Realtors: Higher property tax will curb speculation only in short term

Realtors: Higher property tax will curb speculation only in short term
Malaysia's Prime Minister Najib Razak (front R) announces the 2014 budget at the parliament in Kuala Lumpur October 25, 2013.

GEORGE TOWN, PENANG - The upward revision of the Real Property Gain Tax (RPGT) will work only in the short-run to curb speculation.

New Bob Group director Dr Lee Ville said the revision in the RPGT would trigger a knee-jerk reaction from developers that would see them reducing the delivery of residential housing projects.

"This will lead eventually to a shortage, triggering demand and property prices to rise up again in the long-term," he said.

The Federal Government wants to raise the RPGT to 30% for properties disposed within the holding period of up to three years.

For disposals within the holding period up to 4 and 5 years, the rates would be increased to 20% and 15%, respectively.

For disposals made in the sixth and subsequent years, no RPGT is imposed, whereas companies are taxed at 5%.

Lee said the move to prohibit developer interest bearing scheme (DIBS) projects was good to curb speculation.

"To complement the move, the Federal Government should also look into lowering the down payment, currently standing at 10%, for first-time home buyers.

"This will enable more middle-income Malaysians to buy property," he said.

On the introduction of the Private Affordable Ownership Housing Scheme (My Home) as a step to encourage the private sector to build more low and medium-cost houses, Lee said this would definitely spur the developers to build more such homes.

"The Government should look also into the delivery mechanism for low and medium cost properties to ensure that the eligible income category benefits," Lee said.

Meanwhile Raine & Horne Malaysia director Michael Geh said the establishment of the National Housing Council was a good move to initiate a holistic approach to develop strategies and action plans in a holistic manner.

"The council will be able to coordinate legal aspects and property price mechanism; and ensure provision of homes in a more efficient and expeditious manner.

"It will be effective in curbing speculation and encourage genuine home ownership," Geh added.

Masters Builders Association of Malaysia president Matthew Tee also said that the increase in real property gains tax to 30% from 15% for properties sold within two years and 15% from 10% for properties sold within three to four years should be maintained for a definitive period.

He added that he welcomed the Government's introduction of a more comprehensive affordable housing policy as well as other infrastructure project allocations but noted that there were still many projects carried over from 2011.

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