This article first appeared in The Edge Financial Daily on October 15, 2019
KUALA LUMPUR: Real Estate and Housing Developers’ Association (Rehda) president Datuk Soam Heng Choon is of the view that there is not much in Budget 2020 for the property sector, as many of the measures listed are already in place.
Some of the initiatives are just extensions of existing programmes, such as Bank Simpanan Nasional’s Youth Housing Scheme, which has been running since 2005, said Soam.
As for the extension of the Home Ownership Campaign deadline to year end, Soam said that was already announced in June, adding that the campaign was first gazetted in April.
“Budget 2020 hardly has anything for the property sector as it includes existing programmes,” he said during a panel discussion at the Post Budget 2020 Forum that was organised by Malayan Banking Bhd, CGS-CIMB Securities Sdn Bhd and RHB Banking Group yesterday.
Having said that, he viewed positively the government’s plan to lower the property price threshold for foreign buyers to RM600,000 from RM1 million for high-rise residential properties in urban areas, saying this would help clear existing inventories.
As such, and noting the negative responses to the announced measure over the weekend, Soam said Rehda will have more engagements with stakeholders on the matter.
“I think the housing ministry is getting a bit jittery, as they are saying that maybe they would review [this measure]. But we understand why this [measure] is necessary to help clear unsold stocks. The housing industry here is a subsidised model, meaning that developers will have to build a lot of affordable and low-cost units and this all has to be subsidised by the other units,” he said.
While he thinks the measure could assist the property industry, he said it would have a “very incremental” impact as foreign buying in Malaysia is very low. And the federal government can only enforce the threshold in federal territories like Kuala Lumpur, he noted.
“If the state governments do not play ball, there’s nothing much the federal government can do. They will have to agree to this threshold,” he added.
He also touched on the adjustment of the base year for the Real Property Gains Tax (RPGT) to 2013 from 2000, as many had asked him why 2013 was set as the base year.
He said when 2000 was set as the base year for the RPGT in Budget 2019 — which was previously zero but was brought back as part of a series of cooling measures by the government following a steep increase in property prices in 2014 — there was a negative response from many stakeholders.
“During the same year (2014), the government actually banned the developer interest bearing scheme and many other cooling measures were put in place by the state government. From 2014 onwards, we saw a downward trend in property prices, which is why the government has now fixed 2013 as the base year.
“If today you want to sell a property that you acquired in 2010, the tax will be based on the property’s value in 2013. And from 2013 to today, we would see that the price of that particular property would not have changed much,” Soam said.