Budget Malaysia 2014 and Real Estate / Property

In order to control excessive speculative activities in Malaysia Real Estate, the Government will implement the following steps : -

Review Real Property Gains Tax (RPGT)

For Malaysian citizens, Properties disposed within the holding period of

Up to 3 years : 30% on the gains

Up to 4 years : 20% on the gains

Up to 5 years : 15% on the gains

Up to sixth and subsequent years, no RPGT is imposed on citizens, whereas companies are taxed at 5%.

For non-citizens, properties disposed within the holding period of

Up to 5 years : 30% on the gains

6^th  and subsequent years : 5% on the gains.

Review of minimum price of property that can be purchased by foreigners

Increase the minimum price of property that can be purchased by foreigners from RM500,000 to RM1,000,000

Increase transparency in property sales price

Property developers will have to display detailed sales price including all benefits and incentives offered to buyers such as exemption of legal fees, stamp duty, sales agreements, cash rebates and free gifts

Abolish Developer Interest Bearing Scheme (DIBS) and related

Prohibit developers from implementing projects that have features of Developer Interest Bearing Scheme (DIBS), to prevent developers from incorporating interest rates on loans in house prices during the construction period. Therefore, financial institutions are prohibited from providing final funding for projects involved in the DIBS scheme.

Increase home ownership at affordable prices

An estimated 223,000 units of new houses will be built by the Government and the private sector in 2014. The Government will allocate RM578mil to the National Housing Department (JPN) for the implementation of Program Perumahan Rakyat for 16,473 housing units. In addition, JPN will construct 600 units for Program Perumahan Rakyat Disewa and Perumahan Rakyat Bersepadu with an allocation of RM146mil.

PR1MA will provide 80,000 housing units

PR1MA will provide 80,000 housing units with an allocation of RM1bil. The sales price of PR1MA houses are 20% lower than market prices. Meanwhile, SPNB will build 26,122 units of affordable houses, comprising 15,122 units of affordable houses, 3,000 units Rumah Idaman Rakyat and 8,000 units of Rumah Mesra Rakyat. The Government will introduce a new category of Rumah Mesra Rakyat, with sales price between RM45,000 and RM65,000 for which the Government will provide a subsidy between RM15,000 to RM20,000 per unit.

Private Affordable Ownership Housing Scheme (MyHome)

The Government will also introduce the Private Affordable Ownership Housing Scheme (MyHome) as a step to encourage the private sector to build more low and medium-cost houses. The scheme provides a subsidy of RM30,000 to the private developers for each unit built. Among the criteria for the scheme are:

Developers are to build at least 20% low-cost houses (800sf) at 45k and 20% medium-cost houses (1000sf, 3-bed 2 bath) at 170k in a housing project

Provide parking, surau, hall and recreational park

First-time home buyers

Open to first-time buyers with a monthly household income of RM3,000 for low-cost houses and a maximum of RM6,000 for medium-cost houses.

Low and medium-cost houses

Preference will be given to developers who build low and medium-cost houses in areas with high demand and limited to 10,000 units in 2014. The scheme is for housing projects approved effective from 1 January 2014 with an allocation of RM300mil under the supervision of Ministry of Urban Wellbeing, Housing and Local Government.

PR1MA housing projects

PR1MA housing projects, housing in newly opened areas and 1Malaysia Civil Servants’ Housing Programme are eligible to apply for grants at 10% of the project cost, from the Facilitation Fund. For 2014, the Government will provide a total of RM4bil to the Facilitation Fund as an initiative to promote private, high-strategic impact projects.

RM1bil is allocated to the Housing Facilitation Fund under Public Private Partnership Unit (UKAS). Developers who receive this grant must abide by the terms and conditions as well as the sales prices which are set by the Government.

Refurbishment program for low-cost housing

The Government will also carry out a refurbishment program and improve comfort and beautify government-owned low-cost housing. Among the measures to be implemented include lift maintenance, repainting the house, cleaning up drains and landfill space and repair playgrounds.

A sum of RM100mil will be provided to 1Malaysia Maintenance Fund under the Ministry of Urban Well-being, Housing and Local Government. The Government will also allocate RM82mil to rehabilitate 20 abandoned housing projects involving 8,197 houses.

 

The establishment of the National Housing Council

The Government will implement a more effective and comprehensive approach with the establishment of the National Housing Council to develop strategies and action plans in a holistic manner; coordinate legal aspects and property price mechanism; and ensure provision of homes in a more efficient and expeditious manner. The Council members will comprise Federal Agencies, State Governments, the National Housing Department, PR1MA, SPNB and the private sector.