Under the PENJANA incentives, property buyers are offered stamp duty tax exemption. So, should you buy one during this period?
To encourage the growth of the property sector, the Government has reintroduced the Home Ownership Campaign (HOC), which offers stamp duty exemption on the first RM1 million of a property’s value on the Memorandum of Transfer for properties priced from RM300,000 to RM2.5 million, and 100% stamp duty exemption for the financing agreement under The National Economic Recovery Plan (PENJANA).
The exemption is applicable between June 1, 2020, to May 31, 2021, subject to properties that are priced at a 10% discount provided by developers.
Real property gains tax (RPGT) exemption is also introduced for Malaysians for disposal of up to three properties between June 1, 2020, and December 31, 2021.
Comparison of RPGT from 1995 to 2020
| Year of Ownership/Year | 1995-2007 | 2007-2008 | 2010 | 2011 | 2012 | 2013 | 2014-2018 | 2019 | 2020 |
|---|---|---|---|---|---|---|---|---|---|
| 1st Year | 0.3 | - | 0.05 | 0.1 | 0.1 | 0.15 | 0.3 | 0.3 | 0.3 |
| 2nd Year | 0.3 | - | 0.05 | 0.1 | 0.1 | 0.15 | 0.3 | 0.3 | 0.3 |
| 3rd Year | 0.2 | - | 0.05 | 0.05 | 0.05 | 0.1 | 0.3 | 0.3 | 0.3 |
| 4th Year | 0.15 | - | 0.05 | 0.05 | 0.05 | 0.1 | 0.2 | 0.2 | 0.2 |
| 5th Year | 0.05 | - | 0.05 | 0.05 | 0.05 | 0.1 | 0.15 | 0.15 | 0.15 |
| Thereafter | - | - | - | - | - | - | - | 0.05 | 0.05 |
Source: Loanstreet portal
Contents
What the experts are saying about this
The reintroduction of HOC will attract more first-time buyer into the market when the price of houses are lesser than the usual.
Chief Executive Officer, IQI Global Group, Kashid Ansari said, it is a welcome move as it would make it easy for buyers to get into the property market and it would reduce the current oversupply of unsold properties in the market.
“We are hopeful that the government can also look at easing lending policies to make it easier for homebuyers to get a loan,” he said in a statement.
ExaStrata Solutions Sdn Bhd’s Chief Executive Officer and a real estate consultant, Sr Adzman Shah Mohd Ariffin, told Bernama that the initiative under the revived Home Ownership Campaign (HOC) would certainly boost the sales of new residential properties priced no more than RM2.5 million.
Developers are required to give a 10% discount on the prices (to qualify for the exemption). This incentive is further enhanced by the lifting of the 70 % margin of financing limit for the third housing loan onwards (for properties valued at RM600,000 and above).
“The current low bank lending rate will also help to encourage more buyers to start buying properties provided that they can qualify for a loan,” said Adzman Shah.
How does this affect the property market?
Many buyers are taking a wait-and-see approach as these incentives may only moderately revive demand in the property market.
As for the KL Property Index which continues to trail behind the broader FBM KLCI on a year-to-date basis, UOB KayHian said the latest round of measures have largely been priced in after property stocks rose in the past one to two weeks.
The research house said the KL Property Index recovered by 26.3% from its low in March 2020, adding that it has “a moderately positive outlook” for the sector.
For the first quarter of 2020, property sales for companies under its coverage fell by at least 25% quarter-on-quarter (q-o-q).
It expects the April-to-June quarter will be even worse with the full impact of the movement control order, as reflected in the leading indicator from Bank Negara, loan application and approval for residential property declined 72.1% y-o-y and 75.7% y-o-y, respectively, in April.
“We are positive on the removal of the 70% loan-to-value for the purchase of a third property and above, as this will offer buyers greater flexibility in terms of financing, ” UOB KayHian said.
Research by CGS CIMB said the impact of the measures could be mitigated by higher unemployment and an anticipated contraction in gross domestic product.
The property overhang remains an issue. As at the end of the first quarter, total property overhang – completed unsold, unsold under construction and unsold not yet constructed – increase 4% q-o-q, which was likely due to slower property transactions.
“The pick-up in property sales will be more meaningful in 2021, after getting more clarity on the actual impact of the pandemic and potential recovery in the economy, ” CGS CIMB said.
Overall
As a consumer, make sure that you refer to reliable party like a licensed financial planner to figure out whether or not your current financial standing will be good enough for you to purchase properties during this period. Don’t make a rash decision and regret it later.
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Will you consider buying properties after the PENJANA announcement from the government? Share with us in the comments section below.
Is strata title transfer fee legible for exemption under this scheme where property was purchased in 2010 and strata title due to be issued next year ?
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