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Gurney Wharf public projects to begin early next year

GEORGE TOWN: Work will begin early next year on several components of the Gurney Wharf project, touted as the state’s first reclaimed waterfront.

Among the components are a promenade, a park, a skating rink, a children’s playground and a man-made beach.

State Local Government Committee chairman Jagdeep Singh Deo said the state was in negotiations with relevant parties to finalise some of the agreements.

“We have already been given about 12.4ha of reclaimed land from the developer for work to begin in the southern site, near Jalan Pangkor.

“It will be carried out in stages.

“Finally, we can see this materialising. This will be a real game-changer for Penang in the near future,” he said today.

Reclamation work for the Gurney Wharf project was completed recently by Tanjung Pinang Development Sdn Bhd, a subsidiary of property developer Eastern & Oriental Bhd (E&O).

Of the 52.2ha to be surrendered to the state government, about 24ha will be for various public amenities benefitting the people of Penang.

However, the state government has agreed to reclaim another two water bodies at the site, about 5.8ha, which will also be surrendered to the state government.

Physical work is expected to begin next June and will take about a year to complete.

Gurney Wharf, a new seafront public park, is a state government initiative, with its conceptual master plan by Grant Associates, an internationally-renowned consultant architect firm.

Grant Associates has been involved in various international projects including in the United Kingdom, such as the The Hive, Bristol Harbour Site and Cambridge Accordia, and also Singapore’s Gardens by the Bay.

Jagdeep said Tanjung Pinang Development is expected to surrender the remaining reclaimed land by next year.

“In the subsequent phases, there will also be a wetland, food and beverage outlets, retail outlets and a water taxi pier, all lining the 24ha site,” he said.

He also revealed that about 95 per cent of the public were in favour of the Gurney Wharf project while about four per cent had additional inputs. Only one per cent was against the project.

Meanwhile, speaking on a separate matter, Jagdeep said the Housing and Local Government Ministry (KPKT), during a meeting with state officials yesterday in Putrajaya, had committed to consider approving Penang’s request for funds for 44 critical projects amounting to RM35 million.

Penang had recently requested for RM28.76 million from the Housing Maintenance Programme (PPP) fund and RM72.13 million from the Malaysia Home Maintenance Fund (TPPM) fund for next year.

“There was a commitment from the Federal Government for our requests in yesterday’s meeting.

“I believe Penang will be given one of the highest funding now that the federal and state governments are one and the same.

“If given (the funding), this will be the best New Year gift for the state,” he added.

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Strong interest from mainland Chinese buyers expected next year

CHINESE international property portal Juwai.com, forecast there will be stronger interest from Chinese buyers next year with the lowering of the minimum price threshold for foreign buyers on high-rise property.

In its 2020 budget, the government proposed helping the industry sell some of its unsold new homes by temporarily lowering the minimum price threshold for foreign buyers on high-rise property in urban areas from RM1 million to RM600,000.

The lower threshold will only apply between January 1 and December 31, 2020, after which date the threshold reverts to RM1 million.

Juwai IQI executive boardmember, Kashif Ansari said, the real estate industry views positively the government’s move to temporarily reduce the minimum price threshold for foreign buyers.

That is the conclusion of the Juwai IQI survey of 386 Malaysian real estate agents, conducted between 6 and 21 November 2019, he said.

“With the lower threshold in 2020, we forecast stronger interest from our buyers. Is it good, or is it bad? Nationwide, 71 per cent of surveyed agents approved, calling the lower threshold either “a little good” or “very good.” More than one-third, or 35.1 per cent, of surveyed agents believe the lower threshold is “very good.”

“The fact that everyone agrees upon is that the markets are suffering from an excess of unsold property. By lowering the price threshold for a short time, the government hopes some of these unsold properties will find buyers. Developers will then have the funds to invest in and begin construction on projects more suited to the local buyer in today’s market,” said Kashif.

Kuala Lumpur, Penang, Selangor, and Johor combined have an overhang of 9,315 high-rise units valued at RM6.775 billion.

