Vacancy tax possible answer to property glut issue

Khazanah Research's Theebalakhsmi said the vacancy tax could push developers and homeowners to start selling or renting their empty units to avoid paying the tax.

PETALING JAYA: The implementation of a vacancy tax could be a key factor in addressing the issue of vacant and unsold housing units across Malaysia.

Khazanah Research Institute’s Theebalakshmi Kunasekaran said this tax is imposed on housing units that remain unoccupied or unused for a certain time period.

It is usually calculated as a percentage of the gross selling price of these units, which means the higher priced housing units will have a greater corresponding tax amount.

She noted in a report the aim of this tax is to encourage developers to be more cautious when planning housing projects.

“They would be prompted to undertake a comprehensive feasibility study to analyse the local market demand and provide housing that caters to the diverse needs of different population segments.

“This can prevent oversupplying products that can contribute to the property glut,” she said.

According to Theebalakshmi, this tax will also discourage speculative activities by people who hold units to make quick profits.

Meanwhile, Theebalakhsmi said vacant units not only are left idle, but also impact resources and neighbourhoods in terms of development. She said when there are overhang units, there is less utilisation of public transport services which will place a strain on public resources.

“Additionally, the presence of unoccupied units can also lead to disinvestment in townships by discouraging property developers and businesses from investing in the neighbourhoods,” she said.

Theebalakhsmi concluded the vacancy tax will push developers and homeowners to start selling or renting their empty units to avoid paying the tax.

“Consequently, this will provide home buyers with access to affordable housing options as developers lower their price through ‘fire sales’ to clear the glut.”