More alternatives with rental market initiatives

PETALING JAYA: The formulation of a Residential Rental Act and the tax exemption on rental income would facilitate the government’s push to have more alternatives in terms of providing shelter for the rakyat.
“The 50% tax exemption on rental income would encourage the T20 group to buy homes and rent them out, which would ease the overhang and oversupply of houses within the RM500,000 and RM1 million range. It would also benefit the M40 group, as it would provide more choices for the rental market,” CBRE-WTW managing director Foo Gee Jen told SunBiz.
He said this would result in a more orderly rental market and lessen the burden on the government in providing shelter as more private parties would enter the rental market.
He also said that the 50% tax exemption on rental income is more relevant than rent-to-own (RTO) schemes.
“RTO schemes may not work because not many developers have such big capital to take on such schemes. No developer would build homes with massive capital required to earn passive income,” he added.
Foo is also for the Residential Rental Act, which was also announced will also be formulated to protect landlords and tenants.
“The Act would facilitate the rental market. Right now, there is no central registration to govern the rental market, which is very lopsided. For example, if a tenant does not pay rent or utility bills, there is not much recourse for the landlord to take action.
“I hope with this Act, there will be a central registration system for tenants where landlords can do a background search on potential tenants to check on his or her track record and whether the person was a good paymaster or not,” said Foo.
He said “bad” tenants could be blacklisted on the system and be compelled to settle all outstanding rent and bills before any landlord decides to lease their properties to them.
However, National House Buyers Association (HBA) secretary-general Chang Kim Loong feels that the 50% tax exemption is one-sided and does not benefit the tenants.
“There was no announcement that the tenants can claim tax deduction on such rentals paid. In this regard, HBA wishes to state its strong objection to such a tax exemption as it would only encourage more speculative purchases of residential properties by property syndicates and investors club which will further drive up property prices and deprive more deserving Rakyat from owning such properties,” he said.
Chang said HBA is glad that the developers’ interest bearing scheme (DIBS) did not make a comeback despite calls from several parties to bring back such schemes, at least for first-time house buyers.
HBA is also glad that there was no mention of forming a Housing Guarantee Corporation (HGC), which it sees as a licence for developers to recklessly launch new housing projects in huge volumes without considering the projects’ viability as losses caused by abandonment would be incurred by the government.
“It will not solve the problem of abandoned housing projects but will increase them exponentially. HGC will also not solve issues that relate to shoddy workmanship, sub-standard materials, timely delivery and a host of other problems which one has to encounter with errant and wayward developers,” said Chang.