(Oct 23): Putrajaya should raise the minimum price from RM1 million to RM2 million for foreigners buying properties in Malaysia, a group representing Malaysian house buyers said, calling for tighter rules for overseas buyers owning property in the country.

National House Buyers Association (HBA) honorary secretary-general Chang Kim Loong said they also hoped for, among other things in Budget 2016 to be tabled this afternoon, restrictions on foreigners to only buy stratified properties and not landed properties.

Two years ago, Najib announced in Budget 2014 that foreigners could purchase property with a minimum value of RM1 million, an increase from RM500,000. It was part of the government’s plan to impose stricter restrictions to curb speculation by local and foreign investors in the real estate market.

"The prices of houses have become ridiculous. In the last five years, it has surged so high that they are beyond a lot of Malaysians,” Chang told The Malaysian Insider.

“Now, it’s a matter of not allowing foreigners to buy so much of our property that we lose control. Thus, it is important to curb it, and this is where the RM1 million minimum value is far too low.

"If the government’s plan is to have them invest in our country, then allow them, do not shun them. However, limit them to purchasing only stratified property that costs more than RM2 million.”

This was also necessary, he said, in view of the depreciation of the ringgit.

Penang is among the states in Malaysia that has set its own minimum floor price for overseas buyers of RM1 million on the mainland and RM2 million on the island.

Chang also suggested that the government limit foreigners’ purchases to only leasehold property, as freehold property should only be for Malaysians.

"If it is a leasehold property, when the lease gets shorter, the value of the property becomes lower. So, if the government wishes to acquire such property upon the expiry of the lease, or even before it expires, then the government will not be burdened with having to pay so much compensation to those in possession of the property.

"We should prohibit them from buying freehold as well as residential landed properties because landed properties, such as those in Kajang or Semenyih, are already priced between RM750,000 and RM950,000 for a double-storey terrace house, and for a bungalow, the price is about RM2 million.

"So do not deprive Malaysians of opportunities to buy landed property for long-term investment and to shelter their family,” Chang said.

Real Estate and Housing Developers’ Association Malaysia (Rehda) said in September that sales performance has been on a subdued mode for the past one and a half years, with not only the number of participants shrinking, but also the value of properties showcased and sold going down significantly.

Unsold units also increased from 64% in the second half of 2014 to 78% during the first half of 2015, Rehda said.

"Unreleased Bumiputera lots and end-financing/loan rejection problems are the top reasons for the unsold units,” Rehda said, adding however, that indications were that the situation was still manageable.

Rehda also noted that strata units dominated the launches as apartments and condominiums recorded the most type launched in the first half of 2015 compared with landed units, which saw a reduction.

Rehda also said launches of strata properties were mainly in Penang, Selangor and Kuala Lumpur.

“Half of the units launched were priced below RM500,000 and it was also observed that launches of properties below RM200,000 were on the rise. Most states were retaining their prices except for Penang, Johor and Kelantan," it said.

HBA, meanwhile, also suggested that the government scrap the proposal to set up a Housing Guarantee Corporation (HGS), whose objective was to protect buyers and housing developers in the event of abandonment of housing projects by developers.

"Housing Guarantee Corporation (HGC) is akin to guaranteeing developers’ profit. The setting up of the HGC will be seen as a “licence” for developers to recklessly launch new housing projects in huge volumes regardless of their viability,” HBA said in its recommendation, adding that developers would know that they could abandon projects should things turn bad.

"The government should not waste its resources to formulate a HGS purportedly to ‘save’ house buyers,” the association said.

HBA also called for the proper implementation of Perumahan Rakyat 1Malaysia (PR1MA) and reminded the government of its promise on the "Build then Sell 10:90" concept, which was supposed to have been made mandatory this year.

Under the BTS 10:90 system, house buyers only need to fork out the initial down payment of 10% when booking a house, and do not need to make any further payment until the vacant possession of the property is delivered to them, upon which the balance 90% is payable. – The Malaysian Insider