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PEPS: Remove 5% RPGT for property disposal from 6th year

PETALING JAYA (Oct 4): The Association of Valuers, Property Managers, Estate Agents and  Property Consultants in the Private Sector Malaysia (PEPS) is urging the government to review the current Real Estate Property Gains Tax (RPGT) so it can have a positive impact in stimulating  the country’s  housing market.

Stating its Budget 2020 wish list in a press release today, the association said property ownership from the 6th year onwards should no longer be deemed as speculative investment hence, the 5% RPGT on such property ownership among individual Malaysians or permanent residents should be withdrawn.

As for foreign individual owners and companies, the current RPGT of 10% for the property disposal from the sixth year onwards, should be reduced to 5%, the group said.

“The removal and reduction of the RPGT after the fifth year will indirectly stimulate the property market and encourage more buyers and investors to re-enter the property market and this will also assist to reduce the property overhang and help developers to reduce the supply of unsold units in the secondary market,” it said.

The association also hoped that Putrajaya will consider reducing the stamp duty rate for property transactions worth RM1 million and above to 3.5%, from the current rate of 4%.

To help more people own homes and to stimulate the market further, PEPS suggested that first time homebuyers of properties below RM500,000 be given 100% loan while the margin for the third  property onwards be increased to 80%. To ease lending eligibility, the government should allow more funds from the borrower’s EPF Account 2 to be withdrawn for the purchase of affordable homes.

The association also  proposed that the government set up a National Centralized Corporation on Affordable Housing to plan, coordinate and implement the government’s  blueprint and plans on affordable housing nationwide while working with state governments and developers on affordable housing matters.

The business model could be based on Singapore’s Housing Development Board.

“Existing agencies involved in affordable housing such as PR1MA could be absorbed under this new corporation,” it added.

To reduce the property overhang in the market, the association suggested a fast release mechanism of Bumiputera units to make the unsold units available in the open market.

PEPS also felt that there is a need to attract foreign buyers to ease the overhang. Hence it proposed that the government reduce the financial criteria required for foreigners to apply for the Malaysia My Second Home (MM2H) Visa Permit by lowering the liquid assets amount required.

State governments should also consider lowering the minimum threshold for foreigners to own properties in Malaysia, such as from RM1 million to RM800,000 in Kuala Lumpur and from RM2 million to RM1 million in Selangor.

PEPS also hoped to see the upcoming Budget 2020 offer more tax incentives and allowances to property developers or contractors who adopt the Industrialised Building System (IBS).

“At the moment only new IBS manufacturers or companies with pioneer status are given tax exemption and tax allowance,” it noted.

Source: The Edgeprop

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Investing In Penang Property

In this article I will be sharing about the Penang’s property market and how I look at the island and its potential for growth.

If you don’t already know, I’m not originally from Penang. My hometown is Malacca. I moved to Penang in 2001 and started investing in Penang’s property since 2005.

I now share with my student how to invest in property in Malaysia and especially so in Penang.

One of my graduates (who is also a blogger) Elvin has asked me the following questions, which I’ve make a video and shared it here:

Penang's Area of Growth

Do you want to know how I look at Penang's property market?Watch this video to know moreThis is a short overview about the area of growth for properties in Penang#kaygarntan #empoweringyourdreams #propertyinvestment #propertyinvestor #propertyinvestmentcoach #themasterkeymethod #penang #propertymarket #overview #area #of #growth

Posted by Kaygarn Tan – Property Investment Coach, Speaker and Author on Tuesday, 4 September 2018

 

If you prefer to read instead of watching the video, the transcript of the video (with additional points) is as below:

How long have you been studying the property market in Penang? And where are the top 5 areas in Penang that you see the most significant growth?

I started investing in Penang’s property since 10 years ago. And since I turned full time investing in properties, I started in depth analyzing and researching Penang properties 5 years ago. And I have compiled these data into several reports for e.g. Property Hotspots in Penang. I continuously study and update the data and have produced several ebooks related to property investment.

Kaygarn Tan Property Investment hotspots report

 

In doing my research and study, I use a lot of check list and tools. One of the tools I use is the Penang Map. Now, let us look at the Penang Map and let’s focus on Penang Island. I would “divide” Penang Island into 4 parts, North, South, East and East. West Penang is Balik Pulau and East Penang is really where it’s most happening and where both “growth” and “development” is.

 

We can further divide East Penang to North East and South East; using the first Penang bridge as the guide.

Kaygarn Tan invest in penang property

So, North East will encompass Glugor, Batu Ferringhi, Tanjung Tokong and Tanjung Bungah. All these are places are what I call “mature” areas. The main economic activities in North East are tourism and this includes Medical Tourism and Hospitality Tourism.

