PETALING JAYA: Real Estate And Housing Developers’ Association Malaysia (Rehda) is urging the government to waive goods and services tax (GST) on construction material for development of affordable housing priced at RM500,000 and below.
The proposal was made the first time by the association since GST implementation on April 1, 2015.
President Datuk Seri FD Iskandar said while Rehda supports the introduction of GST to make taxation more comprehensive, efficient, transparent and business friendly, the imposition of GST however has resulted in increased input prices.
He said as residential properties are categorised as an exempt supply, the disallowance of input tax credit has added on to the cost of development.
“For affordable housing, please waive (the GST). This can seriously help (first time home buyers).
“You will have more developers coming forward to build affordable houses. We hope the government to please consider this,” he told reporters at a luncheon on REHDA’s Budget 2018 Wishlist here today.
Besides that, FD Iskandar said Rehda is also proposing a Home Ownership Assistance Programme (HOAP) to the government aimed to address the affordability issue faced by the first time buyers.
He said under the programme, developers will include the interest of the housing loan disbursed during the construction period.
He said the main objective of the proposal is to assist buyers at the early stage of purchase and at the same time ease the burden of house buyers having to service both their house rental and the loan interest during the construction period.
Rehda has proposed that HOAP be specifically targeted for first time/only home owner and includes those who have sold their previous homes to upgrade and/or relocate.
This include for house priced RM500,000 and below, house price includes interest on mortgage during the construction period, property under construction, household income RM10,000 ad below and is not applicable to cash buyer.
Rehda has also proposed for the disbursement of the 10 per cent down payment from Employees Provident Fund (EPF) to be channeled directly from EPF to the developer concerned without buyers having to pay the amount from their own savings or other sources.
Besides that, FD Iskandar said Rehda is also proposing for the percentage of contribution to be credited to EPF Account II to be increased to 50 per cent from the current 30 per cent.
He said in order to continue encouraging and facilitating homeownership, Rehda has proposed that the MyDeposit Scheme to be continued with higher allocation to benefit more first time house buyers in addressing the issue of high entry cost.
The scheme, launched in Budget 2016 with an allocation of RM200 million, aims to address the issue of first time house buyers struggling with financing upfront deposits.
Among others in the wishlist include:
Stamp duty exemption
– The stamp duty waiver to be expanded to more properties of higher threshold but falls under the affordable housing.
– The stamp duty exemption to be continued beyond December 2018.
Special end-financing scheme
– Rehda is requesting the government to include private developers in the scheme or accord them other similar schemes towards realising the government’s objective in encouraging homeownership among the rakyat.
– The proposal follows the introduction of a special end-financing scheme for PR1MA houses during Budget 2017 which provides buyers with end-financing up to 90 per cent to 100 per cent.
Solicitors’ Remuneration (Amendement) Order 2017
– Rehda has proposed that residential properties of which selling price is up to RM500,000 (affordable housing) be given special consideration and the legal fee structure applicable to such properties be reverted to the old structure.
– This will mitigate the increased cost of home ownership as well as go a long way in assisting the target groups especially those who are new to the workforce. This segment of the workforce may be able to afford to the monthly housing loan repayment installments but may have yet to accumulate sufficient savings to be able to pay for legal fees and other upfront costs on top of the 10 per cent down payment upon signing of the sale and purchase agreement.
Increase affordable housing supply
– Developers should be relieved from the role of providing low cost housing and the role should be reverted back to the government through one centralised body with a statutory power to build such houses.
– Government to identify and utilise government and state owned land for the provision of affordable housing, especially if such land is not used optimally.
– Focus on building affordable housing by converting low cost quota (which is low in demand) to affordable housing with higher demand.
– Review planning requirements in order to facilitate and encourage supply of more of houses – current planning policy for residential development based on density should be changed to plot ratio to enable sub-division of floor area into smaller units, thus, increasing supply.
Cost of doing business
– Government should review and lower down or abolish unnecessary charges or requirements with the objective to reduce the costs of doing business so that the savings can be passed on to house buyers in the form of more affordable housing.
– Private utility companies should not be imposing capital contribution charges on developers are already required to lay infrastructure in their development projects and bring in new customers to them.
Further incentives for the adoption of Industrialised Building System (IBS)
– The government and its agencies must ensure that their projects adopt IBS system and components thus ensuring economies of scale. The cost of producing the IBS components therefore can be reduced and at the same time can encourage more manufacturers to set up plant.
– The government to continue in the provision of IBS promotional fund with higher allocation to encourage more adoption of the system.
– Other incentives: fast lane approval for IBS projects, sales tax exemption for accredited IBS materials, GST exemption for IBS constructions, stamp duty exemption for house buyers of IBS projects, and reduction of custom duties to encourage adoption.
RM1 million threshold price for the purchase of residential properties by foreigners
– A tiered pricing threshold approach that would be more practical and efficient in promoting foreign investment in Malaysian property without compromising the interest of local buyers.
– The three-tier pricing threshold should be adopted according to the state and degree of urbanisation of the related property as highly urbanised areas (Kuala Lumpur), urbanised areas (Selangor, Melaka, Negri Sembilan, Johor, Penang) and less urbanised areas (Perlis, Kedah, Perak, Pahang, Kelantan, Terengganu, Sabah, Sarawak).
– Foreign acquisition threshold to be relaxed for completed properties which remained unsold six months after the issuance of Certificate of Completion and Compliance.
Revision of the Bumiputra quota policy
– The Bumiputra quota should be standardised across all states and should be capped at 30 per cent.
– Bumiputra quota release mechanism should be standardised, structured and transparent across all states. The automatic release of unsold Bumiputra units to the open market shall be:
a) 10 per cent to be released after six months from the launching date.
b) 10 per cent to be released after 12 months.
c) Balance 10 per cent to be released upon completion.
– Bumiputra discount rate should be standardised and capped at three to five per cent for housing and five to seven per cent for commercial properties and should not be applicable to high end properties.