Data from the Valuation and Property Services Department of Malaysia (JPPH Malaysia) shows that Kuala Lumpur has the highest overhang of unsold completed condominiums and apartments. As at the first quarter of 2019, the high-rise overhang in Kuala Lumpur stood at 2,544 units, worth about RM2.338 billion, followed by Penang with 2,684 units valued at RM2.13 billion, Selangor (2,113 units; worth RM1.144 billion) and Johor (1,974 units; RM1.163 billion).

According to Kashif, the property market was most positive about the lower thresholds in Kuantan, Penang, Melaka, and Sarawak.

Kuantan had the highest rate of approval, with 75 per cent of agents from that state calling the initiative “very good,” he said.

In every state with sufficient survey responses for analysis, at least 62.5 per cent of respondents consider the lower threshold to be “a little good” or “very good.”

The states with the highest number of negative responses, in which agents call the lower price thresholds either “a little bad” or “very bad,” are Melaka (15.8 per cent), Kuala Lumpur/Selangor (7 per cent), and Sabah (8.1 per cent). Nationwide, 8.6 per cent called the change “a little bad” or “very bad,” said Kashif.

Malaysia a good market for mainland Chinese

Kashif said, recent reports by Juwai found that mainland Chinese buyers accounted for RM8.4 billion (US$2 billion) of total Malaysia residential property sales per year, and less than one per cent of all transactions.

He also said, Chinese buyers made 16.5 per cent more enquiries on Malaysian property in the third quarter of this year than in the same quarter of 2018.

In the first half of 2019, Malaysia was the fifth most popular country for Chinese property buying inquiries in the world, he added.

“Malaysia is especially appealing to buyers motivated by lifestyle, retirement, or education. It has affordable standards of living, high quality of life, medical facilities, and accessible educational institutions. Malaysia consistently ranks among the best places to live,” he said.

Kashif said the trade war encourages global corporations to relocate their operations to Malaysia due to the country’s productive labour force and strategic location.

These new investments in factories and distribution centres also lead to a certain amount of housing investment as foreign business people move to Malaysia.

“Malaysia is an essential player in the Belt and Road Initiative, as 80 per cent of China’s trade moves through the Straits of Malacca. The difficulties in Hong Kong have contributed to a strong increase in demand from Hong Kong. Total numbers of Hong Kong buyers will not be as large as some imagine because Hong Kong itself has a relatively small population,” he said.

Source: News Straits Times

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Penang seeks design ideas for its three man-made islands, offers RM510,000 as prize

The Penang government is offering RM510,000 prize money for five finalists in a competition to gain design ideas for its plan to build three artificial islands in the Straits of Malacca.

Penang Chief Minister Chow Kon Yeow who made the announcement today said the competition is meant to get design ideas from qualified and registered architects and town planners for three man-made islands under the Penang South Reclamation (PSR) project.

He said the state government has set aside RM5 million overall for the competition, including for its publicity campaign and for the RM510,000 or approximately US$125,000 honorarium money each of the five finalists will get.

He said the PSR will be known as Penang South Islands (PSI) for the competition.

“There will be main guidelines on the design for the three islands such as Island A will focus on industrial park to complement the Bayan Lepas Industrial area,” he told a press conference here.

He said the design for Island A will have to include the next level of technology, such as the Internet of Things and be Industry 4.0 ready.

“The final winner will work on the details of the design for the three islands including the phases of implementation,” he said.

Chow said the designs submitted will have to comply with all 18 conditions by the National Physical Planning Council (NPPC) and will also have to include green spaces, transportation, affordable housing and sustainability.

He said participants can form a consortium to submit their application for the competition as the project was for three islands covering a total of 4,500 acres.

“The original masterplan for the islands can be used as a guideline for participants but they do not have to follow it, they can submit their own proposals and designs,” he said.

He said the winner will also be asked to suggest names for the islands.

The closing date for the competition is November 25.

The five finalists will be picked by April next year and the final winner will be announced subsequently.

The final winning submission will be the Lead Master Plan Designer and will be in charge of the full design of the whole project.

