Penang assemblyman proposes 3% levy on out-of-state property buyers

PETALING JAYA (May 13): A Penang state assemblyman has proposed a 3% property transfer premium on buyers who are not from the state, in a bid to cool speculative demand and channel funds into affordable housing schemes for locals.

Batu Lancang assemblyman Ong Ah Teong, speaking during the debate on the governor's address at the state assembly on Monday, said the levy should apply to those who are not Penang-born, not permanent residents in the state, and have not been registered Penang voters for at least three consecutive election cycles.

The proposal, if adopted, would require amendments to state land laws and regulations.

A familiar playbook, extended

The idea is not without precedent in Penang. In December 2013, then-Chief Minister Lim Guan Eng introduced a 3% levy on foreign property purchasers and a separate 2% levy on sellers who disposed of properties within three years of purchase — both effective from Feb 1, 2014, and designed to prevent speculation and property flipping, according to a report by The Edge Malaysia. 

Ong's proposal revives that approach but extends it significantly further, targeting out-of-state Malaysians rather than only foreign buyers — a broader and more legally complex category. 

At the federal level, a flat 4% stamp duty on property transfers by non-citizens and foreign-owned companies has been in place since January 2024 — establishing a national precedent for differential transfer taxes based on buyer origin.

The structural case

Ong cited three converging pressures on Penang's housing market: the state's positioning as the "Eastern Silicon Valley" combined with constrained land supply; out-of-state investors treating Penang property as an inflation hedge; and the progressive commodification of housing that has priced out local buyers.

"We are not poor, but impoverished by greedy speculative investors from outside the state," he said.

Official data shows Penang recorded 14,344 unsold residential units as of the second quarter of 2024, with a disproportionate share in higher price brackets — a pattern Ong described as a structural mismatch between what is being built and what locals can afford.

"This creates a vicious cycle where developers and agents focus on high-margin projects, leading to oversupply in certain segments and a saturated market. 

“It also raises the risk of a housing bubble that could destabilise the financial system if property values used as collateral decline sharply," he said.

"Property is a human right, not a speculative commodity for profit and wealth," he added.

Revenue with a purpose

Ong proposed that proceeds from the levy be directed into a dedicated housing trust fund to expand the state's Rumah Mutiaraku affordable housing programme and strengthen rent-to-own schemes for B40 households and youth — positioning the tax as both a cooling measure and a revenue mechanism.

The call echoes a position taken by the Consumers Association of Penang in July 2025, when it formally backed a vacancy tax on unoccupied residential properties, citing Canada and Australia — where Melbourne charges vacant property owners 1%–3% of property value annually — as workable models. 

Together, the two proposals reflect a sustained and broadening policy appetite for demand-side intervention in Malaysia's housing market, particularly in high-pressure urban centres like Penang.

Singapore's Additional Buyer's Stamp Duty — which Ong cited as a reference point — charges foreign buyers a flat 60% on any residential purchase, a rate doubled from 30% in April 2023 as a pre-emptive measure against investment demand. 

Hurdles ahead

"When the market collapses, speculative investors from other states will leave Penang with their profits, while locals will be left to bear the burden of the downturn and resulting economic hardship," Ong warned.

Defining "non-Penangite" for the purposes of a property tax — particularly in a country where internal migration is common and constitutional freedom of movement is enshrined — would require careful legal drafting and likely federal engagement, given that stamp duty is a federal matter under the Federal List.

Whether the state has the power to impose such a levy via land enactment amendments alone, or whether it would require federal legislative support, is likely to be the central question if the proposal advances beyond the assembly floor.

Ong acknowledged the proposal was at an early stage, calling on the state government to study and consult on the framework before any implementation.

Additional quotes sourced from The Star and Free Malaysia Today (May 11, 2026). 

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