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Budget 2019: RPGT hike to push up house prices in secondary market, says PAM

KUALA LUMPUR (Nov 4): The increase in Real Property Gains Tax (RPGT) on the profits from disposal of real estate will see the increases in sub-sale prices of properties, said the Malaysian Institute of Architects (PAM).

“Although it is intended to curb speculations, but it is expected to affect the actual sub-sale needs for home upgrading to a better new home.

“The sub-sale price will also increase due to upgrading or renovation of the property by the owner, taxing on the increase of the value upon sale due to upgrading is not just to the owner and may cause property price inflation to cover the tax factor,” PAM president Ezumi Harzani Ismail told EdgeProp.my.

But the price of new projects is expected to face some downward pressure due to the exemption of Sales and Service Tax (SST) on the construction services and building materials, he noted.

“I hope the exemption of SST shall also includes the professional services provided by construction industry professional such as architects, engineers, planners and surveyors,” he urged.

On the other hand, the National Home Ownership Campaign in which developers are offering a 10% discount on the price of existing residential property projects is a very good programme in reducing oversupply of residential properties effectively, he added.

Meanwhile, Ezumi said that the government’s proposal for stamp duty exemption is good to boost property sales, but it would be better if the exemption period can be extended up to two to three years to allow a more moderate sales improvement which can also stimulate other economic activities.

“The six months window period for the exemption is too short and is expected to cause a sudden surge in the number of transactions,” he explained.

Ezumi pointed out that in order to find a better housing solution rather than putting all stakes in building the houses, a portion of the RM1.5 billion budget allocated for Program Perumahan Rakyat, Perumahan Penjawat Awam Malaysia, PR1MA dan Syarikat Perumahan Nasional Bhd should be invested in research and development (R&D) involving construction industries professionals.

“The RM22 billion values of property overhang shows that the issue is not on shortage of supplies, but the mismatch between the supplied houses and the prospective buyers’ needs and affordability. Through R&D, better quality houses at an affordable price can be produced to match the needs of the people,” he said.

However, most of the R&Ds are focusing on the cheapest solutions, which may not be the best solution, he said.

On top of that, there are not many platforms for young architects and engineers who can produce solutions for housing issues to participate in finding and presenting new ideas in housing development, he continued.

“Through comprehensive R&D and design idea competitions, we should be able to produce better quality houses which suit the needs and life style of the new generation. Such competitions and R&D will also give a more cost efficient and sustainable development methodology,” he elaborated.

He also welcomed the property crowdfunding scheme announced by the government to solve financing and affordability issues in the housing sector.

But he urged the government to properly regulate the peer-to-peer lending approach to avoid potential abuse and manipulation by irresponsible parties.

Lastly, he lauded the government’s allocation of RM400 million for the maintenance and repairing of identified government quarters as it is a good start in refurbishing the buildings.

“Maintenance budget is always something that we are lacking in upkeeping and upgrading our facilities. In future budget reviews, we should allow such allocation in other buildings including housing.

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