THE current “tax holiday” has been a boon for property developers who are seeing an increase in sales.
Real Estate and Housing Developers Association (Rehda) Perak chairman Tony Khoo Boon Chuan said the transition period between the goods and services tax (GST) being reduced to 0% and the implementation of sales and service tax was driving interest in property acquisitions.
He said there have been more enquiries from potential buyers recently and it was expected to continue until the new sales tax kicks in.
“I cannot put a number to the sales figures yet but it is picking up.
“It is definitely a good period for sales of both commercial and residential units,” he said.
Khoo said developers too were taking the opportunity to promote and boost their sales during this “honeymoon” period.
“There will definitely be discounts offered by developers for commercial properties.
“Even residential properties, which are already zero-rated, will also see discounts between 2% and 4% by developers.
“This is in anticipation of how people think – just because the GST has been zero-rated, they expect all properties to have 6% discount.
“This also gives developers a dilemma. It is good to use this opportunity to give some discounts to push up sales but on the other hand, we have already absorbed GST for the projects,” he said, adding that the discounts for new properties or projects would be slightly more than those that were constructed when the GST was in effect.
“There will definitely be discounts for new projects based on the construction costs.
“We have already absorbed most of the GST on input costs for raw materials and also to contractors for our earlier projects,” he said.
Earlier this month, Prime Minister Tun Dr Mahathir Mohamad announced the decision to reduce the GST rate from 6% to 0% with effect from June 1.
The sales and service tax would be re-introduced but it remains to be seen what the rate set by the government will be.
StarBizweek reported that the volume of property transactions in the country was expected to increase because of the improvement in spending power arising from the reduction of GST.
Khoo said it was now the right time to buy properties before the sales tax is reintroduced.
“Honestly, it remains to be seen how the sales tax will impact the property market but I think there will be some increase in cost.
“When the sales tax comes in, suppliers may charge a different price, depending on the amount of tax. Property prices will see a slight change,” he said.
“But as of now, aside from the discounts given by the developers, we can also expect an additional 6% discount on legal fees,” he added.
On another matter, Khoo said his team met with new Perak Local Government and Housing Committee chairman Paul Yong on how the association and the state can work together.
“We are glad that he was very receptive to our proposals for a win-win situation between the developers and the state.
“We have also called upon the state government to be more transparent with its housing-related policies,” he said.
Khoo said other matters discussed with Yong included to shorten the time frame when releasing units from the bumiputra quota for open sales.
“It usually takes more than a year and we have expressed our hope that it can be reduced significantly.
“There is actually no point to take so long. Once the units are released, developers can sell them off and use the funds for future developments, which will generate more revenue for the state.
“We can also cut down on unsold property units,” he said.
Khoo also hoped the state would review the other development-related fees to help boost the property market.
“Certain fees, such as for advertising and hoarding, are quite high. We hope that these can be lowered.
“Yong has told us that they will do a study on it,” he said.