Mixed reaction from property consultants to Budget 2024

13 Oct 2023, 10:13 pm
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KUALA LUMPUR (Oct 13): Real estate consultants said key property issues, such as home ownership and housing affordability, were not addressed in Budget 2024, which was tabled on Friday evening (Oct 13) by the government.

When contacted, Henry Butcher Malaysia chief operating officer Tang Chee Meng said it is a “disappointing Budget” for the real estate industry because many proposals from the pre-budget discussion between the stakeholders and government have not been included in the Budget 2024, such as bringing back the Home Ownership Campaign (HOC) and the increase of industry incentives, which will indirectly help to lower overall property price.

Agreeing with Tang, KGV International Property Consultants (M) Sdn Bhd executive director Samuel Tan expressed that it is disappointing that there were no announcements on the extension of the HOC to promote the housing industry.

“The proposal for the abolition of RPGT (Real Property Gains Tax) on non-citizens/corporates did not materialise as hoped for too. Moreover, the increase of the service tax from 6% to 8%, with exceptions given to a few services, will further increase the cost of construction and will be passed to the purchasers, while the housing industry has already been facing challenges in rising costs in building materials, labour and compliance,” Samuel added.

Henry Butcher Malaysia chief operating officer Tang Chee Meng (Photo by Sam Fong/The Edge)

Nonetheless, he welcomes the measure on a lower consent threshold for strata scheme redevelopment, which currently requires 100% house owners’ consent, to a more consistent level based on international thresholds like in Singapore.

CBRE | WTW group managing director Tan Ka Leong shares a similar view with Samuel that parts of the city can be regenerated with the proposal, and will allow some owners of old developments to enjoy the value of their investments.

Savills Malaysia group managing director Datuk Paul Khong also said: “It is critical to rejuvenate the blighted city areas and allow old dilapidated strata buildings to be torn down for redevelopment purposes. Many of the old buildings have outlived their economic life and redevelopment is imminent but hampered by this current 100% requirement. This move is timely for all.”

Tang added that this move will free up more development lands in the prime areas for better city planning and urbanisation, especially with old projects of a lower density and plot ratio as approved back then. However, he urged the government to come up with a solution for the minority residents who are against the idea of redevelopment, in which their rights and interests as property owners should be well protected.

Minimal impact from 4% stamp duty on housing transactions involving foreign purchasers

Savills Malaysia group managing director Datuk Paul Khong (Photo by Savills Malaysia)

Commenting on the ad valorem stamp duty for foreigners buying real estate in Malaysia to be locked in at a flat rate of 4% from 2024, Khong said it is against the idea to review the criteria of the Malaysia My Second Home (MM2H) programme to make it friendlier in attracting foreigners.

Nonetheless, he said that this move will have only a small impact as it basically involves an additional payment of RM16,000 if the property price exceeds RM1 million.

CBRE | WTW group managing director Tan Ka Leong (Photo credit: https://cbre-wtw.com.my)

Concurring with Khong that the impact of the 4% flat rate is minimal, Ka Leong noted that foreigners usually purchase properties in the Klang Valley and Penang, where the threshold for foreign buyers is RM1 million and above. “I believe it is part of the government’s effort to increase revenue and it has something to do with the reintroduction of the MM2H programme. We welcome the relaxation of MM2H conditions, which will also increase revenue and help the real estate market.”

Ka Leong is also encouraged by the proposed opening of a high-tech industrial area in Kerian, Perak, which is expected to have a substantial impact on the market. He believes this move will open up the area to boost the economy and see spillover effects from the southern part of Penang.

KGV International Property Consultants (M) Sdn Bhd executive director Samuel Tan (Photo by Mohd Suhaimi Mohamed Yusuf/The Edge)

Meanwhile, Samuel applauded the proposal for Pengerang Integrated Petroleum Complex (PIPC) to be made the development hub for the chemical and petrochemical sector in the form of special tax incentives, saying that this will augur well for the growth in Pengerang and its surrounding areas and will attract more investors to the RAPID project.

Other positive news that are welcomed by the consultants are:

  • additional funds allocated for People’s Housing Programme (PPR) and Rumah Mesra Rakyat to build new and repair old buildings, which will benefit the B40 and M40 segments
  • the RM10 billion allocation for Skim Jaminan Kredit Perumahan benefiting some 40,000 borrowers
  • the RM100 million allocation for low-cost and medium-cost housing in the public and private housing sectors for the repairs of water tanks, roofs, electricity wirings and CCTV
  • the RM2.8 billion allocation to repair roads and bridges, with RM300 million for G1 to G4 contractors, and
  • the RM100 million to upgrade street lamps across the country and RM50 million to address accident-prone areas, including installing smart traffic lights on federal roads to reduce accidents.

Go here for our comprehensive Budget 2024 coverage.

Edited ByChai Yee Hoong

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