The National House Buyers Association (HBA) share their thoughts on the recently announced property market incentives under Budget 2023 and raises several concerns regarding the success of these allocations.
UPDATE: Budget 2023 is currently put on a standstill as the Malaysian Parliament was dissolved on the 10th of October, just a few days after the budget tabling. The views represented here are based on the Budget tabled under the old government. A new Budget could be re-tabled after the general elections, GE-15 is held in November 2022.
HBA acknowledges the challenges faced by our Honourable Finance Minister Tengku Zafrul in tabling Budget 2023 given the aftershocks of the COVID-19 pandemic. These primarily affected the global and regional economies as well as the financial health of Malaysia.
Our comments and response to Budget 2023 on matters relating to the property sector are as follows:
1. 75% Stamp duty exemption on homes priced RM500,000 to RM 1 mil
Concern: Will the exemptions be extended to the subsale housing market?
Although the objective of the stamp duties discounts is to reactivate the property industry and also to spur economic growth, the measures appear to be not well thought out. We find it confounding – why is Malaysian taxpayers’ money being sacrificed to facilitate niche housing market buyers? Why are the exemptions mainly for the benefit of housing developers and do not include individual property owners/sellers?
The rakyat should remember that less collection of such stamp duties and revenues means that government expenditure is being paid from other tax sources.
Mind you, we are talking about property developers’ housing stocks – the completed but unsold properties. Why should the rest of the country subsidise these unsold products? Instead, the developers should be providing a higher percentage of discounts to prospective purchasers. It is elementary economics that when a product can’t sell, you sell it at a lower price in a soft market, especially in times of recovery, post Covid-19.
To the typical purchaser, there is no difference between buying a property of RM1 million with its stamp duties of RM24,000 waived by the government and buying the same property at RM976,000 from the developer and paying the RM24,000 stamp duties to the government. The adage “privatising profits and socialising losses” is most apt to describe this situation.
2. RM367 million allocation to build PPR homes for the benefit of 12,400 new residents
Concern: People’s Housing Projects or PPR should remain as transit homes for rental and should not be offered for sale or ownership, as many abuse its usage.
The PPR units are only temporary living quarters for Malaysians who are looking to purchase their own homes in future. These homes should only be rented out by the relevant agencies. The Government’s objective is for these transit homes to provide a temporary living place for those who want to save enough money before embarking on the journey to buy their own homes. Those who rent the PPR flats should not regard them as their permanent homes but merely as a temporary abode to shelter their family and to have a roof over their head.
PPR is for self-occupation and should not be allowed to sublet
The PPR flat tenants are supposed to self-occupy until they improve in their social standing. Upon this, they should move out and allow those on the ‘waiting list’ to take over possession of said units. Those who flout the rules by subletting their units for obvious profit should be evicted and enforcement should be meted out without delay.
Many PPR residents act like landlords and sublet rooms to foreigners and singles who migrate from their villages to the big city. This practice has been going on for years but enforcement by the authorities is notoriously slow and sometimes thwarted by interference.
It is a betrayal of the purpose of building such PPR housing in the first place, which is to provide a roof for the poor. Why are these units being allowed to be taken advantage of by rent money seekers aka profiteers?
HBA has been calling for many years now – for the stricter enforcement of existing rules to ensure that low-cost housing and PPR flats are not rented out to third parties and instead allocated to the correct target group.
Means tests for prospective tenants & Exit policy for old PPR tenants
To ascertain whether one deserves to qualify for a PPR handout, a prospective tenant should go through a process of ‘means testing’ – which measures how much income a person has. This social welfare should be reviewed every 3 years by a committee within the housing agencies so that tenants do not overstay it will enable the incoming target families to take up gradually take up occupation of the existing units.
This is where enforcement must be strict so that those who are no longer eligible must give way to deserving Malaysians. Nevertheless, this should not be to the extent of ‘throwing them onto the streets”.
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3. Allocation of up to RM3.0 billion for the Housing Credit Guarantee Scheme (HCGS)
Concern: HCGS should be limited to first-time buyers only and cover subsale home purchases
HBA welcomes the announcement that the Government will allocate up to RM3 billion for the Housing Credit Guarantee Scheme to guarantee Housing Loans for those without a stable income to buy properties, including Malaysians in the Gig Economy. The Gig Economy has been a lifesaver to many of the Rakyat who lost their jobs during the pandemic and resorted to becoming ride-hailing drivers, food delivery riders and other forms of freelance work.
These employees are still economically productive and should have access to financing to buy assets such as their own residential property. However, their income may not be consistent and many lack the necessary documents that Banks typically require from fixed-income salaried employees.
This Guarantee Scheme would be very beneficial to the employees in the Gig Economy to buy their property. However, HBA hopes that this Housing Credit Guarantee Scheme will be limited to first-time home buyers and it should only cover affordable properties. Not forgetting, the financing scheme should be made available for the purchase of subsale homes (ie completed properties) and not restricted to the purchase of new launch properties (ie directly from property developers).
4. RM10 stamp duty for properties transferred between family members is a good move
HBA welcome this incentive of nominal stamp duty for the transfer of real property from parents to their off-springs (children). This will alleviate the financial burden on the parents having to bear stamp duties which can be saved for other purposes.
Check out the property initiatives announced last year under Budget 2022: 4 main property sector initiatives for Keluarga Malaysia