Speaking to FMT, Real Estate and Housing Developers’ Association patron Ng Seing Liong said the budget also did not address the high cost of building materials.
In the run-up to today’s budget announcement by Prime Minister Najib Razak, Ng voiced hope that Putrajaya would exempt developers from paying the 6% GST on building materials, or at the very least, reducing the amount.
He said this would have enabled them to build more affordable units.
“Although it is good that the government has allocated funds for 2,000 units under the MyDeposit programme to help house buyers with down-payments, we were hoping Bank Negara would relax its lending guidelines.”
In the MyDeposit programme introduced last year, the government allocates funds to help first-time house-buyers cover the 10% down-payment for a home or RM30,000, whichever is lower.
Rehda has repeatedly cited end-financing issues, particularly stringent lending requirements, as a stumbling block for property sales.
However, others, like the National House Buyers Association (HBA), complained that developers had priced homes beyond most people’s means.
Good reason not to relax lending guidelines
Meanwhile, leading real estate agency Henry Butcher Malaysia, said the government had good reasons not to relax lending guidelines, which some developers had been lobbying for.
“Even though there have been calls to relax lending guidelines or reintroduce schemes similar to the Developers Interest Bearing Scheme (DIBS), which could stimulate the property market, these may increase household debt levels,” said Henry Butcher Malaysia’s chief operating officer Tang Chee Meng.
He told FMT that other incentives announced by Najib today, such as the 50% tax exemption on rental income under RM2,000 per month, would encourage people to purchase homes as an investment.
“The expansion of the step-up financing scheme introduced by the 1Malaysia People’s Housing Programme (PR1MA) to private housing developers will encourage the construction and ownership of affordable homes.”
Under PR1MA’s step-up scheme, house buyers pay a lower amount in the initial years and start to make higher instalment payments as their salaries increase over time.
“As for the GST exemption for properties managed by developers, this will help them but overall it’s not a very exciting budget for developers. But it’s better than last year’s when there was hardly anything for them.”
HBA against tax exemption on rentals
HBA honorary secretary-general Chang Kim Loong said the 50% tax exemption on rentals would only encourage more speculative purchases of residential properties, further driving up property prices.
He said that while HBA was grateful for Putrajaya’s commitment to building more affordable homes, it was important for such housing projects to be implemented properly to benefit the right target market.
“They must build the right product at the right place with the right pricing and the right numbers.”
Chang also commented on the expansion of the PR1MA step-up financing scheme to private housing developers, saying it may be detrimental in the long term.
“Housing developers will be encouraged to increase house prices knowing that the buyers can get higher end-financing. This, in turn, will also push up prices of completed properties.”
Putrajaya, he said, should take measures to slow down escalating property prices by increasing the entry and exit cost of owners of multiple properties, by increasing the stamp duty and real property gains tax.
At the same time, he also urged the federal government to give more incentives to private housing developers to build affordable properties such as alienating land at a lower cost, giving fast-track approvals and even tax exemptions.