Housing affordability not addressed in Budget 2014

PETALING JAYA: Property developers and real estate agents feel that measures announced in Budget 2014 failed to address the affordability and hope that the government will announce more effective measures in Budget 2015.
"Budget 2014 only managed to slow down the number of property transactions but values remain high," Malaysian Institute of Estate Agents (MIEA) president Siva Shanker told SunBiz.
"We wish the government would be more inclusive in policy making decisions and engage all stakeholders or else they miss out on the big picture, and end up setting policies that cause knee-jerk reactions," he said.
MIEA, which represents registered real estate practitioners in the country, wants the government to focus more on affordability especially for young, first-time house buyers in Budget 2015.
"Be cleverer with the real property gains tax (RPGT). If the 30% RPGT is imposed on properties sold during the first three years, it does not really kill speculation because for a new project, it takes three years to complete anyway.
"The speculative element is still at play. After three years, the RPGT rate is already lower. MIEA suggests that the 30% RPGT be imposed on properties sold within the first three years, starting from the date of handover/vacant possession," said Siva.
MIEA also suggested that valuations be made compulsory for properties in the primary market, before the launch of new projects and before raising prices in subsequent phases within an ongoing project.
As for first-time home buyers, MIEA hopes that the central bank can ease up on lending rules and consider giving 100% loans to this group of buyers while the Developer Interest Bearing Scheme (DIBS), which was banned, could be re-considered.
"I dislike DIBS because it distorts the market, it distorts actual demand. However, maybe we can consider bringing it back only for first-time buyers. It should also come with a price cap, perhaps only for properties below RM400,000 or RM300,000. This will give young people a chance to own a property.
Property developers also echoed calls for the government to consider allowing DIBS for first-time house buyers for homes below RM500,000.
Real Estate & Housing Developers Association Malaysia (Rehda) president Datuk Seri Fateh Iskandar Mohamed Mansor said his association also wants developers to be given a waiver by the federal of state government from building low-cost homes.
"In lieu thereof, the developer shall pay a sum of RM4,500 for every unit waived, similar to the existing model practised by Kuala Lumpur City Hall (DBKL) since both the state and federal governments own substantial landbank," he said.
Other proposals from Rehda include measures to avoid further increase in compliance costs such as land conversion premium, improvement service fund and development charges imposed by local authorities on developers, which is a condition for obtaining development order approval, as well as for houses priced below RM500,000 to be zero-rated under the goods and services tax scheme.
"Rehda also requests the federal government to remind utility companies such as TNB, Telekom Malaysia, Syabas and others not to abruptly increase developers' costs by continuously increasing the charges and contributions imposed on developers.
"Budget 2014 has not really helped to bring house prices lower, instead has affected the property market quite negatively."