This June, the Home Ownership Campaign (HOC) was re-introduced to help improve the suffering property market. Learn about the incentives provided for the property sector.

Prime Minister Tan Sri Muhyiddin Yassin announced this June that the Home Ownership Campaign (HOC) has been reintroduced in an effort to improve the country’s property market and provide financial relief for consumers. The campaign has been in effect from June 1, 2020 to May 31, 2021.

The incentives included in the HOC are RPGT exemption, stamp duty exemption, and  removing the 70% margin of financing limit.

Additionally, the government also plans to introduce the Residential Tenancy Act (RTA) following concern raised by landlords and tenants.

Home Ownership Campaign (HOC) property incentives

1. Real Property Gains Tax (RPGT) exemption

One of the incentives announced is the Real Property Gains Tax (RPGT) exemption. This exemption, applicable between June 1, 2020, to May 31, 2021, is subject to properties that are priced at a 10% discount provided by developers.

Year of Ownership/Year1995-20072007-200820102011201220132014-201820192020
1st Year0.3-0.050.10.10.150.30.30.3
2nd Year0.3-0.050.10.10.150.30.30.3
3rd Year0.2-0.050.050.050.10.30.30.3
4th Year0.15-0.050.050.050.10.20.20.2
5th Year0.05-0.050.050.050.10.150.150.15
Thereafter-------0.050.05

According to ExaStrata Solutions Sdn Bhd chief real estate consultant and chief executive officer (CEO), Adzman Shah Mohd Ariffin, the RPGT exemption will provide better chances for residential homes owners to sell their homes during the exemption period.

“However, this may result in the sub-sale market competing with the sale of developers’ unsold housing stock. Nevertheless, this will help the owners who need to liquidate due to financial woes to gain more since the RPGT will be exempted,” – Adzman Shah Mohd Ariffin, ExaStrata Solutions Sdn Bhd chief real estate consultant and chief executive officer (CEO).

2. Stamp Duty exemption

This incentive is granted for full exemptions on loan agreements and partial exemptions on instruments of transfers for sales and purchase agreements signed from June 1, 2020 to May 31, 2021.

“The exemption on the instrument of transfer is limited to the first RM1 million of the home purchase price while full stamp duty exemption is given a loan agreement effective for sales and purchase agreements signed between June 1 this year and May 31, 2021, subject to at least 10 per cent discounts provided by the developer,” – Tan Sri Muhyiddin Yassin, Malaysia Prime Minister.

Adzman Shah also added that the exemption under the HOC would certainly improve the sales of new residential properties priced at less than RM2.5 million.

“On top of that, 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),” – Adzman Shah Mohd Ariffin, ExaStrata Solutions Sdn Bhd chief real estate consultant and chief executive officer (CEO)

3. Removal of 70% margin of financing limit

During the HOC period, the current 70% margin of financing limit will be removed for ownership of 3rd property provided the property is valued at RM600,000 above.

The removal of the 70% margin of financing limit is expected to encourage potential buyers to add to their property portfolio and boost the secondary residential market. Those with a stable financial situation can make use of this change to add to their property portfolio with reduced initial capital outlay.

Another group who stand to benefit are borrowers with sufficient cash flow but were unable to secure a loan can now reapply for a housing loan to buy again. Some controls are required to be fair to eligible home buyers and avoid prices from spiking uncontrollably in the future.

The Residential Tenancy Act (RTA)

Housing and Local Government Minister, Zuraida Kamaruddin recently said that the RTA is being drafted and is expected to be ready by the end of 2020. The act is based on the Australian model and adapted for Malaysia. The new act is expected to benefit both landlords and tenants from various aspects.

1. For Property Tenants

  • Assist younger generation, B40 and M40 groups in getting a rental unit.
  • Prevent discrimination from property owners in excluding certain groups from renting.
  • Prevent property rentals rates from being increased at the whim of the property owner.
  • Prevent property owners from evicting tenant without just cause.

2. For Property Owners

  • Protect owners from common issues that may arise during the period of renting.

3. For Both Property Tenants and Owners

  • Formation of a tribunal for issues related to housing rental between property owner and tenant.
  • Assist in determining a fair affordable rent rate based on location.

Overall

These incentives are government actions to help the nation’s property sector to recover and provide a healthier environment for property ownership as well as rentals. However, the effects of the pandemic and subsequent pay/job cuts is still affecting many people and Malaysia’s overall economy. With unemployment numbers spiking and many facing income cuts, banks may opt to tighten lending conditions raising difficulties in obtaining borrowing margin.

FAQ

Q: Can foreigners buy homes using HOC benefits?

A: No, the HOC applies only to Malaysian citizens seeking to purchase residential properties.

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