Those who are looking to buy a new home have until 30 June 2019 to take advantage of the HOC 2019 special property deals and purchase exemptions.
The HOC has been reintroduced and extended to 31 May 2020 – Refer here for an updated version of the article.
At the risk of sounding like a broken record, it is a wide-known fact that many young working adults in Malaysia are struggling to afford a residential property as they are priced way above the market. Homes are getting more expensive, especially in urban areas and the growth in household incomes is dismal, to say the least.
Thus, it is hardly surprising that there is a stunning amount of new-launch property units being left unsold. According to the Malaysian Property Market 2018 Report, which was recently released by the National Property Information Centre, the number of overhang units in 2018 rose by 30.7% to 32,313 units from the previous year.
For those who are unfamiliar with the term “overhang property”, it is defined as a completed residential unit which has remained unsold or has been on the market for at least nine months. In light of this situation, the government has introduced the Home Ownership Campaign (HOC) 2019, which was unveiled earlier this year as one of the housing initiatives under Budget 2019.
1. What is HOC 2019?
The HOC was first announced by Finance Minister YB Lim Guan Eng during the tabling of Budget 2019 at the end of last year. It is a joint effort by the Housing and local government ministry (KPKT) and Real Estate and Housing Developers’ Association (REHDA) Malaysia.
The main focus of the HOC according to the Minister of Housing and Local Government (KPKT) YB Zuraida Kamaruddin, is to assist aspiring homeowners in getting a leg up on the property ladder. Besides that, it would also help alleviate the current glut of unsold properties in the market, thus killing two birds with one stone.
2. What are HOC 2019’s terms & conditions?
- HOC 2019 only applies for properties sold between 1 January and 30 June 2019.
- It is open to all Malaysian purchasers, with no limit to the number of purchases.
- Only residential properties in the primary market (homes that have been launched or completed) are eligible for the exemptions and incentives under the program. This means only new residential properties purchased directly from developers with APDL (Advertising Permit and Developer License)
- Homes in the secondary market, such as those purchased from a friend, family member or any other person that has previously bought the home from a developer, does not qualify.
- Properties for sale in Peninsular Malaysia must be registered with REHDA Malaysia. Meanwhile, those in East Malaysia must be registered with Sabah Housing and Real Estate Developers Association (SHAREDA) and Sarawak Housing and Real Estate Developers’ Association (SHEDA), respectively.
- Service apartments must be for residential use only and cannot be converted for commercial activities.
3. How does HOC 2019 benefit you?
- There is a stamp duty exemption (on the Memorandum of Transfer) for homes that are priced between RM300,001 and RM1 million. Homes that are valued at less than RM300,000 do not qualify for the exemption.
- Properties that fall in the RM1-2.5 million price range will be subject to a reduced stamp duty of 3%, where the 3% stamp duty will only be imposed on the balance amount after RM1 million. For instance, if the property price is RM1.5 million, the 3% fee is imposed only on RM500,000.
- The 0.5% stamp duty charges on your loan agreement is also exempted – this applies for properties up to RM2.5 million.
- Home buyers will get to enjoy a (minimum) additional 10% discount on the purchase price – This discount must be reflected in the Sales & Purchase Agreement (SPA). Property developers are required to offer at least a 10% discount for their residential projects in order to register their development(s) under the HOC. The discount is given based on approved APDL pricing. For properties where the APDL is no longer valid (for projects that have already obtained CCC), the 10% discount is based on selling price.
MORE: Latest stamp duty charges & 6 other costs to consider before buying a house in 2019
It’s pretty obvious that buying a home under the HOC will save you quite a bit of money. Previously, home buyers had to pay a stamp duty of 1% for the first RM100,000 on a home, 2% for the next RM100,001 to RM500,000 and 3% for the subsequent RM500,001 to RM1 million. At first glance, this might not seem like much.
However, let’s say you were to buy a home worth RM500,000, the stamp duty charges that you would have to pay amounts to:
= {(0.01 × 100k) + (0.02 × 400k) } + 0.5% of loan amount (90% of RM500k)
= RM1,000 + RM8,000 + RM2,250
= RM11,250
Let’s not forget about the 10% discount that developers are required to offer as well. Previously, if you were to buy the property you have your eye on, it would’ve cost you RM511,250 inclusive of stamp duties.
But with the HOC, you could get it for only RM450,000. You’re looking at savings of RM61,250. That’s more than enough to cover the cost of a brand new mid-range car! To put things in perspective, the 2019 Perodua Myvi (1.5L) is going for RM50,290.
Before you start hunting for your dream home, make sure to find out what is the maximum amount that you can borrow from various banks across Malaysia. You can do this easily via the iProperty’s Home Loan Eligibility Tool also known as LoanCare in just three easy steps.
4. What should I take note of in HOC 2019?
- Those who purchase a property and sign the SPA by June 30 2019 but only get their SPA stamped in July 2019 (typically, the deadline for stamping the SPA is one month after it is signed) will still be eligible for the stamp duties exemptions on MOT & SPA and on Loan Agreement. This is provided that the developer registers the residential unit by Wednesday, 19 June 2019 and submits the necessary documents for certification by Monday, 15 July 2019.
- It has been reported in the media that some of the projects being marketed under the HOC have yet to be launched – homebuyers should practise caution in identifying these as the 10% discount will then not apply for these projects.
- Purchasers of homes under the HOC are not required to pay any sort of fee either by the developer, REHDA or the Government. Only developers are imposed with the registration and certification fees.
5. How do I purchase a house under HOC?
In conjunction with the HOC, multiple expos have been held around the country for developers to showcase their residential properties under one roof.
Prospective home buyers are encouraged to attend the upcoming expos to scout for potential homes:
- KLANG VALLEY: One Utama Shopping Centre, KL (12-16 June 2019)
- SARAWAK: C0mmence Square Mall, Bintulu ( 10-12 May 2019)
Even if you had missed the previous expos, you can check out what are the available properties being marketed under the HOC in the respective states here and contact the developers yourself.
REHDA is targeting RM3 billion in sales for HOC 2019 and so far they seem to be on track. The flagship HOC expo for Klang Valley held in March 2019 attracted 43,000 visitors and recorded RM285 million in home bookings. It is also promising to note that during the latest HOC expo in April 2019, Finance Minister Lim Guan Eng said that the ministry would take action if it were to receive any report from developers on housing loan applications being rejected without strong justifications.
Some developers are calling for the HOC 2019 to be extended to the end of the year. Do look out for news in the media for further updates on the campaign. Happy home hunting!
This article was updated on 12 June 2019 to better reflect the benefits of the HOC 2019, based on input from REHDA.
Edited by Reena Kaur Bhatt