Home Ownership Campaign (HOC) 2019 extended by another 6 months! Here’s what homebuyers should know

Malaysians who are looking to buy a new residential property have until 31 December 2019 to take advantage of special property deals and purchase exemptions under the nation-wide campaign. 

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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 (NAPIC), the number of overhang units in 2018 rose by 30.7% to 32,313 units from the previous year.

‘Overhang property’ 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. The campaign was originally supposed to end on 30 June.

1. What is the HOC 2019?

The HOC 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.

On June 30th, our Finance Minister, YB Lim Guan Eng announced that the government has approved REHDA’s appeal to extend the HOC for another six months from July 1, 2019 until December 31, 2019.

MORE: BNM reduces OPR to 3% – How will it affect your home loan?

2. What are the HOC 2019’s terms & conditions?

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(A) HOC 2019 only applies for properties sold between 1 January and 31 December 2019.

(B) It is open to all Malaysian purchasers, with no limit to the number of purchases.

(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.

3. How does the HOC 2019 benefit you?

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  • 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 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 charges on your loan agreement is also exempted – this applies for properties up 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 30th June), those who purchase a property and sign the SPA by 30 June 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.

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 January 2020. 

(B) 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.

(C) Finance Minister Lim Guan Eng has 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. 

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

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

Upcoming expos in H2 2019 have yet to be announced – in the meantime, you can check out what are the available properties being marketed under the HOC in the respective states here and contact the developers yourself.

Some of the projects under the HOC banner include:

Since the campaign extension have been announced, it is anticipated that more developers will be coming on board to market their housing products under the HOC.

Prospective home buyers are encouraged to attend the upcoming expos to scout for potential homes. Do look out for news in the media for further updates on the campaign and happy home hunting!

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