Malaysia Budget 2014 Highlights on Property Sector

Goods and Services Tax (GST)
Sale, purchase and rental of residential properties as well as selected financial services are exempted from GST.
Increasing Home Ownership
The recent sharp increase in the prices of houses has affected the ability of the rakyat to purchase houses. In addition, speculative activities have an impact on house prices and can adversely affect the real estate market in the long term.
To increase the ability of the rakyat to buy a house and ensure stable house prices, as well as to control excessive speculative activities, the Government will implement the following steps :

Review Real Property Gains Tax (RPGT).

For gains on properties disposed within the holding period of up to three years, RPGT rate is increased to 30%, whereas for disposals within the holding period up to four and five years, the rates are increased to 20% and 15%, respectively. For disposals made in the sixth and subsequent years, no RPGT is imposed on citizens, whereas companies are taxed at 5%.

For non-citizens, RPGT is imposed at 30% on the gains from properties disposed within the holding period of up to 5 years and for disposals in the sixth and subsequent years, RPGT is imposed at 5%.

Minimum Price For Foreigners

Increase the minimum price of property that can be purchased by foreigners from RM500,000 to RM1,000,000;

Price Transparency

Increase transparency in property sales price, where property developers will have to display detailed sales price including all benefits and incentives offered to buyers such as exemption of legal fees, stamp duty, sales agreements, cash rebates and free gifts; and

Developer Interest Bearing Scheme (DIBS)

Prohibit developers from implementing projects that have features of Developer Interest Bearing Scheme (DIBS), to prevent developers from incorporating interest rates on loans in house prices during the construction period. Therefore, financial institutions are prohibited from providing final funding for projects involved in the DIBS scheme.

To further increase access to home ownership at affordable prices, an estimated 223,000 units of new houses will be built by the Government and the private sector in 2014. The Government will allocate RM578mil to the National Housing Department (JPN) for the implementation of Program Perumahan Rakyat which involves the construction of 16,473 housing units. In addition, JPN will construct 600 units for Program Perumahan Rakyat Disewa and Perumahan Rakyat Bersepadu with an allocation of RM146mil.
PR1MA will provide 80,000 housing units with an allocation of RM1bil. The sales price of PR1MA houses are 20% lower than market prices. Meanwhile, SPNB will build 26,122 units of affordable houses, comprising 15,122 units of affordable houses, 3,000 units Rumah Idaman Rakyat and 8,000 units of Rumah Mesra Rakyat. The Government will introduce a new category of Rumah Mesra Rakyat, with sales price between RM45,000 and RM65,000 for which the Government will provide a subsidy between RM15,000 to RM20,000 per unit.
The Government will also introduce the Private Affordable Ownership Housing Scheme (MyHome) as a step to encourage the private sector to build more low and medium-cost houses. The scheme provides a subsidy of RM30,000 to the private developers for each unit built. Among the criteria for the scheme are:

• Build at least 20% low-cost houses and 20% medium-cost houses in a housing project;
• The maximum price of low-cost houses is RM45,000 and medium-cost houses is RM170,000;
• The minimum built-up area of low-cost houses is 800 square feet and the medium-cost houses, 1,000 square feet, with a minimum of 3 bedrooms and 2 bathrooms;
• Provide parking, surau, hall and recreational park; and
• Open to first-time buyers with a monthly household income of RM3,000 for low-cost houses and a maximum of RM6,000 for medium-cost houses.

Preference will be given to developers who build low and medium-cost houses in areas with high demand and limited to 10,000 units in 2014. The scheme is for housing projects approved effective from 1 January 2014 with an allocation of RM300mil under the supervision of Ministry of Urban Wellbeing, Housing and Local Government.
Currently, PR1MA housing projects, housing in newly opened areas and 1Malaysia Civil Servants’ Housing Programme are eligible to apply for grants at 10% of the project cost, from the Facilitation Fund. For 2014, the Government will provide a total of RM4bil to the Facilitation Fund as an initiative to promote private, high-strategic impact projects.
Of this, I propose that RM1bil is allocated to the Housing Facilitation Fund under Public Private Partnership Unit (UKAS). Developers who receive this grant must abide by the terms and conditions as well as the sales prices which are set by the Government.
The Government will also carry out a refurbishment program and improve comfort and beautify government-owned low-cost housing. Among the measures to be implemented include lift maintenance, repainting the house, cleaning up drains and landfill space and repair playgrounds.
To this end, a sum of RM100mil will be provided to 1Malaysia Maintenance Fund under the Ministry of Urban Well-being, Housing and Local Government. The Government will also allocate RM82mil to rehabilitate 20 abandoned housing projects involving 8,197 houses.
To further strengthen the real estate market and increase opportunities for the rakyat to own houses, the Government will implement a more effective and comprehensive approach. In this regard, I am pleased to propose the establishment of the National Housing Council to develop strategies and action plans in a holistic manner; coordinate legal aspects and property price mechanism; and ensure provision of homes in a more efficient and expeditious manner. The Council members will comprise Federal Agencies, State Governments, the National Housing Department, PR1MA, SPNB and the private sector.

Source: StarProperty.my