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KUALA LUMPUR: The government’s proposed measure to impose a four unit limit on bulk sales of property to control the bulk buying of property investor clubs (PICs) may not be effective, say property consultants.
Datuk Abdul Rahman Dahlan, minister of Urban Wellbeing, Housing and Local Government, said during the launch of Sime Darby Property Bhd’s housing income index that his ministry will enforce a new condition for bulk buying in which developers intending to sell more than four units to an individual or group are required to obtain prior approval from the Controller of Housing.
According to Samuel Tan, director of KGV International Property Consultants (Johor Baru) Sdn Bhd, the proposed move isn’t likely to have a big effect on bulk purchasers or the investor clubs.
“An individual can still buy more than four units. All they need to do is sign up using another name. The main problem is that there is no body or regulation to monitor PICs,” Tan told The Edge Financial Daily.
James Wong, managing director of VPC (KL) Sdn Bhd, added that the measure could be hard to implement.
“It is not a very well thought out measure. The individuals within these investor clubs can always use nominees or their relatives to buy. The proposed measure will only dampen the property market even more. Then 2014 will definitely not be a good year for property,” said Wong.
“The property market was soft, and paired with subprime prices after the 2008 and 2009 global financial crisis, [and so] it was the perfect time for bulk buying,” said Wong, adding that the first few PICs were established during that time.
Despite having reservations about the measure, Foo Gee Jen, managing director of C H Williams Talhar & Wong Sdn Bhd, believes the government is moving in the right direction.
“The psychological impact is going to be there. Speculators and bulk buyers will definitely feel the jitters,” said Foo, adding that property investment is a big ticket item for most people and bulk purchase and speculation only create artificial demand.
Foo and Tan noted that artificial demand can be seen during the handover period of a development when many units remain empty despite the project having a high take up rate.
“If you’re buying [lots of] units and get a discount only to flip it later, it deprives other honest property buyers out of affordability,” said Foo.
According to Brian Koh, executive director of DTZ Nawawi Tie Leung Property Consultants Sdn Bhd, the idea is good, but developers and investors will always have ways to come up with new ideas to overcome this problem.
Koh believes the proposed measure coupled with the hike in real property gains tax will kill off the PICs.
Foo said the Inland Revenue Board of Malaysia can play a role if the measures do not work.
“The government can still slap you with 25% income tax. If you’re a speculator who buys in bulk and trades on an annual basis, then it can be considered a business and you can still be charged this income tax rate,” said Foo.
This article first appeared in The Edge Financial Daily, on February 21, 2014.
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