PETALING JAYA (Nov 2): The increase in stamp duty rates for the transfer of property valued RM1 million and above as well as the imposition of Real Property Gains Tax (RPGT) on future property sales have increased the entry and exit costs for property ownership which might dampen investors’ interest, said Savills Malaysia managing director Datuk Paul Khong.
Overall, Khong described the first budget by the Pakatan Harapan government as a good budget targeted at the low and middle income group who are planning to buy a house priced at RM500,000 and below.
Under Budget 2019, the government has proposed that stamp duty for the sale of properties priced more than RM1 million to be raised to 4% from 3% while there is a two-year exemption for houses priced up to RM500,000, on the first RM300,000.
First-time homebuyers also get an exemption on stamp duty for properties priced between RM300,000 and RM1 million, for a limited period of six months starting Jan 1, 2019,
The government will also be giving first time homebuyers a stamp duty exemption on sale and purchase agreements as well as loan agreements of up to RM300,000 for a period of two years until December 2020.
“These measures will be a catalyst for first time homebuyers to look for such properties within the first six months,” he said.
Khong estimated the savings from the property transfer stamp duty will be about RM24,000 for property priced RM1 million and a RM5,000 savings for property priced RM500,000 and below.
“This is extremely helpful to the first-time house buyers in terms of lower acquisition costs in buying their property which is critical, especially when they need to come out with their upfront deposits and costs within their very tight budgets,” he told EdgeProp.my.
However, Khong said there are no positive changes for the general mid and high-end property segments as the entry cost of acquisition has been increased due to the changes in stamp duty and RPGT.
He also said developers will be able to capture more sales with the stamp duty savings for properties below the RM1 million price tag and RM500,000 generally.
“The exemption in Sales and Service Tax will induce developers to push prices further down by up to 10% which will also make the entry prices of houses more affordable and attractive. Hopefully this will bring some positive impact,” he added.
For investors, Khong observed that there are really no goodies for them. Existing investors will have to relook at their investment strategy in terms of exiting or take a long-term view of their properties while new investors will be evaluating their purchase decisions accordingly as there is a lack of incentives for all other sectors such as residential, industrial, commercial, leisure, retail and others.
Meanwhile, Knight Frank Malaysia managing director Sarkunan Subramaniam concurred that Budget 2019 is more focused on the issue of housing affordability.
“For me, the 5% Real Property Gains Tax on property sales in the 6th year onwards will allow serious buyers to have higher chances in buying a home at more stable prices,” he said.
On the 10% house price reduction for new projects agreed by Rehda, Sarkunan opined that it is difficult to enforce because Rehda cannot instruct its members to reduce prices although he believes members are willing to work together with the government to provide affordable houses to the rakyat.
“However, I think it will be challenging for it to be enforced,” he said.
On the peer-to-peer lending scheme based on a property crowdfunding model to help first-time homebuyers own a home, he noted that this is a good initiative as “we need to explore innovative ways to make property more accessible. But the key is how to execute and manage, as well as regulate. The investors will also be looking at the ROI so, the return is also important”.
He also lauded the creation of an airport real estate Investment trust (REIT) will be good for the REIT market and help the government monetise its assets.