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Affordability, overhang and foreclosures

JOHN is interested to buy a RM1.2mil property. Together with rebates and all, the real value of the house is RM1mil and John is aware of that.

John goes to the bank, and based on the sales and purchase agreement, applies for a bank loan of RM1.08mil, or 90%.

But the bank gives him an 80% loan amounting to RM960,000. John walks away from the purchase.

The developer blames “stringent financing rules” for the aborted purchase. To the bank, it has approved the loan.

For the past couple of years, developers and banks have their own definition of loan rejection. Developers say the loan rejection rate is as high as 70%. According to Bank Negara statistics, loan rejection is 25.4%.

At a media briefing on “Household debt and house financing in Malaysia” on Oct 24, Bank Negara’s Financial Surveillance Department director Qaiser Iskandar Anwarudin said 54.4% of household debt is for housing as at June 2019.

If non-residential properties were to be included, this rises to 60.9%. This is the debt carried by Malaysian households, or families, for the purchase of properties.

Qaiser says 84% of housing loans are extended by banks, while 16% are by other lending, but non-bank, institutions.

“About 70% of a bank’s income is generated by its lending activities. It is in their best interest to lend and housing loan is a significant portion, ” Qaiser says.

The Real Estate & Housing Developers’ Assocation Malaysia (Rehda) has a different definition of loan rejection/approval.

Rehda (Selangor branch) chairman Zulkifly Gharib says a developer has a register of potential buyers who apply for financing, and a register of those who make successful purchases.

“If there are 100 prospective buyers, but 70% walk away from a purchase, to us, that is a 70% rejection, ” says Zulkifly, who is GLOMAC BHD’s chief operating officer.

Zulkifly says “technically” the loan may be approved, but it did not result in a sale. As long as a sale is not concluded, that is considered as a rejection.

A source says Rehda has “never disputed” Bank Negara’s approval rates of more than 70%.

“But we are concerned about the high number of potential buyers who do not carry on with the purchase because they do not have sufficient downpayment, ” the source says.

The source says most buyers want a 90% loan margin.

In order to ensure a sale goes through, the source says a minimum 10% rebate is given during the current Home Ownership Campaign but the real price is not stated in the sales and purchase (S&P) agreement.

The source says although John’s real price is RM1mil, the developer has listed it in the S&P agreement as RM1.2mil “to help the buyer cover the downpayment.”

“Some buyers cannot even afford a RM50,000 downpayment, ” the source says.

“Let us look at the situation from the perspective of the potential buyer, from the bank’s perspective. And from the developer’s.

“As a developer, we ask ourselves… what can we do to help out. We understand the risk from the bank’s perspective, but look at the industry and its linkages to other industry, ” the source says.

Strict financing versus high house prices

While developers blame “stringent” lending/financing rules for the slow sales, Bank Negara’s surveillance department says it is the high price of housing that remains a “major hurdle”.

Qaiser says the main issue is housing affordability. Based on Bank Negara estimates, most Malaysians are able to buy up to RM280,000. But the average price of new properties launched nationwide is significantly higher, at RM420,000. The level is higher at individual state level.

This affordability issue is supported by the median multiple ratio, says Qaiser.

“A house is considered affordable if it is not more than three times the household income. In 2012, it was 3.9 times and in 2016, it was 4.8 times.

“This indicates that houses in Malaysia are seriously unaffordable, even by international standards, ” Qaiser says.

He says debt levels have moderated from the 2015 peak of 86.9% of GDP and recent growth in debt has been more aligned with income growth. However, the aggregate level of indebtedness among Malaysian households remains high relative to regional and rating peers, and high-income countries like Hong Kong, Japan, South Korea, Britain, New Zealand, Australia and the United States.

Widespread affordability issues

He adds that the affordability issue is widespread. It is not “contained” in certain areas but is most obvious in Selangor, Kuala Lumpur, Johor and Penang. This has contributed to the elevated levels of unsold properties in Malaysia, Qaiser says.

Qaiser says 73% of unsold properties are considered as not affordable, according to the different states, based on data from the National Property Information Centre (Napic).

