Budget seeks to raise property deals

Kota Kinabalu: Budget 2021 is set to lift the real estate market with RPGT or real property gain tax exemption up to three units of residential home per individual (property owner/seller/vendor) effective from July 1, 2020 to Dec 31, 2021.

A lot of people from Sabah, not necessary Sabahans, bought many units of apartments in Iskandar Malaysia as investors or property speculators, so this year and the next is a good time to get out of their liabilities, if they can find buyers who need no bank loans or have no problems getting loans.

Johor recorded the largest number of overhang properties in the country, with 6,166 unsold completed units in the market.

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Johor registered the sharpest decline in the third quarter of this year where asking prices fell by 2.97 per cent, while Kuala Lumpur and Selangor also projected weak figures with 1.35 per cent and 1.04 per cent contractions, respectively.

RPGT does not apply if the owner is selling at a loss, but cheaper real estate prices may help the younger generations to buy their first home. For example, national property demand has fallen 2.5 per cent year on year, and accountant Eileen Tan recently snagged a 2,200 sq ft terraced house for RM560,000 in Denai Alam, Selangor. 

“This is the best time to shop for a house, as the market is soft and the interest rate is also low. Mine is only at 3.14 per cent, compared with the usual 4.25 per cent,” says Tan, 29. “I bought my first property at 25 per cent cheaper than the initial price as the owner was desperate to get rid of it.”

The original price tag on the house, which she bought, was RM750,000. On the supply of new properties, Selangor recorded the largest increase at 23.55 per cent this quarter.

The abandoned 1Sulaman Condominiums being revived under receivership.

The state of Johor has recorded Malaysia’s highest property overhang and a sharp 22.8 per cent decrease in demand. Selangor was the only major state to see a rise in housing demand, up 3.5 per cent year on year for sub-sale residential properties, due to affordable units in Klang Valley’s suburban areas.

Budget 2021 helps sellers to find buyers as the stamp duty exemption for first home owners has been increased to RM500,000 from RM300,000. This means 100 per cent full stamp duty exemption given to transfer of ownership document and loan agreement for purchase of a first residential home up to RM500,000 will be waived.

This exemption is effective for Sales and Purchase Agreement (S&P) must be dated from Jan 1, 2021 until Dec 31, 2025. The developer of a mixed development ‘The Heart of Luyang’ here, is building affordable homes in Tuaran under RM400,000, should qualify for the tax exemption.

Meanwhile, for abandoned projects like 1Sulaman Condominiums that are being revived under receivership, Budget 2021 provides stamp duty exemption to revive abandoned housing projects.

Tax Director of Messrs. Cheng & Co., accountant Lam Kwai Soon (pic)  in a G&A Group organised Zoom seminar “2021 Budget Talk & CEO Outlook” moderated by Dato’ George Lim of G&A Group on Monday, Nov 16, explained: “This is to further encourage rescuing contractors to complete abandoned housing projects and reduce the financial burden of affected house purchasers.”

“Existing stamp duty exemption to the contractors and original purchasers of homes of abandoned projects will be extended to another two years.

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“The stamp duty exemption for rescuing contractor/developer covers the instruments of loan agreements to finance the completion of abandoned housing projects and instruments of transfer of titles for land as well as houses affected.

“For the original house purchaser in the abandoned project, stamp duty exemption covers instruments of loan agreements for additional financing and instruments of house transfer.

“Both stamp duty exemptions are given on loan agreement and instruments of transfer executed from Jan 1, 2021 until Dec 31, 2025 for abandoned housing projects certified by the Ministry of Housing and Local Government,” Lam said.

Meanwhile, with regard to stamp duty exemption for exchange traded fund, it is given on contract notes for trading of Exchange Trade Fund (ETP).

“This exemption is effective for the trading of Exchange Trade Fund (ETP) executed from Jan 1, 2021 until Dec 31, 2025,” Lam explained.

Based on National Property Information Centre (Napic) reported that in the first half of 2020, Malaysia’s residential property overhang rose 3.3 per cent to 31,661 completed units worth RM20.03 billion during the period, compared to 30,664 units valued at RM18.82 billion in the first half of 2019. 

In Napic’s Property Market Report for the first half of 2020, it was projected that asking prices may continue to take a dip in the months to come, but not necessarily in Sabah and Sarawak as supply of housing is limited, except for some strata property like pricey condominiums, due to limited suitable land costs hiked up by speculative developers and flippers.

“Despite these findings, there is a silver lining as it may unlock pent-up demand for millennials looking for affordable homes,” said PropertyGuru Malaysia country manager Sheldon Fernandez.

Malaysia’s property market is still dealing with the effects of the Covid-19 pandemic in the third quarter of 2020. 

PropertyGuru Malaysia Property Market Index (MPMI) reported a downward trend in asking prices across all four key markets of Kuala Lumpur, Selangor, Penang and Johor, but not widespread in Sabah yet, although a lot of condominiums are on the market.

“Overall, property asking prices in Malaysia dropped by 1.34 per cent this quarter; in contrast to the 0.38 per cent increase registered in the second quarter of 2020 and 0.63 per cent increase in the first quarter of 2020.

“For the first time this year, all key markets saw prices falling, indicating that this could be more than a quick dip”.

PropertyGuru believes that the implementation of the conditional movement control order (CMCO) due to rising Covid-19 cases will impact current and future commercial activities, leading to a dampening effect on asking prices and the overall property market.

Penang also saw a slight contraction of 0.64 per cent this quarter, it said, noting that the slight downward dip in asking prices indicates that the state is a stable haven for those who wish to preserve their assets through property investments.

“Market watchers continue to be confident of the state’s long-term prospect, despite it having the second-largest property overhang in the country,” said Fernandez.

Other states also saw quarter-on-quarter growth in new properties, namely Penang (20.30 per cent), Kuala Lumpur (14.39 per cent) and Johor (18.36 per cent).

“As for Kuala Lumpur, it is going through a challenging period with weakened interest from foreign investors, leaving an unsold upmarket stock that is mismatched with local appetites and affordability range,” added Fernandez.

The MPMI aggregates and indexes data from over 450,000 listings on PropertyGuru.com.my demonstrates the movement of supply-side pricing.