BUDGET 2017 COMMENT The National House Buyers Association (HBA) secretary general Chang Kim Loong

Posted on 24 October 2016
 

Source: The Sun Daily

The National House Buyers Association (HBA) acknowledges the challenges faced by our honourable Prime Minister (PM) in tabling Budget 2017 on Friday, 21st October, 2016 in view of the slowdown in the global and regional economies and also the steep drop of the Ringgit.

We are grateful that out PM did not heed the advice from business groups with vested interest to relax some of the cooling measures announced previously to stem excessive speculation such as lowering the Real Property Gains Tax or re-introducing the Developer Interest Bearing Scheme for first time house buyers. We are indeed glad that a ‘status quo’ (an existing state of affair) was retained through the wisdom of our PM.

The positive take from Budget 2017 in relation to property, in particular Affordable Home are as follows:

(a)The government will build more PR1MA homes, SPNB, PPA1M houses and also PPR homes (“Affordable Homes by the Government”)

(b)Exemption of stamping fees on Transfer instruments and Loan facilities for first time buyers of houses not exceeding RM300,000

(c)Levy of stamping duties of 4% on properties in excess of RM1 million;

(d)Maximum special loan scheme of between 90% – 100% from participating Banks for first time house buyers

(e)Building 10,000 housing units in the town/ city for rental to eligible youths with permanent job including young graduates entering labour market, which duration should not exceeding 5 years

(a)Affordable Homes by the Government

HBA is grateful that the Government has taken the initiative to build more affordable housing. However, HBA cautions that the right implementation to ensure that the said Affordable Housing reaches the right target market.
“They must build the right product at the right place with the right pricing and the right numbers” – National House Buyers Association (HBA)
The Affordable Housing must be build at the right place and priced reasonably (between RM150,000 to RM300,000 and not more than RM300,000 for prime locations) and only for first time house buyers and not to be made available for second time house buyers which PR1MA is allowing with certain conditions.
PR1MA must also ensure that all the allocated land is used to build Affordable Housing and not to partner with Private Developers whereby only 40% of the lands (from what we understand from the market) is for Affordable Properties with the balance used for Lifestyle Properties to build Commercial and High-end Properties.

(b)Exemption of stamping fees on Transfer instruments and Loan facilities for first time buyers of houses not exceeding RM300,000

This is an excellent formula to assist the first time house buyers in buying their first home. The ‘first timers would not be burden too much with the stamping fees from the onset. In a situation where the sales price is RM300,000 the savings would be as follows:

Stamping fees payable to LHDN
Transfer instrument - RM5000.00
Loan facility - RM1500.00

(c)Levy of stamping duties of 4% on properties in excess of RM1 million;

Current Stamp Duty on Transfer of Properties is considered to be low to encourage easy ownership of Properties amongst the Rakyat and is based on a scale rate as follows:

Value of Property Stamp Duty Payable

First RM100,000.00 1%
RM100,000.01 to RM500,000 2%
RM500,000.01 to RM1,000,000 3%
RM1,000,001 and thereafter 4%

Weakness

Stamp Duty is the same regardless of number or Properties held. As a result of low entry cost to acquire a Property, speculators have taken advantage of low Stamp Duty regime and able to acquire multiple Properties at the same time, this depriving genuine house buyers the opportunity to acquire those houses

HBA’s Recommendation

Current Stamp Duty regime can be maintained for the first 2-properties held, one being for own stay and one for long term investment. However, Stamp Duty must be increased for the third and subsequent property held. Our recommendation for Stamp Duty is as follows:

(a)First Two Properties, based on current scale rate
(b)Third Property – Flat 5% of Value of Property
(c)Fourth Property – Flat 7.5% of Value of Property
(d)Fifth Property - Flat 7.5% of Value of Property

We are glad that our PM has instead adopted another approach to our recommendation. Our PM just announced an increase of 4% stamping fees levy for properties exceeding RM1 million and above. HBA support the initiatives. At least the rich are taxed more and should contribute more towards our country’s revenue.

(d)Maximum special loan scheme of between 90% – 100% from participating Banks for first time house buyers

Although this proposal will assist first time house buyers to buy their property, HBA urges some caution that such a proposal cannot be implemented across the board. This is because some first time house buyers may have existing loan obligations and if they were given a 90% to 100% loan, the combined loan repayments could be too burdensome leading to an imminent default in a matter of time.

As such, HBA feels that the decision of how much financing to extend must rest with the respective Banks and this proposal should only be a general advisory and cannot be made mandatory.

(e)Building 10,000 housing units in the town/ city for rental to eligible youths with permanent job including young graduates entering labour market, which duration should not exceeding 5 years

The building of such housing units to allow eligible youths with permanent jobs to rent is also a good move. These youths may not be eligible for housing loans and this move will allow them to have a stable roof over their head until their income levels improve. 



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