According to Napic’s latest figures in Property Overhang 2Q19, the ringgit value of unsold completed housing, including serviced apartments and small offices home offices is RM35.1bil.

Qaiser says the main reasons why Malaysians cannot afford a house are:

> Properties not aligned to what people can afford; and

> A mismatch between income growth and property prices.

He says although there is a downtrend seen in the Malaysian House Price Index, and more units priced below RM300,000 are making their way into the market, “this rebalancing will take some time”.

Giving his perspective on the financial system, Qaiser says there are pockets of risk in the financial system.

There are those earning less than RM3,000 a month who only have 0.6 times assets to their debt.

This group is particularly vulnerable, although at aggregate level, it looks all right.

Qaiser says housing loans impairment remains low at 1.3%. Bank Negara is seeing a slight pick-up in default among properties valued at more than RM500,000 and among those with variable income.

“There is an uptick. We started seeing this last year and we continue to see it this year, ” he says.

Rising foreclosures

Analysing the foreclosure property market, AuctionGuru.com.my executive director Gary Chia said in its 3Q19 report that overall foreclosure cases have expanded further to 9,294 cases versus 8,760 a year ago, representing a 6% rise. This includes commercial, residential properties and land parcels.

In ringgit value, it is an increase of 31.6%, RM5.19bil (3Q19) versus RM3.9bil (3Q18).

On a nine-month basis to September 2019, the total number of foreclosure cases rose to 26,563 versus 23,658 a year ago, a 12% increase.

In value terms, the total aggregate foreclosure reserved value stood at RM14.38bil, a rise of 32% compared to a year ago. This supports Bank Negara’s findings that the central bank is seeing an uptick in foreclosure cases involving properties priced RM500,000 and above since last year.

Residential comprises the largest volume of foreclosure cases, at 22,196 out of the total 26,563 cases, or 83.56%, for the period ended Sept 30,2019.

Chia said the growth in the foreclosure property market appeared to be “relentless”, as evidenced by the double-digit growth recorded across the various property segments.

He expects “a strong and robust” foreclosure market going forward in the foreseeable near term amid headwinds in the domestic and external macro economy outlook, coupled with the overhang situation facing the primary property market.

The proactive measures taken by the government to reduce the property value ceiling to RM600,000 for foreign property buyers may provide relief by reducing the excess property stock in the primary market, Chia says.

Source: The Star

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🎯 Up Your Game In Property Investment by Understanding The Value Chain

In any investments, it’s always about the profit.

And in property investment there are ways you can maximise profit even if you are just getting started or a newbie.

Let’s look at the whole property investment value chain, to better understand this.

 

To start off with, choosing the right property market at the planning stage will let you maximise your borrowing capability, and at the same time ensure you can continue to leverage from the bank.

Property Market

Choosing which market to invest in will determine the percentage below market value you can get for your property. This can go from between 20% up to 50%. But the trick is, do you know if the value you get is the actual real value?

In the current market, we are seeing worrying trends where the prices of certain property type are actually depreciating (or going down) creating a scenario we call negative equity. Why? Simply because new projects by developer have been sold at a price much, much higher than actual valuation. The prices were artificially inflated.

Instead of buying new projects, there is a huge opportunity in buying from the secondary (or sub-sale) market, which 𝗦𝗨𝗥𝗣𝗥𝗜𝗦𝗜𝗡𝗚𝗟𝗬 𝗰𝗮𝗻 𝗺𝗮𝗸𝗲 𝘆𝗼𝘂 𝗺𝗼𝗿𝗲 𝗺𝗼𝗻𝗲𝘆 𝗔𝗡𝗗 𝗙𝗮𝘀𝘁𝗲𝗿 𝘁𝗵𝗮𝗻 𝗻𝗲𝘄 𝗱𝗲𝘃𝗲𝗹𝗼𝗽𝗲𝗿 𝗽𝗿𝗼𝗷𝗲𝗰𝘁𝘀

And now is one of the BEST time to start investing in the secondary market..

