Home Ownership Campaign (HOC) reintroduced & extended until 2021! Here’s what homebuyers should know

*This article was updated on 5 June 2020.

As announced by PM Tan Sri Muhyiddin Yassin during the short-term economic recovery plan (PENJANA) briefing on 5 June, the government will be reintroducing the HOC. Malaysians who are looking to buy a new residential property have until 31 May 2021 to take advantage of stamp duty exemptions. 

© Lane Oatey / Blue Jean Images | Getty Images

In an effort to stimulate the property market and provide financial relief to home buyers following the Covid-19 outbreak, the government will be bringing back the nation-wide Home Ownership Campaign (HOC) which features significant stamp duty exemptions on Instrument of Transfer and Instrument on Loan Agreement.

This campaign would serve as a much-needed catalyst to boost the housing market in the coming year – Numerous industries, property included was at a near standstill as Malaysians across the country religiously practise social distancing during the MCO and CMCO period. The stamp duty holidays under the HOC coupled with the lower interest rates announced by Bank Negara Malaysia in May 2020 will help spur homeownership as we continue to battle the effects of the Coronavirus pandemic.

Here are a few things you should know about the HOC:

1. What is the Home Ownership Campaign (HOC)?

The government first unveiled the Home Ownership Campaign (HOC) as one of the housing initiatives under Budget 2019. The campaign was launched in January 2019 and was originally supposed to end on 30 June, but due to high demand, the government approved REHDA’s appeal to extend the HOC for another six months until December 31, 2019. Six months down the road, the HOC has been reintroduced in response to Covid-19 and will now run from 1 June 2020 until 31 May 2021.

The HOC was a joint effort by the Housing and local government ministry (KPKT) and the Real Estate and Housing Developers’ Association (REHDA) Malaysia. 

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The main focus of the HOC according to Minister of Housing and Local Government (KPKT) YB Zuraida Kamaruddin, was to assist aspiring homeowners in getting a leg up on the property ladder. Besides that, it hoped to alleviate the ongoing glut of unsold properties in the market, thus killing two birds with one stone. The HOC did contribute towards bringing down overhang property stock – According to NAPIC’s Property Market Report 2019, the number of overhang residential properties in Malaysia decreased for the first time after 4 years; by 5.1% in 2019!

2. What are the HOC’s terms & conditions?

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(A) HOC only applies for properties sold between 1 June 2020 and 31 May 2021.

(B) It is open to all Malaysian purchasers, with no limit to the number of purchases. The current 70% margin of financing limit applicable for the third housing loan onwards for properties valued at RM600,000 and above will also be lifted during the HOC, subject to internal risk management practices of financial institutions.

(C) Only residential properties in the primary market (homes that have been launched or completed) – This means only new residential properties purchased directly from developers with APDL (Advertising Permit and Developer License).

(D) 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, do not qualify.

(E) Properties for sale in:

  • Peninsular Malaysia, must be registered with REHDA Malaysia.
  • Sabah, must be registered with Sabah Housing and Real Estate Developers Association (SHAREDA)
  • Sarawak, must be registered with Sarawak Housing and Real Estate Developers’ Association (SHEDA)

(F) Service apartments must be for residential use only and cannot be converted for commercial activities.

READ:  BNM reduces Overnight Policy Rate (OPR) to 2% due to Covid-19. How will it affect your home loan?

3. How does the HOC benefit homebuyers?

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© Tinnakorn Jorruang | 123rf

  • There is a full stamp duty exemption (on the Memorandum of Transfer & SPA) for homes that are priced between RM300,001 and RM1million. Homes that are valued at less than RM300,000 do not qualify for the exemption.
  • Properties that fall in the RM1million -RM2.5 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 charge on your loan agreement are also fully exempted – this applies for properties priced from RM300,00 to RM2.5 million.
  • Homebuyers 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. 

NOTE: 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. 

It’s pretty obvious that buying a home under the HOC will save you quite a bit of money. Previously, homebuyers 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 up to 17 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?

(A) Under the previous campaign period (up to 31 December 2019), those who purchase a property and sign the SPA by 31 December 2019 but only get their SPA stamped in January 2020 (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 15 November 2019 and submits the necessary documents for certification by 15 January 2020.

As the HOC site has yet to be updated, we would assume that the same condition applies under the new campaign period – you would still be eligible for the stamp duty exemptions even if your SPA gets stamped in July 2021. 

(B) It was previously 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.

(C) A developer is allowed to offer the 10% discount to purchasers prior to registering a project with REHDA for HOC.  However, the developer must ensure that the sold unit(s) are registered once the registration process begins and that the SPA is signed within the campaign period.

(D) The Finance Ministry would take action if it were to receive any report from developers on housing loan applications being rejected without strong justifications. 

5. How do I purchase a house under the HOC?

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© maroke | Getty Images

Previously under HOC 2019, multiple expos were held around the country for developers to showcase their residential properties under one roof. The flagship HOC expo for Klang Valley held in March 2019 attracted 43,000 visitors and recorded RM285 million in home bookings. 

Since the campaign revival has just been announced, upcoming expos for HOC 2020 have yet to be announced. According to the official HOC website, details of the new campaign will be updated upon the official release of a Government Gazette.

Do watch this space for further updates on the campaign and check out our other property guide articles in the meantime!

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