Bulk buying under scrutiny

KUALA LUMPUR: In a move to further curb speculative activities in the property market, the government is in talks with property industry stakeholders to stop individuals from buying houses and properties in bulk.

According to Urban Wellbeing, Housing and Local Government Minister Datuk Abdul Rahman Dahlan, some individuals have been using the Property Investors Club (PIC) concept as a platform to buy houses and properties in bulk at discounted prices in order to sell them at huge profits in the secondary property market within one to two years.

Some industry players said these bulk buying activities usually involve “hot” property projects in the country, which usually see fast and sometimes near full take-up rates during their launches.

“Syndicate” members will first look for individuals who are willing to lend their identity cards and signatures to participate in the scam in return for a payment of between RM2,000 and RM5,000 per deal.

These properties are then sold in the secondary market one or two years later, with the syndicate members fetching a profit of at least RM50,000 per property. In some hot projects, they can earn a minimum profit of RM100,000 per property in a matter of two years.

Some quarters have suggested that there is also an element of “insider trading” in these cases, as some personnel of property development companies are also involved in the scam. They work hand in hand with the syndicate members in ensuring that the hot properties are reserved for the latter.

Abdul Rahman said bulk buying of properties by PIC creates false demand and increases the price of houses, adding that his ministry has looked into the matter but found no laws broken under such circumstances.

His ministry, he said, is already in discussions with the Real Estate and Housing Developers Association of Malaysia (Rehda) to monitor and restrict bulk sales of houses.

“In order to curb speculative activities by the PIC, my ministry will establish a comprehensive database of house buyers so that we can identify the number of houses owned by an individual and take the necessary steps to curb unhealthy speculation,” he said at the launch of Sime Darby Property Bhd’s Housing-Income Index 2013.

The database is part of the Private Affordable Ownership Housing Scheme (MyHome) programme announced by Prime Minister Datuk Seri Najib  Razak last week. A total of RM300 million has been allocated for the programme, which is expected to be launched on April 1, 2014.

Abdul Rahman said his ministry will also enforce a new condition for selling houses in bulk or en bloc, whereby developers who intend to make bulk sales of more than four units must obtain prior approval from the Controller of Housing.

“This condition will be prescribed as a mandatory requirement in every advertisement and sale permit for housing developments,” he said.

The minister said it is not necessary to pass legislations to control bulk purchases of properties.

“Creating laws, I think, is a step backward. I think we still need to maintain a certain amount of free economics. It’s a free market. We cannot be controlling everything. I don’t think it would be good for the industry,” he said.

The new measure to curb individuals from buying properties in bulk will be an addition to a string of regulations which were put in place in Budget 2014 to curb speculation in the property market and to control house prices.
Under Budget 2014, the quantum for the real property gains tax (RPGT) was increased from 15% within the first two years of disposal to 30% within the first three years of disposal. A further 5% tax is imposed on companies and non-Malaysians in the sixth and subsequent years. The government has also removed the Developers Interest Bearing Scheme.

Sime Darby Property managing director Datuk Seri Abdul Wahab Maskan said the government’s anti-speculative measures are already affecting the property market. “There has been a slowdown in terms of softening of the market in the last couple of months,” he said.

The company, however, has strategised to limit the impact of the anti-speculative measures by planning affordable housing projects with a price range of between RM400,0000 and RM1 million in the last one year.

Abdul Wahab said the company has also been affected by Bank Negara Malaysia’s move to impose restrictions on personal and housing loans last year, adding that the percentage of interested home buyers who failed to obtain bank loans had increased.

“In the past, it was a very small percentage, less than 5%. Today, it has moved up to double digits but it has not crossed our 20% [mark],” he said.

Sime Darby Property will be launching one to two new projects for landed properties costing RM500,000 per unit in the next two months in Bukit Raja, Selangor. Abdul Wahab said the company has set itself a sales target of over RM2 billion for 2014. Last year, the company managed to secure sales of RM2.37 billion.

This article first appeared in The Edge Financial Daily, on February 18, 2014.


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