✅ Property is at least 20% cheaper than market rate

✅ We can know safely and surely the actual valuation

✅ Start receiving passive income within 3 to 6 months

✅ And the good news is make from between RM 20,000 to RM 60,000 within 3 to 6 months (and still collecting rental)(you can read more here)

Property Type

Next is property type.

You need to decide and choose the property type. Choosing the correct property type can stretch your borrowing capability to optimise your return. And this can be determined based on your individual profile and your budget.

Well, you may think to yourself – “What budget? Property price is so expensive now, it is way above my budget.”

Let me debunk one of the biggest myth in property investment. You do not need a lot of money to start investing in property.

You can start investing in property with as little as RM1,000. Again, match your available and existing budget/ capital with the different property type.

So what are some of the property types? Residential property type ranges from flat, apartment, condominium, single or double-storey terraces, semi-detached or bungalow.

Whilst commercial property types are offices, shoplots, retail space, hotel, industrial (such as factory and warehouses) and special purpose property.

The first step

So first thing first, you need to decide on the budget that you are comfortable with. This includes how much monies that you have (which we will call capital) to pay the upfront necessary payment needed and the monthly installments.

With this mind it will be much easier for you to further narrow down the property type.

 

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Change name in TNB account so tenants will be liable for bills

LANDLORDS have been reminded to do a name change for the Tenaga Nasional Bhd (TNB) account of their rental properties, making the tenant fully responsible for any charges owing.

At a press conference, two complainants shared how they ended up with thousands of ringgit in unpaid bills after their tenants defaulted on payments.

One of them, who only wanted to be known as Yau, was informed by TNB that he owed a staggering RM1,298,213.85 on one of his properties.

According to Yau, he rented out the premises to a woman about a year ago but she failed to pay the rental. The tenant was unreachable for five months before finally contacting Yau and informing him of her decision to terminate the tenancy agreement.

Yau only found out that he owed a huge sum of money to TNB, amounting to five years’ electrical consumption, after she had handed over the keys.

With help from Kepong MP Lim Lip Eng and Beautiful Gate Foundation for the Disabled (Kepong Centre) chairman Chua Choong Yin, Yau filed a police report.

Luckily for Yau, the tenant decided to take responsibility for the matter, and agreed to pay around RM330,000 after TNB recalculated the charges, taking into consideration the fact that the property was only occupied for two years.

“TNB gave the tenant two years to settle the payment. As for now, she has already settled the first payment and the second is due next month, ” said Yau.

The other complainant faced a similar predicament after letting out her premises.

However, the tenant went missing, leaving behind a RM191,979.55 electricity bill, forcing the complainant to take the matter to court.

During the press conference, Lim’s political secretary Yew Jia Haur emphasised the importance of changing the name in the TNB account when letting out properties.

“Cases like this have happened before but the owners managed to resolve it by taking immediate action. It is vital to apply for the change to avoid legal problems, ” he said.

Owners were also advised to register with myTNB to monitor their tenant’s monthly usage and payment pattern.

Source: The Star

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RM800,000 proposed as Penang property price threshold for foreign buyers

GEORGE TOWN (Oct 21): The Penang government has proposed that the price threshold for foreigners to purchase urban high-end properties in the state to be set at RM800,000, compared to RM600,000 announced by Finance Minister Lim Guan Eng during the 2020 Budget.

Penang’s Housing, Local Government, Town and Country Planning Committee chairman Jagdeep Singh Deo said the reduction in price threshold for foreign property buyers should only apply for a period of six months instead of one year as tabled during the budget.

“Finance Minister Lim Guan Eng’s purpose in reducing the threshold for foreigners (purchasing built condominiums) from RM1 million to RM600,000 was to tackle the property overhang issue in the country, but in Penang, the (property overhang) issue is manageable,” he told a media conference here today.

He said the unsold property in Penang had been decreasing from 3,916 units in 2017 to 3,502 units in 2018, whereas it was increasing in other states such as Johor (4,376 to 6,066 units between the year 2017-2018) and Selangor (3,713 to 4,623 units).

