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Pros and cons of buying a Home Ownership Campaign (HOC) property

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Still undecided on whether or not you should be purchasing a Home Ownership Campaign (HOC) property? With deadlines looming this December 2021, let us help you decide.

pros-and-cons-of-buying-a-hoc-property
© ake1150 | 123rf

With the pandemic bringing life to a standstill since last year, we’re sure many big plans you had were put on hold. If purchasing your first home was one of them, then the extended offer of the Home Ownership Campaign (HOC) should certainly be part of your consideration.

While you can aim to save a considerable amount of money when you purchase HOC property, is it actually worth getting? Below, we outline the pros and cons of buying HOC 2021 properties to help you better decide, before the deadline this December 2021.

pros-cons-hoc-property
© marctran | 123rf

What is the Home Ownership Campaign (HOC)?

You might be wondering: “What is HOC?” For the uninitiated, the Home Ownership Campaign (HOC) was first launched in 2019 and reintroduced in 2020 as a government effort to stimulate the property market and provide financial relief to home buyers. It was originally supposed to run from 1 June 2020 until 31 May 2021. Later on May 31st, it was announced that the HOC would extend for an additional six months, pushing the deadline to 31 December 2021.

The HOC is a joint effort between the Housing and Local Government ministry (KPKT) and the Real Estate and Housing Developers’ Association (REHDA) Malaysia to help aspiring homeowners get their first properties. They also hoped that this campaign would help clear out Malaysia’s property overhang, which registered up to RM41.5 billion back in 2019. This way, the HOC can benefit both parties: buyers enjoy financial incentives while developers get to sell off their properties.

Who is eligible to buy HOC property?

The HOC campaign is open to all Malaysian homebuyers with no limit to the number of purchases. It applies to properties sold between 1 June 2020 and 31 December 2021 in Peninsular Malaysia, but the properties must be registered with REHDA Malaysia; Sabah, with properties registered to Sabah Housing and Real Estate Developers Association (SHAREDA); and Sarawak, with properties registered to Sarawak Housing and Real Estate Developers’ Association (SHEDA)

who-is-eligible-to-buy-hoc-property
© deagreez | 123rf

What are the benefits of the HOC properties?

Financial benefits make up the bulk of benefits of purchasing a HOC property. These include:

  • A full stamp duty exemption on the Memorandum of Transfer (MOT) and Sale and Purchase Agreement (SPA) for homes priced between RM300,001 and RM1,000,000. Homes valued below RM300,000 do not qualify for the exemption.
  • Properties within the RM1,000,000 – RM2,500,000 price range will be subjected to a reduced stamp duty of 3%, which will only be imposed on the balance amount after RM1,000,000. For example, if the property is priced at RM1,500,000, the 3% fee is imposed on the following RM500,000.
  • The 0.5% stamp duty charge on your housing loan agreement will be fully exempted, applicable to properties priced from RM300,000 and RM2,500,000.
  • Homebuyers will enjoy an additional minimum of a 10% discount on the purchase price. This discount must be reflected in the Sale and Purchase Agreement (SPA).

Will the HOC 2021 be extended?

The HOC has been extended twice, with the current extension until 31 December 2021. There is no news as of press time indicating that there will be another extension.

Is HOC applicable to subsale properties?

No. Subsale properties are homes purchased in the secondary market, meaning that they are purchased from a friend, family member, or any other person that previously bought the property from a developer. These do not qualify for the HOC programme.

The HOC is only open to residential properties in the primary market, meaning homes that have either been launched or completed. These new residential properties must be purchased directly from developers with APDL.

hoc-property-malaysia
© fantasista | 123rf

Should I buy a HOC property?

If you’ve always wanted to buy your first home but never felt like you were financially ready, the HOC campaign will make it easier for you to achieve that dream. There are plenty of brand new housing projects located in convenient locations and trendy up-and-coming neighbourhoods that are eligible for the HOC campaign — if these tick your boxes, you should certainly consider buying a HOC property.

However, the grass isn’t always greener within the HOC property fences. You should also ask yourself why you want to purchase the property. If your intention is to convert a residential property into a commercial one in the future, then the HOC campaign is not applicable to you. If you prefer to reside in a mature neighbourhood instead of an up-and-coming one (which also has the possibility of turning out to be bad), perhaps consider a subsale property instead of a HOC property.

What are the pros and cons of a HOC property?

While the HOC campaign is a fantastic deal for aspiring homeowners, it also comes with some caveats. Before diving into a large investment, you should always understand the pros and cons that come with it.

Pros of buying a HOC property

Cons of buying a HOC property

You can get full stamp duty exemption for Instruments of Transfer (up to RM1,000,000).You can’t purchase subsale properties, hence you may miss out on living in a mature neighbourhood.
You can get partial stamp duty exemptions for Instruments of Transfer (RM1,000,000 to RM2,500,000). The HOC benefits are only applicable to newly-launched projects.
Enjoy full stamp duty exemption on the Instrument of Securing Loan (up to RM2,500,000).The HOC programme is only for residential properties and cannot be used for commercial purposes.
Enjoy a minimum 10% discount on the development’s purchasing price. If you’re buying a property for investment purposes under the HOC programme, you may need to wait longer to see returns.
The overnight Policy Rate (OPR) is at its lowest level of 1.75%.

What are the properties available under the HOC campaign?

Not sure where to begin shopping for possible properties that are eligible for the HOC campaign? Don’t worry, we’ve got you sorted. Here are some of the properties available in the Klang Valley, Johor, and Penang.

If you’ve been on the fence about purchasing a property under the HOC campaign, we hope this article will help you make a decision before the end of 2021. We want you to save as much money as possible when buying your first property, so here are more tips on purchasing a property at a minimal entry cost.

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