Image source: bnm.gov.my
Budget 2020 was announced on October 11th, 2019, making an impact on the Malaysian real estate industry.
Of the biggest news to hit the market is the lowering of the minimum threshold for foreigners to purchase a property in Malaysia. Previously fixed at a minimum purchase price of RM1 million, the government has now lowered the minimum purchase price to RM600,000.
The price reduction is however limited to only residential high rises such as apartments and condominiums. This move is expected to reduce the property overhang in Malaysia. According to Tun Dr Mahathir Mohamad, “We need to sell off these properties. Of course, there will be foreign buyers but the local buyers will not be cut out just because there are foreigners buying at lower prices.”
Among the concerns brought up was that property developers would deliberately increase the ceiling price of high rises to RM600,000, but Finance Minister Lim Guan Eng who was also at the conference stated, “I don't think foreign buyers are that stupid to buy houses which do not reflect market value.”
It is hoped that this move will reduce the overhang of high rises in the country which has totalled to RM8.3 billion since the second quarter of 2019.
The second most impactful announcement was of the Rent-to-Own (RTO) scheme. This scheme is designed for those who are unable to afford the 10% downpayment to purchase a property. This scheme will be available for only first time home buyers, and for homes priced from RM500,000 and below.
RTO property buyers will also enjoy full stamp duty exemption from between buyer and financial institution, as well as between financial institutions and developers. RM10 billion will be allocated to assist those of this category, through a guarantee provision of 30% or RM3 billion.
Among the other news of interest related to the Malaysian real estate market is of Bandar Malaysia. The mega project is to proceed, and will now include 5,000 units of affordable homes, a community park, and an increased involvement of Bumiputera contractors in the project.
On a separate topic, RM100 million will also be allocated to low and medium cost residential strata properties to ensure the buildings are properly maintained. The funds will go to ensuring the elevator service, electrical wiring, roofing, and sewerage pipes are in good working condition.
Real Property Gains Tax (RPGT) will remain for properties sold after the 5-year mark, much to the disappointment of property speculators. The good news, however, is that there will be a proposed RPGT revision for properties purchased before Jan 1, 2013. This will ensure that genuine home upgraders will not be impacted by the curb on property speculators.
(15 October 2019)
