The Malaysian Institute of Estate Agents (MIEA) recently called on the government to spur the secondary property market by reviewing incentives offered during the six-month National Home Ownership Campaign (HOC) HOC 2019 to be extended to first-time home buyers looking to purchase properties from the secondary market.
4 March, PETALING JAYA – A joint statement from the MIEA Board of Directors, calls on the government and stakeholders to weigh the importance to the secondary residential property market which makes up about 80% of all residential property transactions in the country, compared to around 20% of new properties or primary market – according to the National Property Information Centre (NAPIC). It is important that all parties recognize that the secondary market is the ‘bedrock’ of the property sector which sustains the real estate market and provides the thrust for its sustained growth.
MIEA is very appreciative of the fact that the Ministry of Finance has introduced new programmes to stimulate the primary market by focusing on first-time home buyers, however, it is critical that the door should not be closed to first-time property buyers by limiting incentives to only properties offered by developers. As such MIEA requests that the incentives offered to first time home buyers be extended to buyers in the secondary market.
There are significantly more varieties of homes at affordable prices for first-time home buyers within the secondary property market. Based on this premise, we should allow for the exemption of stamp duties to cover the purchase of homes within the secondary market by first-time buyers. This will also support the Government’s goal of encouraging homeownership in the secondary market.
MIEA proposes the following incentives for first time home buyers of secondary properties;
1) That stamp duty exemption on the instrument of transfer be extended from 1st January to 30th June 2019 for properties ranging from RM300,001 to RM1,000,000
2) Stamp duty exemption on the instrument of transfer for loans up to RM1,000,000 during the same period
The two biggest challenges in homeownership for first time home buyers are:
i) the ability to have enough funds to place a down payment and;
ii) Loan eligibility
In view of this, a mechanism of ‘Rent & Buy program’ should be set up for this category of purchasers through a special vehicle or through banks to help them in the two areas mentioned above. MIEA also requests Bank Negara to study and implement a fair and equitable loan approval and streamlined process for first-time buyers and/or set up a special revolving fund to fund these buyers.
This will allow for a shift in the dynamics of the property market, not only allowing for the disposal of ‘overhang’ properties but also unsold completed projects that are vacant. This will help further stabilize the property market.
For the property sector to grow we need a vibrant primary and secondary market and thus far the emphasis has only been on the new property market. MIEA is looking toward the government to also spur the secondary market which represents 80% of the total property market share. If the secondary market, the ‘bedrock of the property market’, performs well the primary market will also perform better, provided supply is monitored and controlled.
MIEA is confident that this will be akin to giving a much needed ‘injection’ to create new interest in the secondary market and will allow sellers of long-held residential properties to offload and in doing so they will, in turn, look at the new properties as an alternative choice of living; thus the proverbial ‘killing of two birds with one stone’.
MIEA also requests the Government to provide support to the real estate fraternity and real estate firms to modernize through technology and digitization. There are so many disruptions in the market by those unrelated to the real estate profession and our practitioners need to keep up with new technological advancements to support the efforts of the real estate industry. Real estate firms need support to develop the profession and MIEA proposes that a tax exemption is given to those who are keen to invest in digitization. Through these efforts, the profession would be able to modernize itself to be effective and efficient to benefit Malaysian property buyers.
MIEA hopes that their proposals can be considered at all levels and calls on the Ministry of Finance to engage with us on this matter.