> Differing views and comments from industry professionals
THE recent Budget 2015 announcement saw the nation, including industry leaders, regular "Joes" and "Janes", apprehensive and eager to learn of its content and constitution. Will the changes benefit or burden individuals, industries and factions of society? theSun features the views of Real Estate and Housing Developers' Association Malaysia (REHDA) president Datuk Seri F.D. Iskandar, CH Williams Talhar & Wong (WTW) managing director Foo Gee Jen and National House Buyers Association (HBA) honorary secretary-general Chang Kim Loong.
Iskandar lauds the government's move in introducing the Youth Housing Scheme in Budget 2015. "This smart partnership between the government, Bank Simpanan Nasional, the Employees Provident Fund and Cagamas will certainly benefit young couples who wish to own a home. Apart from the 10% loan guarantee that enables borrowers to obtain full financing (including cost of insurance), the RM200 monthly financial aid will be helpful, especially to those living in urban areas and those struggling to cope with the rising cost of living."
REHDA welcomes the various incentives and measures, particularly those related to the real estate and property sector. It believes the new mandates will have a positive impact on the industry, especially in promoting home ownership among the lower and middle income group, as well as improve the quality of life of the rakyat. "We also appreciate the effort made to raise the ceiling of household income from RM8,000 to RM10,000 for PR1MA homes.
We believe it will open up further opportunities for more purchasers to own affordable housing." Iskandar is also happy with the introduction of the Rent-To- Own Scheme, which he says will help those without the ability to obtain financing.
Other applauded projects and programmes include:
- the extension of 50% stamp duty on instruments of transfer and loan agreements; with an increase of purchase limit from RM400,000 to RM500,000 to Dec 31, 2016, which will spur the growth of the housing and property sector, especially the affordable sector;
- increase of price limit of the My First Home Scheme to RM500,000, looking at the increased costs of development;
- borrower's eligibility raised to 40 years from 35;
- facilitation fund of up to 25% from the project cost, which will increase private sector developers' participation in the 1Malaysia Civil Servants'Housing (PPA1M) projects;
- allocation of RM1.3 billion for building 80,000 units of PR1MA homes, RM644 million for 26,000 units of People's Housing Programme (PPR) homes and provision of Rumah Mesra Rakyat, Rumah Idaman Rakyat and Rumah Aspirasi Rakyat by Syarikat Perumahan Negara Berhad (SPNB); and
- the federal government's move to spend RM76 billion in infrastructure projects across the country. Pledging its full support in working together with the government in assisting the delivery of more affordable housing, REHDA hopes the government will consider its appeal to take on the role of social housing. "On our part, we request that private developers be allowed to pay a certain sum to either the state or federal government, in lieu of not building low cost... as currently practiced by DBKL.
"We look forward to a level playing field and are keen to engage the government more, for the benefit of the rakyat and the industry," said Iskandar.
Commenting on Datuk Seri Najib Abdul Razak's announcement that the government has agreed to spend RM279.3 billion, with up to RM9.8 billion aimed at "accelerating growth, ensuring fiscal sustainability and prospering the rakyat", WTW's Foo said that little was mentioned of GST in the budget, although the undercurrent of concern as to its impact on the cost of living in 2015 cannot be ignored. "Although residential properties are zero-rated for GST, materials and services supplied in the development process will be subject to GST and these costs are likely to be passed on to home buyers. However, the extent of its effects are unclear," says Foo.
He mentioned the various affordable homes projects that were planned. "Together with the 130,195 homes proposed in 2013, the government will provide new housing to about 1% of the population per annum for the next four years, compared to our current population growth rate of 1.3%. Looking at the population aged 25 to 29 years, which is about 12% of the total population, and the estimate of 30% of these households being potential first time buyers (figures by an established property marketing service), the need for affordable homes was identified at about 330,000 units. The above programmes appear to have adequately addressed the requirements of first time home buyers but plans must be matched by actual deliveries. We note that of the 126,000 units proposed in 2013, only about 10,000 commenced construction in 2014. To bring the plans on track, commencement of affordable homes construction in 2015 will need to be stepped up to 120,000." Foo's concerns: the actual number of affordable homes constructed may fall far below target.
Like Iskandar, Foo applauds the Youth Housing Scheme but says: "Its availability of only 20,000 units is a major limitation. This number should be doubled." He adds that an additional condition for eligibility of this financing scheme should be mandated. "Houses bought should be owner-occupied."However, he feels that the mentioned scheme was a better decision compared to re-introducing DIBS. Foo is all praise for the many affordable home projects and financing schemes to help home buyers purchase a roof over their heads, but he also points out that buyers should be educated on good financial management, otherwise "the easy terms of loan financing with these schemes may lead to excessive debts and inability to repay loans".
On the Rent-To-Own scheme, Foo thinks more details on the operation should be studied ... "especially the implications when the 'tenant' requires a bigger home after a few years due to a larger family. The 'tenant' may be unable to break the tenancy agreement and risks losing the option to purchase at the end of 20 to 30 years".
In 2015, Real Property Gains Tax (RPGT) will be self-assessed. Foo cautions prospective sellers to seek expert advice and guidance on the market value prior to completing a sale. "It will minimise the risk of undervaluing your property and being penalised for under-payment of RPGT."
The budget has much planned for East Malaysia. Foo believes these will cater to the expected increased traffic in view of the Year of Festivals. It will also help the country achieve its 29.4 million visitor target and RM89 billion tourists receipts. "The budget also announced tax exemptions of 70% to 100% for a period of five years, for the management of industrial estates. This should encourage better management and gated and guarded industrial parks, and attract more logistics operators. Better managed industrial estates will also encourage more industrial developments and investments in general," he adds. On the many infrastructure developments, Foo believes that these will create additional wealth and spur new opportunities for residential developments.
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