Saturday, October 8, 2011
Real property gains tax: Gradual impact
The existing rate is not effective in curbing speculation and could jeopardise the ability of the low- and middle-income groups to buy houses, says Najib
Kuala Lumpur: The impact from the real property gains tax (RPGT) hike, a move to curb speculation in the property market, will be gradual.
RPGT is a tax on properties sold less than five years after they are bought. Only the profit from the sale of a property is subject to RPGT.
It has been doubled to 10 per cent for the first two years and will remain at the previous level of 5 per cent in the third, fourth and fifth year. There will be no tax on gains after the fifth year.
RPGT exemption on a residential property is given to both husband and wife on one residential property each, once in a lifetime.
Yesterday, Prime Minister Datuk Seri Najib Razak in his 2012 Budget speech said that the existing rate of 5 per cent is not effective in curbing speculative activities and could jeopardise the ability of the low- and middle-income groups to buy houses.
These changes, he said, are low enough not to affect genuine property owners and will curb speculative activities.
Chairman of the Property Management, Valuation and Estate Agency Division of the Royal Institution of Surveyors Malaysia Adzman Shah Mohd Ariffin said that the move will deter future sales of property within two years of purchase. With prices stabilising and should they sell fast, they will not be able to make a killing.
"But, for those who bought a property three years ago, the price appreciation would have been much higher than the 10 per cent RPGT imposed," Adzman said, adding that this category of buyers will continue to make a profit.
According to him, properties can appreciate by 20 per cent or more once completed.
Real Estate and Housing Developers' Association Malaysia president Datuk Seri Michael Yam welcomed the move.
"The fact that there is no drastic change to the ruling on RPGT encourages long-term ownership of property which also helps the owner with capital appreciation and wealth creation as they will hold on to the property longer," said Yam.
He added that the first two years are effectively a 100 per cent increase, thus it will help discourage short-term speculation.
"It is a gentle/soft landing which will avoid a dip in the supply and demand of property," Yam told Business Times.
"The increase in this instance is not unreasonable, given that there are no speculative activities in the entire country but only confined to pockets of urban areas like Kuala Lumpur and Penang. These pockets of activities are insignificant compared with the total supply and demand for housing in Malaysia," he added.
However, real estate agent Rahim & Co's managing director Robert Ang said the 10 per cent increase is not an effective measure to try and curb speculation activities.
"If you want to curb speculation, why not something higher?" he said.
By Business Times
Measures proposed to prop up housing sector
The Government has announced a slew of measures related to the property sector. While the real property gains tax (RPGT) was uppermost on the minds of both developers, consultants and property buyers, Prime Minister Datuk Seri Najib Tun Razak also proposed other measures to keep the momentum going for the sector.
Under the My First Home Scheme (MFHS) announced earlier this year, Najib proposed that the cap of houses for young working adults of aged 18 to 35 be raised from RM220,000 to RM400,000.
Najib, who is also the Finance Minister, also promoted the 1Malaysia People's Housing (PR1MA) scheme. While the MFHS is for those with a monthly salary of RM3,000 and below, the PR1MA scheme also comes under the broad category of affordable social housing.
“PR1MA will be the sole agency to develop and maintain affordable and quality houses, specifically for the middle-income group. It will be the developer for projects on land owned by the Government,” he said.
Several plots of government-owned land around Sungai Besi and Sungai Buloh will be used for this purpose. The Government will also identify areas in the vicinity of MRT, LRT and other public transport system to be developed by PR1MA for housing projects.
“PR1MA also welcomes the cooperation with the private sector to develop similar projects. In this respect, several private developers responded to the Government's call to provide affordable and quality housing. PR1MA will play a main role in ensuring that the distribution of the housing units be transparent and fair through an open balloting system,” he said.
Although much has been said about the build-and-sell concept, Najib brought this up once again in the budget.
To protect buyers from delay and abandoned project, the Government will encourage the construction of more houses using the build-then-sell concept.
Real Estate and Housing Developers Association Malaysia president Datuk Seri Michael Yam and Rehda national council member and branch chairman for Federal Territory N.K. Tong said the measures announced in the budget proposals encouraged homeownership among the poor and young working adults but discouraged speculation.
Yam said the slew of measures to promote ownership and to spearhead investment was heartening and showed that the Government was serious in keeping the healthy property market on an even keel.
“The measures announced is in line with the Economic Transformation Programme (ETP). Under the ETP, the Government wants to raise the population of the Greater KL/Klang Valley from the current 6 million to 10 million. In order to do that, there is a need for housing,” Tong said.
“It will be difficult for private land owners to provide land for social housing in the city, or close to the city. It is good that the Government is providing land for this cause and, at the same time, having them located near the proposed new public rail transport.
“In this respect I would said that the budget is two-prong when it comes to home ownership helping people to have a roof over their heads, and to save for their future.”
Yam said the slew of measures to promote ownership and to spearhead investment was heartening and showed that the Government was serious in keeping the healthy property market on an even keel.
By The Star
Under the My First Home Scheme (MFHS) announced earlier this year, Najib proposed that the cap of houses for young working adults of aged 18 to 35 be raised from RM220,000 to RM400,000.
Najib, who is also the Finance Minister, also promoted the 1Malaysia People's Housing (PR1MA) scheme. While the MFHS is for those with a monthly salary of RM3,000 and below, the PR1MA scheme also comes under the broad category of affordable social housing.
“PR1MA will be the sole agency to develop and maintain affordable and quality houses, specifically for the middle-income group. It will be the developer for projects on land owned by the Government,” he said.
Several plots of government-owned land around Sungai Besi and Sungai Buloh will be used for this purpose. The Government will also identify areas in the vicinity of MRT, LRT and other public transport system to be developed by PR1MA for housing projects.
“PR1MA also welcomes the cooperation with the private sector to develop similar projects. In this respect, several private developers responded to the Government's call to provide affordable and quality housing. PR1MA will play a main role in ensuring that the distribution of the housing units be transparent and fair through an open balloting system,” he said.
Although much has been said about the build-and-sell concept, Najib brought this up once again in the budget.
To protect buyers from delay and abandoned project, the Government will encourage the construction of more houses using the build-then-sell concept.
Real Estate and Housing Developers Association Malaysia president Datuk Seri Michael Yam and Rehda national council member and branch chairman for Federal Territory N.K. Tong said the measures announced in the budget proposals encouraged homeownership among the poor and young working adults but discouraged speculation.
Yam said the slew of measures to promote ownership and to spearhead investment was heartening and showed that the Government was serious in keeping the healthy property market on an even keel.
“The measures announced is in line with the Economic Transformation Programme (ETP). Under the ETP, the Government wants to raise the population of the Greater KL/Klang Valley from the current 6 million to 10 million. In order to do that, there is a need for housing,” Tong said.
“It will be difficult for private land owners to provide land for social housing in the city, or close to the city. It is good that the Government is providing land for this cause and, at the same time, having them located near the proposed new public rail transport.
“In this respect I would said that the budget is two-prong when it comes to home ownership helping people to have a roof over their heads, and to save for their future.”
Yam said the slew of measures to promote ownership and to spearhead investment was heartening and showed that the Government was serious in keeping the healthy property market on an even keel.
By The Star
