Consult us, say developers

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  • Wednesday, 20 May 2015

Tiew: ‘The trust fund is directly taxing the developers and the cost will be passed on to property buyers’

DEVELOPERS want to be consulted before the government imposes any new ruling which can further push up property prices.

They said any unilateral decision would not be good for the sector which is already facing a lot of challenges.

They cited the development charge which was fixed at 25% effective January and subsequently reduced to 10% following complaints by developers as an example.

It is 10% on the difference in the value of the land after it gets approval from the local government for development.

(The original land value will increase after it gets approval for development).

Chan: ‘Trust fund is a new concept to developers in Perak’
Chan: ‘Trust fund is a new concept to developers in Perak’

In the spotlight now is another additional contribution from the developer to the state government — the Bumiputera Real Estate Trust Fund (Tabung Akaun Amanah Hartanah Bumiputera).

In order for developers to secure a release for bumiputra lots, they have to pay 5% of the lot’s selling price to the trust fund if the unit is priced below RM350,000.

It is 7% for units priced above RM350,000 each.

At a dialogue with the Real Estate and Housing Developers Association (Redha) recently, Perak executive councillor Datuk Dr Mah Hang Soon said the trust fund was set up to take care of the needy and underpriviledged who needed shelter.

According to him, proceeds from the contribution would be channelled to the trust fund and used to build houses under the Skim Rumah Insan Amanjaya (SRIA).

Kaizen Holdings Sdn Bhd chief executive officer Dr Tan Chin Yong said the trust fund was an additional cost to the business and would be passed on to the buyers.

Dr Tan said he hoped the state government would include the developers in their meetings when deciding on imposing additional costs on developers.

“They make decisions without having discussions with us (developers),” he said.

On whether the trust fund is a form of corporate social responsibility (CSR), Dr Tan said the taxes paid to the government should suffice, as it could also be used to build homes for the needy.

“Developers are not against contributing to the trust fund. It is just the timing of its implementation,” he said, adding that it would be another blow to deal with given the current sluggish market and challenging economic situation.

”While I have no problems contributing to the trust fund, I hope it will really benefit the needy.

“There are no guidelines on how things are done, who will manage the fund, what is the mechanism or the criteria for the people to benefit from the fund,” Total Investment executive director John Chong said

Apart from that, Chong said the trust fund ruling would also push up the prices of properties.

He pointed out that developers were already paying a lot of fees to the authorities, including the planning fee, hoarding fee and submission fee.

“All these costs will be added to the price of properties,” Chong said.

Dr Tan: ‘Contributing to fund will be an additional cost for developers’
Dr Tan: ‘Contributing to fund will be an additional cost for developers’

Meanwhile, Andaman Group managing director Datuk Seri Dr Vincent Tiew said setting up the trust fund was not a wise move as it would be counter-productive.

“The trust fund is directly taxing the developers and the cost will be passed on to the property buyers,” he said.

Tiew said the state government had its own budget to take care of the housing needs of the underprivileged.

“Developers are already giving special discounts to bumiputra buyers, and some discounts are even higher than that stipulated by the state.

“The developers’ profit margin is between 10% and 22% ,” he said.

Pyhomes Realty Sdn Bhd managing director Chan Hoong Mun said the trust fund was a new concept to the developers in Perak.

“I think other states also have a similar trust fund,” he said, adding that he was told that other state governments also gave some flexibility to the developers where the rates were concerned.

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