PETALING JAYA: Several “drastic measures” in Budget 2014 to increase home ownership may have a detrimental effect on first-time buyers as well as foreign investors, said the Real Estate and Housing Developers Association (Rehda).
Its president Datuk Seri Michael KC Yam said the removal of the developer interest-bearing scheme (DIBS) would put pressure on genuine buyers, including first-time, as well as Bumiputra buyers.
(The DIBS allows purchasers to pay a deposit and nothing else until they collect the keys to their units, as developers bear the loan interest during the construction period).
He said this was because DIBS greatly assisted homebuyers in upgrading and helping them buy a home.
“We think that innovative home financing packages such as the DIBS offered by developers of high premium properties should be encouraged to facilitate financing and promote home ownership,” he said, adding that such properties were in hotspots like Kuala Lumpur, Penang and Johor.
As for the increase in Real Property Gains Tax (RPGT), Yam said that “in reality, the presence of speculators in the market is insignificant”.
Instead, he attributed escalating housing prices to rising construction costs and not enough homes, especially in urban areas.
He added that delays in selling property would only further reduce market supply and increase home prices.
He also said the flat rate of 30% RPGT for six years applicable to properties owned by foreigners would hurt developers when they promote their properties abroad.
“It may send the wrong signal to foreign investors with regard to our property investment and promotion policies,” he said.
In addition, he said the new requirement that allowed foreigners to buy only properties worth RM1mil or more could also hurt developers’ sales.
(Previously, foreigners were allowed to buy properties worth RM500,000 and above.)
He pointed out that many urban areas outside the Klang Valley, Penang and Johor Baru had a very limited supply of properties worth more than RM500,000, while those costing RM1mil were almost non-existent.
He said this threshold increase would also restrict developments of smaller units such as studio or one-bedroom apartments as the prices might not go beyond RM1mil.
“This measure is also contrary to one of the 10th Malaysia Plan’s aspirations of providing better incentives to foreign talents and the Malaysia My Second Home programmes,” he said.
Yam said the industry would also be challenged administratively and practically by the requirement for developers to disclose all details regarding sales pricing.
He said they also anticipated that the practice would affect buyers’ ability to purchase property, as incidental costs in cash over and above the deposit needed to be raised.
“We hope to work with the authorities to address some of the industry’s concerns and hope to mitigate some of the negative impact, moving forward,” he said.
Yam said the initiatives Rehda supported included the introduction of the Goods and Services Tax (GST), adding that the April 2015 deadline gave sufficient time for the industry to fine-tune details with the Finance Ministry.
He also welcomed the Private Affordable Ownership Housing Scheme (MyHome) to provide a RM30,000 subsidy to private developers for each affordable housing unit built.
“We applaud the Government’s RM1bil allocation to the Housing Facilitation Fund under UKAS (Public Private Partnership Unit) and believe this will assist the industry tremendously in the provision of better housing infrastructure for the rakyat,” he said.
Yam praised the establishment of the National Housing Council as timely, adding that he hoped the council’s function would be “facilitative rather than prescriptive” in order to ensure a more sustainable housing industry.
He also expressed full support for the establishment of Malaysian Green Foundation to promote a green lifestyle.
“Rehda’s GreenRE (its green rating tool) will work closely with the foundation to promote greater adoption of green technology in the industry,” he said.