“The suggestion was discussed with the state Chief Minister (Chow Kon Yeow) and will be further discussed and confirmed later during the next state exco meeting,” he said.

Meanwhile, Jagdeep also commented on the Rent to Own (RTO) financing scheme that was also tabled by Lim during the 2020 Budget.

The RTO scheme according to him, should prioritise first-time homebuyers to buy low cost and low-medium cost units valued at RM42,000 and RM72,500 respectively, as well as the affordable housing at RM150,000.

“However, according to the Budget 2020 announcement, the RTO scheme applied to properties valued of up to RM500,000, (which) to me, those who can afford that much do not really need to be helped,” he added.

Source: Edge Prop

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Flat rate for all in mixed-use property

PETALING JAYA: Residents at high-rise buildings without strata titles, where there are also offices and retail lots, will now pay service or maintenance charges according to a fixed formula following a landmark court decision.

The Court of Appeal held that the Joint Management Body (JMB) committees of high-rise buildings are not allowed to charge different rates on owners in any mixed development projects.

It overturned a High Court decision that JMB had power under the Strata Management Act to determine or fix different rates of service or maintenance charges for

different parcels in a mixed development.

Commenting on the Oct 4 ruling by the Court of Appeal, Strata Property Owners Association Selangor (SPOAS) legal advisor Datuk Joy Appukuttan explained that the ruling would affect properties without strata titles and managed through the JMB.

“Mixed development projects usually comprised residential and office units, retail lots and carparks.

“There had been a grave disparity in the maintenance or service charges imposed by the JMB on property owners.

“With this decision, each property owner will pay a single maintenance or service charge rate in proportion with their share of the unit in the property.

“The JMB can only determine and fix one consistent rate of service or maintenance charges for all properties within the strata development, ” he told The Star.

This court judgment, he said, was a welcome decision for those owning properties in mixed development projects, where they are subjected to different rates of maintenance or service charges.

“Dwellers are often at the mercy of those with a larger share of the units. Unreasonable maintenance or service charge rates are imposed on the minority share unit holders, ” he said.

By virtue of their greater share of the units held by retail and carpark owners, Joy said these owners could control the election and decisions of the JMB at the expense of the minority.

He noted that all JMB should now observe charging a flat rate effective immediately provided for under the Strata Management Act and the ruling or risk breaching the law.

JMB that do not comply can be referred to the Commissioner of Buildings (CoB) under the local councils, he added.

Joy said the judgment stemmed from a case between an individual parcel owner and the Menara Rajawali JMB as well as Denflow Sdn Bhd, the carpark owner of Menara Rajawali in Subang Jaya.

“The owner was dissatisfied with the JMB and the company’s decision in allowing lower maintenance charges imposed on owners with a substantial share of the units.

“On Jan 26 last year, we initiated a case against the JMB and the company, ” said Joy, who was one of the counsels representing the owner.

The case was brought to the Court of Appeal in October last year after the High Court dismissed the case in September.

The Court of Appeal unanimously held that the Act does not confer any power to the JMB or joint management committee to fix different rates of service or maintenance charges for different parcels in a mixed development.

It also held that Section 21 of the Act only accords the JMB the power to determine, impose and collect the charges from parcel owners in proportion to the allocated share units of their respective parcels.

When asked if high-rise property owners will pay less maintenance or service fees following the ruling, Joy said it would depend on the cost of maintenance of the common property of the high rise building.

“Property owner will now contribute in proportion to their share of units.

“In other words, the formula should be – the total cost of maintenance of the common property of the high rise property divided by the total amount of share units, multiply the number of share units for each property, ” he said.

Citing the Menara Rajawali case, where condo and retail owners before this paid RM2.80 per share unit while the carpark owner paid only half, Joy said all the property owners would now pay the same rate of RM2.80.

When contacted, SPOAS chairman Law Hock Hua said a majority of high-rise properties in Malaysia were without strata titles.

“Even after the owners of a property have obtained strata titles, less than 25% of them have the titles. So the property is still bound by the Court of Appeal’s ruling.

“This landmark ruling will likely benefit individual residential owners in a mixed development who are paying higher maintenance charges than owners of offices and retail outlets, ” he said.

