out a way to evade detection by splitting their club into mini-clubs in order to purchase the multiples of 4……:) That said, this is a good start. The authority can fine-tune and improvise along the way (if they are really serious about it)…..:)
Why 4? It should be not more than 2.
tax those property club heavily lah, since they are so rich, earn so much money by reselling house, why our government so good to them?
How to control? Even as bulk buyer they will just register with different names of their “club” members
They call themselves “club” already, sure got members one la… 10 members can easily sapu 40 units with 20% cheaper price.. This minister needs to think harder if really want to stop investor club…
@Huat
Any suggestion on an effective way to control this?…..:)
Tax those people who own more than 4 properties.
@LM
That might not be a bad idea. That is basically assessment rate that the council is making you pay every year. So what you are saying is when the land office detects there is more than 4 units of property registered under the same owner (regardless private or company), the assessment rate will automatically increase 30x ?….:) Then again, if one wishes to own 40 houses, you can easily register 10 companies to hold 4 houses each……:) No?
You can register 10 companies to hold 4 houses each but at the end of the day the council still able to track who is the owner of the company or who is borrowing money from the bank.
I believe house is a necessity to everyone. Each person should only be limited to own not more than 2-3 houses. If you wish to buy a bigger house is fine but you should sell your current house before you buy the new house else that person should be taxed heavily. Now seems the problem is rich people owning many houses but leave it empty while poor families of 5-6 people stuck in one little house because cannot afford a small house for them. In this case i believe supply and demand will adjust themselves and eventually property price will be controlled.
Greedy developers & ugly speculators who manipulate, cheat , rob the buyers should be jailed and whipped …
Increase stamping fee for same property. For example stamping duty for 1 unit of The Light at 1x, but if buy 2 unit of the same project, then stamping will be at 1.4x etc etc. this should apply for same property transaction only. I am sure speculator will be put off by such measure.
if people have alot of money… sure buy many properties, shop lot , land etc… why want to limit it? those thing will appreciate.. else u want people to put money in FD? buy saving plan? or go to buy super car??or buy private retirement scheme? =.=”’
tax them with RPGT is more than enough la… or make the loan down all the way to 50% for second house la.. but bank and gov wont do that… they want $$
@JT
How about 100 club members bought 1 unit each through their club, with negotiated low price? Can your suggestion actually work?
If the government is really serious about controlling speculation. They have to increase RPGT drastically and interest rates as well.
There is no point controlling the number of houses one can buy because it is ridiculous. It won’t work.
The best way is to make it hard for the speculators to enter (interest rates) and exit (RPGT).
Increase property tax for people with multiple units in hand, such as having 4 or more houses. Extend checking to spouse or any close relative, to avoid husband hold 3 house wife hold 3 house etc.
I’ve read property tax as high as 2.8% in New York. Assume I understand correctly, imagine a person got hold of 5 properties for cheap, but they increased to 800k per unit, totalling 4 million in value. This would mean if heavy tax applied, he will get taxed over 100k a year if he keep on holding those house in his hand?
Probably won’t eliminate speculations, but surely this will reduce how much houses can speculators hold.
@hello
There are many other investment instruments other than properties such as blue chip stock, gold, silver, bonds or even open own business etc. Like sugar, flour, rice, a shelter to stay is a necessity too. Hence the price should be controlled. Can you imagine if there is a huge amount of necessity product like sugar or rice is hold by rich people and sold or rent to poor people at a very expensive price?
@Chris
Chris, agreed with you. In Korea there is property tax too, if you own a house, need to pay expensive property tax every year, if you own more, the more tax have to pay, not only property tax, but the income tax also increase in the mean time if holding property, and the value is based on market value. so in korea, holding a property means have to pay a lot of tax( property tax+income tax rise++) and it has proven as a effective way to control the housing price. if our government is really serious of curbing speculation, property tax should be imposed.
What is the delta of per capita income between Malaysia and South Korea? What is the PPP difference? Merely blindly copying taxiation measures are just not simplistic answers or solutions. As with any taxiation measures or bands of taxiation measures, its a horses for courses scenario.@Lee
@Ji Sung Park
I agree with you that blindly copying tax measures from other countries is not a solution. However, past experience in other countries serves as a very good reference for us. Example, Singapore. Their continuous measures last year has yielded them very “positive” results. Speculation and price increase are at all time low. Transaction numbers are going back to norm etc. We should implement measures earlier rather then later.
Agreed on implementing it the soonest possible. Its a time sensitive measure as opposed to a time intensive measure. @Kallipok
@Ji Sung Park
so u mean property tax not suitable for middle income country? you dont know there are many rich in middle income countries who are much richer than high income country people? inequality income of msia is one of the highest in Asia, and those rich have speculated in the housing property sectors,inflated the price, contribute nothing to productivity of our econ, cause suffer of other people,these group of people should pay extra tax lah. and our discussion here is targeting to the multi-housing property holder,one family only need one or two house, why need so many houses? if for profit making then why not tax them?
@Lee
Rich people is not a new phenomena, but DIBS is, property bulk buying is, property club is, mass property flipping is. When something is causing more harm then good, authority should take steps to outlaw it.
Example, pyramid schemes, MLM etc. They were new phenomenas at one time, it took many years many victims with many people jumping off buildings before the authority finally outlawed it. I am quite sure that I am not too far off to say there is already actually quite a significant number of people being cheated by “property gurus” of their money (including the rich).
I’m not very good in economics, what I said may sound anti-capitalism. But an opinion is an opinion worth discussing so here goes:
Tax property based on how many house hold, if married, between couple. Example:
1 House = Tax Free.
2 House = Tax 0.1%
3 House = Tax 0.5%
4 House = Tax 1.2%
5 House and above = Tax 2.5%, all according to market value.
If a person/family own 1 house, no tax need to be paid. If they hold two (husband 1, wife 1), assuming each house is 400k, they need to pay 1.6k in tax a year. If they “goreng” property holding 7 houses due to bulk purchases, they will get slapped with 70k tax a year.
If they try to hold them until market value reaches 700k, they will need to pay tax of up to 200k a year. So this will force them to calculate if it’s worth it at all to speculate. They might earn 2 million in 5 years time, but in between they probably paid near 700k in tax or more.
It will probably not stop the super rich, but will surely stop the average joe who think about earning quick money from flipping because he need to pay taxes before he flip.
Not sure of what the long term effect will be if such move is made, but then again no method is perfect. There’s always “holes” as far as Malaysia is concerned.