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