Budget measures seen as boosting property sales

Showing strong interest: The crowd at Mah Sing’s sales preview of M Centura. The developer held simultaneous previews of three projects in the Klang Valley, Penang island and Johor over the weekend.

PETALING JAYA: Several measures from Budget 2018 are expected to boost the property sector, which has seen slow sales in the last few years.

Besides adding more numbers to the list of affordable housing under the different agencies, for the first time in 60 years, the Government has proposed a 50% tax exemption on rental income not exceeding RM2,000 per month from the 2018 to 2020 assessment. The Government has proposed the Residential Rental Act.

The proposed legislation and the rental tax exemption are significant. They underscore the division of the residential property sector into three areas, namely home ownership, residential investment and the speculative market.

Home ownership is highly-valued in Asia, said property consultancy group Khong & Jaafar group managing director Elvin Fernandez.

“Home ownership takes precedence over many economic and social issues unlike Western democracies,” said Fernandez.

“It is not a case of because you cannot afford to buy a house therefore, you rent it,” he said.

Singapore has forwarded this concept of home ownership during the tenure of its Prime Minister the late Lee Kuan Yew and today the city-state has a home ownership rate of about 90%, according to the Singapore statistics department.

The HDB housing makes up the bulk of the market, at 80%, the remaining 20% are private housing.

The association of valuers, property managers, estate agents and property consultants in the private sector, Malaysia budget committee chairman James Wong said there is the concept of house-owning democracy and Malaysia is one of them.

“The proposed Act will promote the growth of the rental market compared with home ownership,” said Wong.

The second significant measure is the proposed extension of the financing scheme introduced by PR1MA to private sector developers, subject to certain criteria.

The extension of this scheme underscores the Government’s encouragement of having more affordable homes being constructed.

The objective of this PR1MA scheme was to help buyers who have financing issues by using some of their contribution under the Employers Provident Fund.

When this scheme was introduced in October 2016, private developers wanted to be included. Their rationale was they too were mandated by the Government to build affordable homes.

Mah Sing group, who prides itself as Malaysia’s leading developer for affordable housing, was euphoric.

The private developer held three simultaneous previews of three projects located in the Klang Valley, Penang island and Johor.

Mah Sing’s group managing director Tan Sri Leong Hoy Kum said buyers have showed interest on an average of 95% on all the projects by placing an earnest deposit.

Leong said judging from the response, the budget has “revived sentiments and confidence in the market.”

Prices begin from less than RM350,000 for M Centura in the Klang Valley and M Vista@ Southbay, Penang. Both are high-rise residential projects while Fern in Meridin East, Johor are landed units with prices starting from slightly more than RM400,000.

“We also would like to applaud the Government’s commitment in enhancing education by providing higher allocation in Budget 2018 for the education sector as well as approving the construction of 10 more schools in Johor and Selangor. In fact, one of the schools, SJK (C) Sim Mow Yu will be built in our Meridin East township,” Leong said.

The third measure aimed to open up property ownership among the civil service.

Under this proposal, the Public Sector Home Financing Board (Lembaga Pembiayaan Perumahan Sektor Awam) which is under the Finance Ministry, is allowed to finance properties constructed on waqf or land donated for Islamic religious or charitable, benevolent purposes.

The budget also allowed the Public Sector Home Financing Board to “have joint-loan for husband and wife or child with a condition that all applicants must be public servants.”

The board also “allows joint-home financing between husband and wife or child, with a condition at least one of the applicants is a public servant.”

“The non-public servant needs to secure loans from the financial institutions or agencies that provide financing facilities who agree to be the second mortgage holder,” according to the budget.

CBRE|WTW director Heng Kiang Hai said the measures proposed under the Public Sector Housing Board would help to boost home ownership among the civil service extensively.

“This will effectively lower the barrier and/or increase the loan amount eligibility of civil servants, thereby making affordable a higher range of houses for this group,” Heng said.

CBRE|WTW managing director Foo Gee Jen said the move would help the young people in the civil service because they can now depend on their father or mother to have a joint loan.

As for the party who is not in the civil service, the question is which commercial bank will agree to be the second mortgage holder. The commercial bank may impose a higher rate of interest to commensurate the risk, according to Foo.


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