Kaygarn Tan invest in penang property

Another area in North East is Georgetown, which is well known as a UNESCO Heritage site. There are areas within Georgetown that is delineated as Core zone, buffer zone and pre-war houses. The activities in all these places are tourism, whereby there are a lot of street art, heritage walk and heritage tour, where people explore about heritage houses in Georgetown.

georgetown unesco heritage site

Moving to the South East, we will reach the growing area of Bayan Baru, which is one of the satellite city here. Moving further to the South, is the Bayan Lepas Industrial Area, Batu Maung, Teluk Kumbar and Gertak Sanggul.

Kaygarn Tan penang free trade industrial zone

These are the growing areas. The reason these are growing areas is because of the 2nd link bridge that linked Batu Maung and Batu Kawan. This link will bring population to come into the island gradually, towards the southern area.

This is, in a snapshot, the growing area and mature area of Penang Island

Now, let’s cross the bridge and go into the mainland.

Kaygarn Tan Property Investment penang bridge

Penang Mainland is divided into 3 major areas – Seberang Perai Utara, Seberang Perai Tengah, and Seberang Perai Selatan. Looking at the Seberang Perai Utara, there’s the Bertam township, which is a growing area; all the way to Seberang Jaya (in Seberang Perai Tengah) which is a mature area. Moving further south, there’s the satellite township of Batu Kawan, which is a well-planned township, and it’s a growing area.

Kaygarn Tan batu kawan property investment

As a summary, if you want to invest in Penang property, you will need to understand which area are growing and which is mature. Additionally, by understanding the economic activities in the different areas, you will know who your future tenant/ potential buyer will be.

If you have any questions, feel free to comment on the box below.

Happy Investing!

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Close to 40% of unsold completed properties were priced below RM400k

KAJANG (Sept 23): Close to 40% of the overhang residential properties recorded in the country are made up high-rise units priced below RM400,000, according to latest data released by the National Property Information Centre (Napic) today.

The data showed that the number of overhang residential properties as at 1H2019 has accumulated to 32,810 units worth RM19.76 billion, an increase of 1.5% in volume whilst the value decreased by 0.5%, as compared to 32,313 units worth RM19.86 billion in 2H2018.

Of the overhang homes, about 43% are condominiums or apartments. A majority of the overhang homes are priced at RM200,001 to RM300,000 (22.3%), followed by RM300,0001 to RM400,000 (17.5%) and more than RM1 million (12.8%).

The increased number of affordably priced residential properties remained unsold has also caught the authorities’ attention.

“This is something that perhaps we didn’t expect. We thought that overhang homes were those that are priced above RM1 million but actually most of them are condominiums and priced at RM200,000 to RM300,000, which are categorised as affordable houses,” said Deputy Finance Minister Datuk Wira Amiruddin Hamzah.

He was speaking at the media conference after the briefing concerning the property market for 1H2019 and the launch of the Unsold Property Enquiry System Malaysia (UPESM) 2.0.

According to the definition by Napic, overhang properties are those which have received Certificate of Completion and Compliance (CCC) but remained unsold for more than nine months after launch.

Meawhile, Amiruddin noted that the authorities would need to investigate further to find out the reasons for overhang.

“The relevant ministries and agencies must further study this to ensure that there is no mismatch and come up with a solution that enables the rakyat to own a home that is affordable to them while developers are offering homes that are wanted by the people, so that our economy will continue to grow,” he added.

Source: The Edge

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Malaysia to cut interest rate in Dec

KUALA LUMPUR: Malaysia’s export momentum has outperformed in South-East Asia, according to the Institute of Chartered Accountants in England and Wales’ (ICAEW) latest Economic Update: South-East Asia report.

The momentum it said, reflected a more modest deceleration in export growth and resilient domestic demand, comparing the growth of trade-dependent economies such as Singapore, Thailand and the Philippines which have seen slower momentum in the second quarter of 2019.

“However, despite the outperformance of the Malaysian economy to date, Bank Negara is expected to lower interest rates by 25 basis points (bp) in December, with a further 25 basis points cut in the first quarter of 2020.

“This is provided that the government will continue to focus on fiscal consolidation in the upcoming budget announcement on Oct 11, ” the report said.

ICAEW economic advisor and Oxford Economics lead Asia economist Sian Fenner said: “Amid ongoing global headwinds and uncertainty around the outcome of US-China trade talks, we expect to see a further deterioration in economic prospects across the region, particularly amongst more trade-dependent economies.”

Overall, regional gross domestic product (GDP) growth is expected to moderate to 4.5% this year, amid another round of tariffs and trade restrictions by the US and China with the GDP to stabilise at the same rate in 2020.” — Bernama

Source: The Star

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Long road to recovery for property sector

KUALA LUMPUR: Alliance DBS Research estimates that Malaysia’s property market will need at least another three years to absorb the unsold properties, assuming status quo in historical transaction volume.

“Therefore, a meaningful recovery for the property market is only expected by 2023, ” it said in a research note on Thursday.

