Budget 2016: Wish List

Budget 2016: Wish List

Two questions were put forward to them:

1. If you could have your way, what property-related regulation would you add or amend in the Budget 2016?

2. What would be on your Budget 2016 Wish List? Please name three.

1. Warrick Singh Director of Business Development/Training of Asian Land Realty


• Land used for commercial, industrial and development purposes should be exempted from GST.

• Place ‘mega projects’ in remission and utilize the allocated funds for affordable housing instead.

• Provision of free public transport to the masses.

When amending the existing legislation, it is vital that the government ascertains that it is not looking backwards or retrospective in nature. This is because it would be extremely unfair to come up with a new legislation that is retrospective for property investors (rather than home owners) who had been convinced or majorly influenced by ‘goodies’ such as the zero down, furniture packages, and the Developer Interest Bearing Scheme (DIBS). It would be against the “very grain” of what had motivated the purchaser or more accurately, the ‘flipping investor’ to have made the acquisition in the first place. Continuing on this note, I find it unreasonable that Bumiputras are only allowed to sell their property to fellow Bumis. As there are numerous circumstances where it can be difficult to sell off due to the ‘narrowed’ market, I suggest that certain concessions be made in the event of genuine circumstances. In the event that the authorities feel otherwise as from the perspective of social obligations, then by all means so be it, but perhaps a middle ground could be achieved by allowing for a “transit corporation” to absorb these units and play the role of the investor.

2. Miichael Yeoh CEO and Founder, GM Training Academy PLT


• Bring back DIBS for low to medium cost properties for first home buyers.

• Reduce GST and improve on the taxation system.

• Government follows through what have been tabled in the Budget.

I have always supported the affordable housing agenda (low to medium cost properties). However, the implementation of new rules and tightening of policies on loans by Bank Negara Malaysia, have particularly affected those who fall under this housing bracket, attested by the surge in loan rejections. I would love to see the banks relaxing home loan approvals for first time home-buyers, as it would be unfair to place rigid caveats on those who are needy. Also, I hope that the government would consider amending the current policy to favor the low to medium income earners group. One way is to bring back the DIBS for first time buyers who fall within this category as it will definitely help in reducing their burden. Developers would benefit as well from the pickup of the market slump.


3.Khalil Adis iProperty.com Brand Ambassador (Iskandar Malaysia) property speaker and author


• Cash rebates and vouchers for basic necessities, ie: groceries and milk products.

• Refurbishment and beautification of Kuala Lumpur.

• Tackle the root cause of the homeless and poor across Malaysia.

Additionally, property policies should be tweaked to factor in affordability rather than placing a blanket policy of minimum purchase price for foreigners. This is because it will have an impact on the resale market should foreigners wish to sell the properties in the future. The current minimum purchase price of RM1 million, while on hindsight, functions well to protect locals from soaring property prices, does not take into consideration should foreign investors wish to sell their properties. The majority of Malaysians have a budget of less than RM500,000, making it difficult for said foreigners to sell their properties to locals. A revised policy that takes into account affordability will result in a more favorable outcome. For example, in Singapore, foreigners can purchase properties with no minimum purchase price. As they tend to have a bigger budget, they would usually purchase properties in prime areas, leaving the less desirable areas to the locals. Such policy could work in Malaysia whereby rich locals and foreigners can purchase in prime areas, leaving the rest of the market to locals. This market driven policy, in my opinion will be more effective.


4. James Chua Executive Director, GreenRe


• Easy access to housing loans to encourage good debt among the public.

• Bigger budget allocation for the prevention of severe floods (in light of recent climate change scenarios).

• Push for sustainable development in Malaysia by encouraging all new developments to adopt the green passive (solar) design which ultimately makes a building more energy self-sufficient.

5. Boo Khuan Khoo Full Time Property Investor & Author of “The 9 to 5 Property Millionaire”


• Further investment into public transportation to increase connectivity and capacity especially in the Klang Valley.

• Reduction of GST rate by at least 3%.

• Investment and incentives for financial education. In lieu of the current slow market, the government should lend a helping hand to the first time home buyers. In my opinion, it would be reasonable to introduce a RPGT exemption for individual property owners if the property is sold to a first time home buyer. On top of that, the current severe policy have tight-cornered sellers to further mark-up their asking prices to “cover” the reduced earnings that is used to pay off RPGT. In addition, incentives should be given to landlords to encourage them to rent out their properties instead of selling it for profit. One suggestion is to include more tax incentives (ie. more deductions/exemptions) for landlords. This would in return produce a domino effect of there being more properties up for rent, a boon for those who are not yet financially able to purchase their own home, especially in city centres.