Source: The Star

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Property wish list for Budget 2020

PETALING JAYA: Relaxed lending guidelines, continued incentives under the Home Ownership Campaign (HOC), reduced compliance cost and the termination of the real property gains tax (RPGT) are on the budget wish list of property developers and consultants, who hope that such measures will help stimulate the industry and reduce the property overhang.

MAH SING GROUP BHD founder and group managing director Tan Sri Leong Hoy Kum said housing loan eligibility has been one of the main challenges in the property market over the past few years.

“Difficulties in securing maximum loan margins continue to plague potential home buyers, causing a high rate of withdrawals, ” he said in a statement yesterday.

Leong is proposing a higher debt service ratio from 70% to 80%, compared to only 60% currently for the lower-income group.

“A higher margin of financing of up to 110% for the first property, 90% for the second and 70% for the third, ” he said, adding that financial institutions should also take into account an individual’s part-time income during the loan application process.

Mah Sing is also proposing a longer loan tenure of up to 45 years, lower interest rates for first-time buyers and the allowance of the developer interest bearing scheme, so that buyers do not need to service loan interests and rentals at the same time during the construction period.

Budget 2020 will be tabled on Oct 11.

With the rising interest from foreigners to purchase property in Malaysia, S P Setia Bhd president and chief executive officer Datuk Khor Chap Jen is hopeful that the threshold price for purchase by foreigners would be reduced, believing that the investments can help to reduce the current overhang and stimulate the soft property market currently.

“We would also like to see a further reduction in the cost of doing business, especially the compliance cost, where the removal or reduction of such a cost could be translated into cost savings for the property buyers.

“Last but not least, we hope the government can consider assuming the role of providing affordable housing for the B40 group, perhaps under a rental scheme, with some contribution from property developers so that private developers can concentrate on free-market housing.”

Separately, Leong is hopeful that the incentives under the HOC can be continued, as it can help lessen the financial burden of first-time home buyers.

“This (the HOC) was a successful stimulator of property transactions in the past and would be an effective short-term catalyst to stimulate the property industry, ” he said.

The six-month HOC, which was kicked off in January, has been extended a further six months to December 2019.

In line with the government’s continuous effort to lower housing prices to benefit the market, Mah Sing is urging the government to review and reduce the compliance cost.

“Apart from land conversion premiums and development charges, the capital outlay for private utility companies is very high and covers the surrender of the land, construction of the infrastructure, and contributions to the utility companies such as Tenaga Nasional Bhd, Syabas, TELEKOM MALAYSIA BHD and Indah Water, ” said Leong.

He also said the imposition of the RPGT on properties sold after five years was affecting the higher-priced residential property segment.

“We hope the government can consider terminating the RPGT as an impetus to boost the secondary market, as perpetual RPGT is currently affecting those who are considering to upgrade their homes.”

PPC International managing director Datuk Siders Sittampalam echoed Leong’s sentiment on the RPGT.

“The RPGT was imposed to curb speculation, not provide additional revenue to the government, especially now when the property market is already dampened.”

On the current property market overhang, Siders said this was due to buildings being constructed in wrong places, or developments being green-lit without a preliminary study being conducted.

“A market and feasibility study needs to be conducted first before a development can proceed, ” he said.

Total overhang of residential property remains high, rising 30.7% to a new record of 32,936 units valued at RM20bil as at the first quarter of 2019 (1Q19) as opposed to 25,193 units or RM15.7bil in 1Q18.

Knight Frank Malaysia managing director Sarkunan Subramaniam said more funding and incentives should be provided to encourage both domestic and foreign investments.

“The government should relook into the regional economic corridors policy, namely, the Northern Corridor Economic Region, the East Coast Economic Region, Iskandar Malaysia, the Sabah Development Corridor and the Sarawak Corridor of Renewable Energy.”

Sarkunan is also urging the government to consider removing the sales and service tax (SST) on building maintenance service charges.

“Selected items that make up the building maintenance service charges are SST-exempt, while others are not.

