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Mah Sing Group Berhad’s budget 2022 wishlist


Mah Sing’s Founder and Group Managing Director, Tan Sri Dato’ Sri Leong Hoy Kum

13 SEPTEMBER – 2021 marks the second year of the ongoing COVID-19 pandemic, which has influenced a change in the lifestyle for all walks of life. We are certainly grateful for the government’s commitment in mitigating the economic impact caused by the pandemic via the introduction of various well-rounded aid and stimulus packages.

Nonetheless, the property sector has experienced a challenging year with the lockdown and economic uncertainties. The demand for affordable and people-centric homes remain resilient as homes are now perceived as a shelter to not only keep our family safe, but double as a working space as well as an area for leisure activities with family. However, end financing for housing is difficult to secure, especially for the M40 and B40 who are deeply impacted during this pandemic due to job insecurities and income reduction. Apart from that, the inflationary pressure also increases the cost of building homes and as a result, this will pose more challenges to the younger generation and first-time home buyers in owning their homes.

We hope the government could introduce additional initiatives to ease the home ownership journey for first-time home buyers and expedite the recovery of the property industry. This will lead to a wider impact on the overall economy as the property industry has a critical multiplier effect on more than 140 industries. As part of the effort to drive more activities in the property segment, we hope that the Government will consider the following: 

1. Enhanced Measures to Ease Home Ownership for First Time Home Buyers

We hope the government could offer additional measures targeting first-time homebuyers, specifically in home financing to boost home ownership. This includes reinstating maximum loan tenure to 40 years; referring to gross income rather than net income for loan applications; higher debt service ratio; and setting higher margin of financing up to 100% for first property to help the M40 and B40 groups who are affected during the pandemic.

We also hope the government can consider the possibility of implementing the Developer Interest Bearing Scheme (DIBS) for first-time home buyers, as this allows them to have the option to not service their loan interest and rentals at the same time during construction period.

Additionally, we propose the government to grant the extension of Home Ownership Campaign (HOC) for another year, as the campaign has been proven to be vital in helping home buyers to secure their home while reducing the housing overhang situation since it was launched.

2. Exemption of Real Property Gains Tax (RPGT)

The PENJANA stimulus package has currently offered the RPGT exemption from 1 June 2020 to 31 December 2021, whereby RPGT is exempted for three residential properties per individual. This initiative is well-received by the market as it could encourage upgrades of homes and boost both the primary and secondary property markets.

However, the re-imposition of RPGT on properties sold after five years after the duration will possibly dampen the secondary residential property segment recovery and discourage long-term investment. We hope the government could consider terminating the RPGT on properties sold after five years as an impetus to boost the secondary market. This will also indirectly improve the home buyers’ sentiment in property purchase.

3. Reduce Compliance Cost

According to the Real Estate and Housing Developers’ Association Malaysia (REHDA) survey, compliance cost remains the most significant factor affecting developers’ cash flow in 2H2020, as the increase in compliance costs is due to the SOPs required by the government under the new norm, including the Worker’s Minimum Standards of Housing and Amenities Act 1990 (Act 446). Adding to the higher cost of doing business also includes inflation in building materials costs such as steel bar prices.

In line with the government’s aspiration to reduce the house price to benefit the home buyers, we hope that the government could review and reduce the compliance cost, including allowing the capital outlay for private utility companies to be borne by respective asset owners so that savings can be passed on to buyers.  

4. Reduce Minimum Threshold for Foreign Property Ownership to RM600,000

The current minimum threshold for foreign property ownership varies according to states. We hope that the government can review and standardise the minimum threshold to RM600,000 across all states, especially in the areas with high overhang such as Klang Valley, Johor and Penang. With the current currency rate, it will attract foreigners to invest in tangible investments and this will help to reduce the property overhang.

5. Review Malaysia My Second Home Programme’s (MM2H) New Criteria

We welcome the government’s effort in reactivating the MM2H, but the stringent new rules might pose a challenge to the foreigners who are interested to choose Malaysia as their second home.

We would like to propose to the government to consider imposing more lenient conditions to retain the current MM2H pass holders, and continue to be more competitive among our neighbouring countries in encouraging more eligible foreigners to choose to stay and invest in Malaysia. Echoing the recommendations from various industries and associations, we are hopeful for the below proposal to be considered:

  • Lower the qualifying minimum income, liquid assets, and fixed deposits instead of a drastic increase currently.
  • Impose different classes of applications, tailored for various foreign applicants.
  • All existing MM2H pass holders should not be affected by the new rules.
  • The duration of the MM2H pass shall remain at 10 years.

6. Incentives for Developments Incorporating Green Features

Some green initiatives were introduced by the government, advocating sustainable developments in Budget 2021. These initiatives can be continued and enhanced to cultivate the importance of developing green buildings. We hope the government can consider to provide small grants to developers, encouraging the industry players to incorporate more green features into the development and to use renewable energy such as solar panels. These measures will collectively help to address the climate change issue in a long run.

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