The National House Buyers Association (HBA) acknowledges the challenges faced by our Finance Minister Tengku Datuk Seri Zafrul Abdul Aziz in tabling the national Budget 2023 on Oct 7, in view of the post Covid-19 pandemic affecting the global and regional economies as well as the financial health of Malaysia.
Our comments and response to Budget 2023 on matters relating to the property sector are as follows:
1. Stamp duty discounts of up to 75% for houses priced between RM500,000 and RM1 million.
HBA’s question: Does such an incentive include sub-sale transactions in the secondary market?
Although the objective of the stamp duty discounts is to reactivate the property industry and also to spur economic growth, the measures appear to be not well thought out again.
It is still very difficult to understand why taxpayers’ money is being “sacrificed” to facilitate the niche market buyers and for the benefit of the housing developers, because that is exactly what is being done here.
How else do you explain the fact that the government is waiving stamp duties for the transactions? Less collections of such duties and revenues means government expenditure is being paid from other tax sources.
Mind you, we are talking about developers’ stocks – those completed and unsold properties. Why should the rest of the country subsidise these developers’ marketing of their products? They made a bad business decision. Do the rest of us have to subsidise their loss? Why don’t these developers just give a “higher” percentage of discounts on these properties? It’s elementary economics that when a product can’t sell, you sell it cheaper in a soft market, especially in these post Covid-19 recovery times.
To the purchaser, there is no difference between buying a property of RM1 million with the stamp duties of RM24,000 waived by the government and buying a property at RM976,000 from the developer and paying the RM24,000 stamp duties or thereabouts to the government
The adage “privatising profits and socialising losses” is most apt to describe the situation.
The same arguments apply too for sale in the secondary market.
2. Allocation of RM367 million to build People’s Housing Projects (PPRs) to benefit 12,400 new residents
HBA is of the opinion that PPRs should remain as transit homes for rental and not for sale or ownership.
PPR units built are only temporary living quarters for those looking to, in future, to buy their own houses. They should only be rented out by the relevant agencies. The objective and aspiration of the government is for these transit homes to provide a temporary living place for those who want to save enough money before embarking on buying their own homes. The PPR residents should not regard the flats as their permanent homes but merely temporary abodes to shelter their families and have roofs over their heads while they endeavour to look for permanent homes.
PPRs are for self-occupation and not for ‘sublet’
The PPR flat tenants are supposed to self-occupy until they improve their economic standings and move out, and allow those on the “waiting list” to take over possession of their units. Those who flout the rules by subletting their units for obvious gains should be evicted and enforcement should be meted without delay.
They act like landlords and sublet rooms to foreigners and singles who migrate from villages to cities. These have been going on for years but it seems enforcement action is slow, even sometimes thwarted by interference.
It is a betrayal of the purpose of building such PPR housing in the first place, which is to provide a roof for the poor and should not be used by rent seekers for self-profiteering.
HBA has been calling for stricter enforcements of existing rules to ensure that low- cost housing and PPR flats are not rented out to third parties and are allocated to the correct target groups.
Means test and exit policy
The tenants should go through a process of “means testing” – the process of measuring how much income a person has in order to decide if they qualify for PPR “handouts”. These social benefits and welfare offered to PPR tenants should be reviewed every three years by a committee within the agencies so that the tenants do not overstay but should gradually allow those incoming target families to take up occupation.
This is where enforcement must be strict so that those no longer eligible must give way to those deserving ones, but of course not to the extent of “throwing them into the streets”.
3. Allocation of up to RM3 billion for Housing Credit Guarantee Scheme
HBA welcomes the announcement that the government will allocate up to RM3 billion for the Housing Credit Guarantee Scheme to guarantee housing loans to help those without stable incomes such as those in the gig economy to buy properties. The gig economy has been a life saver to many of the rakyat who lost their jobs and resorted to becoming ride-hailing drivers, food-delivery riders and other forms of freelance work.
These employees are still economically productive and as such, should have access to financing to buy assets such as property. However, their income may not be consistent and many lack the full documents that banks typically require from fixed-income salaried employees.
However, HBA hopes this Housing Credit Guarantee Scheme will be limited to only first-time house buyers and only for affordable properties. It should also be made available for purchase of secondary properties (i.e. completed properties), not just primary properties directly from developers.
4. RM10 stamp duty for properties transferred between family members.
HBA welcomes this incentive of a nominal stamp duty for transactions on transfer of real property from parents to their children. This will alleviate the burden on the parents having to bear stamp duties which can be saved for other purposes.
This article is written by Datuk Chang Kim Loong, Hon Sec-Gen of the National House Buyers Association (HBA), which is a non-government and not-for-profit organisation manned wholly by volunteers.