“For example, while utilities are SST-exempt, security services are not. Thus, there may be double taxation although SST is supposed to be a single-tier tax.

“We would also like to see the government being more lenient on the release mechanism pertaining to bumiputra units, or also a reduction in the allocation for bumiputra units (lower quota policy), depending on the location and type of property, ” he said.

Source: The Star

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Budget wish list from a property investor

With the budget 2020 around the corner, what are your wish lists as a property investor?

It has been a challenging year since the Pakatan Harapan’s 1st budget tabled by Finance Minister Tuan Lim Guan Eng last year. MALAYSIA’S Budget 2020 will be tabled in Parliament on Oct 11. As announced, the theme for this year’s budget is “Shared Prosperity: Engendering High-Quality Inclusive Growth Towards High Income Economy”.

The property market has been sluggish and the property overhang as well as home ownership remain the key concerns. Property consultants and stake holders of property sector has called for the abolition of the Real Property Gains Tax (RPGT) imposed on properties held for more than five years. Other common suggestions are the revision of the price threshold for foreign buyers, reduction of compliance cost borne by developers and better access to financing for homebuyers.

As a property investor myself, I have listed my top 5 wish list for Budget 2020 for property investors, home owners as well as would-be property investor and home owner.

Here’s my wish list:

1. Remove Real Property Gain Tax (RPGT) after the 5th year

In view of the slow market and oversupply situation, I agree with the call from players in the real estate sector who urges to the government to remove the real property gains tax (RPGT) after the fifth year of purchase to 5% (instead of the current 10%) for non-citizens and companies; and zero tax for Malaysians and PRs.

As a result, I believe it will indirectly stimulate the property market and encourage more buyers and investors to re-enter the property market. In addition, this will help to reduce the property overhang and the supply of unsold units in the secondary market.

The last RPGT revision impacted the market negatively. RPGT is a tax on capital gains and was meant to curb speculation, however the current property market is ‘stagnant’ and moving side way. Do you agree that holding a property from the sixth year onwards should no longer view as speculation and should be 0% RPGT for 6th year onwards?

2. Extend loan tenure to maximum of 40 Years

Currently, the proposal of 40-year loan tenure is only for first time home buyer. Previously, it is available for everyone. And it would greatly improve the property market if this proposal were to be extended to include everyone and for those who buys property from the secondary market as well. The advantage of longer loan tenure is that the monthly repayment is lower. This will then reduce the monthly commitment for property owner and a plus point for property investors. A reduced monthly commitment translates to more rental income to the property investors.

3. Increase the loan margin for 3rd property onwards

In overall, we need more catalyst and goodies to spur the property market. Currently, the loan margin for third property onwards is capped at 70% and it’s called LTV70. Therefore, to encourage more property investor to get back into the market, the LTV70 guideline by Bank Negara Malaysia (BNM) should be removed or revised to higher margin i.e. at least 80% margin of finance.

4. Extend House Ownership Campaign (HOC) to include property bought from the secondary (sub-sale) market

House Ownership Campaign (HOC) has been successful thus far to increase home ownership and reduce property overhang. However, HOC campaign is limited to only developer’s new/unsold units. As a majority of property transaction comes from the secondary market, HOC should also be extended to properties purchased from the secondary market to further spur the property market.

5. Increase EPF 2 allocation from 30% to 40%

We are allowed to withdraw money from EPF account 2 to pay for our property purchase. In view of the increased property prices, there is a suggestion to increase the funds allocation from the current 30% to 40%. This will be a good move to reduce the burden of the property buyer to pay for all the cost involved in buying a property.

As a property investor myself, I always encourage investors to leverage on OPM to minimise capital outflow so that profit can be maximized. I specialises in structuring property deals in the sub-sale market so that you are to buy your property with just under RM1000 and make RM20,000 to RM60,000 a year (Read it here >> Discover How To Buy Your Property With Just Under RM1,000 And Make RM20,000 to RM60,000 A Year).

If you have any question or comment, feel free to drop me a message or comment on the box below.

See you soon!

Reference: The Star

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