6. Ikhram Merican Investment Property Analyst & Property Analyst


• Government should target the delivery of more affordable homes.

• Scrap the RM200 monthly financial assistance for loan repayments and introduce a first home owner grant of up to RM30,000 instead.

• Take into consideration the diverse average values in different cities or states for the 50% stamp duty exemption.

If I could have my way, I would amend the regulation for foreign ownership of properties to make it more attractive. I would start by imparting the same RPGT treatment for foreigners as it is for the locals, with the exception for after the 5th year, they pay a 5% RPGT (whereas citizens pay 0%). If the RPGT rates for citizens are deemed enough to curb speculation, then the same rates levied on non-citizens can be expected to carry the same effect. The current 30% RPGT for foreigners in the first 5 years is too restrictive and discourages foreign ownership of property. I would also reduce the minimum purchase price for foreigners from the existing RM1,000,000 to RM700,000. There are plenty of properties in areas like Mont Kiara and KLCC where the price is under RM1,000,000. The majority of Malaysians are not interested to stay in these areas, but foreigners who favor these locations are hindered to purchase such properties. The government should make it conducive for areas like the Greater KL to become more cosmopolitan. The economic benefits will be significantly superior to the policies to bring in millions of low-skilled workers who do not contribute much to the economic output.


7. Dato’ Sri (Dr) Vincent Tiew Managing Director of Andaman Group


• Remove RPGT as it would encourage a more competitive market

• Banks should restrategise their end-financing facilities.

Bank Negara Malaysia’s (BNM) step in implementing cooling measures such as the loan-to-value (LTV) ratio and tighter loan requirements is laudable. However, I feel that the RPGT should be removed as it is a discouraging factor that disrupts primary and secondary market profits. Once buyers have been approved of a loan from banks, is it not proof enough that they are capable of servicing the loan? It will be more encouraging for the buyer to sell off properties at a more reasonable price, as they would not factor in the “additional cost of RPGT”. This in turn encourages secondary buyers to enter the market, thus adding much-needed vibrancy to it. Also, I feel that the banks have been too aggressive in allocating end-financing. The number of loans given out to potential buyers for each development project should be increased. I feel that BNM should encourage banks to loosen or open up their facilities. The government should see through the affordable housing agenda. Announcing that the government will be building affordable housing is not the end of the line. The low to medium income group should be able to buy them in the first place. How are they going to own these ‘affordable homes’ if they do not receive the much-required loans from banks? Put simply, banks should be giving out loans to those who truly need it especially those who are qualified for affordable homes.

8. David Chong Vice President, Malaysia Property Incorporated


• Restructure the Youth Housing Scheme to be more relevant.

The property market is experiencing a strong demand from first time homebuyers. However, the challenges standing in the way are affordability (e.g. below RM500,000.00 in Greater KL) and getting the right financing based on their current income bracket. I personally believe that the previous Youth Housing Scheme in Budget 2015 held a lot of promise but it was slightly restrictive in its application. My suggestion would be for it to be applicable to any purchase from any developer, for the first-time homebuyers of married couples only, with joint household income of RM10,000 and below and no maximum age restriction imposed. The applicants should also receive a 100% stamp duty exemption on transfer instrument and loan documentation. In addition, the government could provide the additional guarantee of 10% to enable purchasers to obtain 100% loan for any residential property priced below RM550,000. This is to encourage young families to hop on the property ladder particularly as many find it arduous to come up with a large down payment. This also motivates developers to build more housing in the ‘targeted’ sector.

9. Richard Oon Managing Director, ConsulNet Tax Services Sdn Bhd


• Tax allowance for buildings used for commercial purposes.

Currently, a building which is used as an industrial building, either by the owner for his business (eg. as a factory, mill or workshop), or for rent to a tenant who then uses it as an industrial building, is entitled to claim, on the qualifying expenditure incurred on the building – a tax allowance know as industrial building allowance. This is a form of tax depreciation on the qualifying expenditure of the industrial building (excluding land), given as a deduction against adjusted income, over several years until fully depreciated. Unfortunately, this form of tax allowance is not extended to commercial properties. In view of the current sluggish property market where there is a glut of commercial properties, I sincerely hope that the laws will be modified to allow this equivalent form of tax allowance on commercial buildings in order to promote ownership of commercial properties.