KUALA LUMPUR: The Budget 2015 is ‘uninteresting’ for the real estate sector as it does not deal with issues such as the application of the goods and services tax (GST), said a property consultant.
“Generally speaking, this is an uninteresting Budget. It is targeted at civil servants and providing affordable housing. There is good news for first-time house buyers but the household income level (RM10,000) is too ambitious,” KGV International (Johor) Property Consultants Sdn Bhd executive director Samuel Tan told The Edge Markets.
“I am disappointed that there were no mention on a readjustment of the GST [to give exemptions to affordable homes and so forth], developer interest-bearing scheme (DIBS) for first-time house buyers and the problem of double taxation for non-residential properties, such as paying for GST and stamp duty,” he added.
He added that there was also no mention of drawing foreign investment into the country, which could help spur demand for properties.
Affordable housing and home-ownership promotion
Under Budget 2015, government agencies such as Perumahan Rakyat 1Malaysia (PR1MA), National Housing Department (JPN) and Syarikat Perumahan Negara Bhd (SPNB) will build more affordable and low-cost homes.
PR1MA will be allocated RM1.3 billion to build 80,000 home, with the maximum household income to qualify raised to RM10,000 from RM8,000.
There will also be a rent-to-own scheme for those who cannot obtain bank loans.
Tan lauded the rent-to-own scheme as very practical, but questioned the need to raise the maximum household income. “It should be maintained,” he said.
Meanwhile, JPN will be allocated RM644 million to build 26,000 units of homes under the People's Housing Programme.
SPNB will build 12,000 units of Rumah Mesra Rakyat and 5,000 units of Rumah Idamanan Rakyat. SPNB will also build 20,000 units of Rumah Aspirasi Rakyat on privately-owned land.
In addition, Cagamas' Skim Rumah Pertamaku will raise the maximum property price to RM500,000 and the 50% stamp duty exemption will be extended to Dec 31, 2016. The age ceiling for eligible borrowers will also be raised to 40 years from 35 years.
“These are good moves as they make affordable housing available to more people because the cost of purchase is lowered. Skim Rumah Pertamaku is also a good idea, but we need houses priced below RM500,000 in larger cities to meet pent-up demand, and buyers must be able to obtain end-financing,” he said.
Meanwhile, RM40 million will be allocated under the Public Housing Maintenance Programme and RM100 million go towards the 1Malaysia Maintenance Fund to take care of private low-cost housing.
“It is also good to inculcate good maintenance of low-cost housing,” he said.
Youth Housing Scheme and 1Malaysia Youth City
A Youth Housing Scheme will be introduced, which enables married people aged 25 to 40 years old with household income of not more than RM10,000 to take up a loan of up to RM500,000 over a maximum period of 35 years.
In addition, the government will also provide financial assistance of RM200 per month to service the loans, a 10% loan guarantee to get full financing and a 50% waiver on stamp duty.
“It opens up opportunities to the youths and graduates who otherwise have no chance to own a house. But in larger cities, it is not easy to find houses under RM500,000,” he said.
The government also announced a RM100 million allocation for the 1Malaysia Youth City project that will come up in three places in Peninsular Malaysia, Sabah and Sarawak.
“Will RM100 million be sufficient for the three locations? I think it is only scratching the surface, but nonetheless it is a good start,” he said.
Civil servants
More housing perks under the 1Malaysia Civil Servants’ Housing (PPA1M) were included in the Budget 2015.
The government has agreed to build another 5,380 units - 1,600 units in Putrajaya, 1,530 units in Bukit Jalil, 1,290 units in Papar, Sabah and 960 units in Bukit Pinang – on top of 10,639 units that are already approved for construction.
In addition, the minimum price has reduced to RM90,000 from RM150,000 while units have a minimum built-up of 850 sq ft.
The maximum household income to qualify for PPA1M homes was also raised to RM10,000 from RM8,000.
A facilitation fund of up to 25% of the project cost will also be set up for developers participating in this scheme.
Meanwhile, the minimum eligibility for property financing has been reduced to RM80,000 from RM120,000 and the maximum price raised to RM600,000 from RM450,000.
“Civil servants seem to benefit most from this budget,” he observed.
He noted that although the lower tax will raise disposable household income, this will be offset by cost rising from the GST and inflation.
For more on the Budget 2015 and its impact on the real estate sector, read The Edge Malaysia Issue 1036 coming out on October 11.