The Malaysian property market has been challenging since the arrival of Coronavirus or better known locally as Covid-19. This pandemic has definitely turned our lives around and it may take some time for us to fully recover from it. During the Movement Control Order (MCO), no one was allowed to step foot outside. That said, potential buyers were not able to view houses and real estate negotiators have been struggling to secure appointments. Just a year ago, 2019 was a successful year for the real estate industry when the government announced Home Ownership Campaign (HOC) as the total of transaction in 2019 was higher than 2018.
When the industry went downhill during the rise of Covid-19, the government introduced PENJANA and within this initiative, there are these 3 measures focused mainly on the property market:
- Home Ownership Campaign (HOC)
HOC is a campaign applicable for NEW residential properties purchased by Malaysians. Thus, this campaign is not applicable for secondary properties and developers who are looking to offer their properties under HOC 2020 are required to provide a minimum of 10% discounts while registering their projects with REHDA Malaysia (for Peninsular Malaysia) and SHEDA (for Sarawak) and SHAREDA (Sabah). Another great news is that all property transactions that fall under HOC 2020 will get stamp duty exemptions for instruments of transfer for properties priced from RM300,000 – RM2,500,000. However, the applicable stamp duty is up to RM1,000,000 only and the full exemptions are granted for loan agreements signed between 1st June 2020 until 31st May 2021.
- The lifting of Loan-To-Value (LTV) of 70% for 3rd property onwards
Banks can now approve up to 90% loan for the property loan even if the buyer has 2 properties before and is buying their 3rd property. However, this approval is subject to the banks’ own internal risk assessments and is applicable for new projects.
- Real Property Gains Tax (RPGT) exemption
With this new initiative, Malaysians who sell a property between 1st June 2020 to 31st December 2021 will receive RPGT exemption for any gains arising from the disposal. This exemption is exclusive for owners who wish to sell up to three of their properties only. This is a great news for investors who wish to sell their properties and acquire new ones.
According to The Edge Markets, ExaStrata Solutions Sdn Bhd chief real estate consultant and chief executive officer (CEO) Sr Adzman Shah Mohd Ariffin said the stamp duty exemption under the revived Home Ownership Campaign (HOC) would certainly boost the sales of new residential properties priced no more than RM2.5 milion. This will definitely to strengthen not only the real estate market but economic standing amid the pandemic.
HOC 2019 was a success when they were implemented last year as they’ve helped the industry to bloom. According to NST, HOC 2019 has sold more than 30,000 residential units developed by federal and state governments, and private developers, valued at a whopping RM 23.2 billion as at November 2019. This has surpassed the initial target of RM 17 billion. Many believe HOC 2020 will spur the most number of transactions as developers will have the opportunity to clear their current stocks. RPGT on the other hand caters to the secondary market as investors and sellers are able to save a lot of money since they do not have to pay the taxes. While with the lifting of LTV, buyers and investors will more likely to purchase their third property with ease. That being said, the future of the real estate market is looking very hopeful especially with the help from our government.
Source: https://www.theedgemarkets.com/article/property-buying-activities-increase-penjana-incentives-say-surveyors