It said the large and growing property supply overhang remains the key stumbling block for the sector’s recovery, resulting in weak sentiment among buyers and investors.

“Based on data from the National Property Information Centre (NAPIC), we estimate that Malaysia’s property market will need at least another three years to absorb the unsold properties, assuming status quo in historical transaction volume, ” it said.

The supply glut will only intensify the competition among developers as weaker players could adopt a more aggressive pricing just to monetise their unsold units.

In addition, depressed rental yields may further discourage investors from entering the market, exacerbating the already weak sentiment in Malaysia’s property market. Heightened external uncertainties also continue to undermine confidence with the anticipation of an economic slowdown.

“Property stocks are currently trading at multi-year low at 0.49 price/book value (P/BV) which is two standard deviation below its 10-year mean, pricing in the worst case scenario.

“While there is a lack of imminent catalysts, we continue to favour developers with clear earnings visibility and decent dividend yields to tide over the challenging times.

“We like Sunway for its focus on sustainable township developments with multi-disciplinary expertise which has resulted in superior integrated ‘build-own-operate’ model with a proven track record.

“It is set to resume its growth trajectory with projected FY18-20F earnings compound annual growth rate (CAGR) of 8%, contributed by strong performance across its key divisions in property development, construction, healthcare services and investment property, ” it said.

Source: The Star

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How to appeal against the higher assessment rate by MBPP

Penang lang recently was shocked with the sudden higher assessment rate imposed by the local council.

The assessment rate for the property I am staying in has increased an eye-popping 77%!

I’ve been asked by many people how they can lodge a bantahan.

So I’ve decided to write it down here so that you too knows how you can lodge your appeal or ‘bantahan’ to the MBPP.

Check your mailbox for the MBPP assessment. It looks something like this:

MBPP Assessment

The new assessment rate is outlined in Jadual 2 – Cukai Dikenakan

And then you will see a box with the website URL you can log into to make an appeal, as well as your unique user id and password. 

Visit the website – http://smartmonitoring.mbpp.gov.my/InternetBantahanPS/

This is how it looks like. Click on the button Sila klik disini, which will bring you to the page below. Enter your username and password (as given in your assessment letter from MBPP). 

Once you are logged in, your property’s information will be displayed. It is the same as that shown in the MBPP assessment letter you received.

Enter your Alasan Bantahan in the box given and click submit.

And there you go. That’s how you submit your appeal.

Remember, the deadline is on 14 October, 2019.

You can read about the news here Oct 14 deadline for Penang property owners to appeal against assessment rate hike

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3 reasons why you should only invest in below market value property

Firstly, what is below market value (BMV) property? In a nutshell, BMV property are property that is selling at a discount in the property market.

Imagine this, you, walking in the shopping mall and seeing all your favourite items (clothes, shoes and etc..) on SALE at every corner, with the tag of 30%, 50% and even 70%.

Now, imagine you, driving around in your favourable neighbourhood shopping for your property and seeing the sign “For Sale at Below Market Value”.

Below market value (BMV) property is essentially property that is selling from as low as 20% to 40% below the real market value.

However, you will not able to see it so easily. You need to do a little bit more research about where this below market value property is and look out for it.

The next question you may ask, so what’s so good about buying below market value (BMV) property?

For simplicity sake and easy understanding, I have listed the reasons why buying below market value (BMV) property has more benefits/ advantageous, into 3Ms as below:

Margin of profit

We already make a profit when we buy below market value property. We do not need to wait another 5 – 10 years to sell it to enjoy the profit. This is because, there is already a healthy profit margin.

Let’s say a property in the market is asking for RM 500,000 but you successfully bought it at a 30% discount (or better known as 30% below market value), at RM350,000. You would have make a RM150,000 profit!

Minimise your risk

Historically, property prices depreciated at most 20% lower than the original selling price. If a RM500,000 property were to depreciate 20%, it would be worth only RM400,000. You will not make any money selling this property in a down trend market.

However, because you bought the property at below market value, you have very little risk, or none at all.

Minimum capital

Of course, when you successfully found a below market value property, you definitely minimize your capital. Using the same example as above, you would have already save RM15,000 on the initial deposit needed.

Using the Master Key Method®, you can even structure to purchase the below market value property in such a way that not only you purchase it with minimum capital, but potentially at zero capital.

Read Discover How To Buy Your Property With Just Under RM1,000 And Make RM20,000 to RM60,000 A Year here

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Tips on how to inspect a property and avoid buying a lemon

One man’s meat is another man’s poison. The overcast economic climate may have caused property prices that have seen steep hikes in the past to moderate but this could mean greater opportunities to pick up good bargains.

However, remembering that good things usually don’t come cheap, industry experts are cautioning buyers against jumping into a deal without proper inspection.

According to Architect Centre Sdn Bhd, one in every five newly completed properties has some kind of major faults such as in plumbing, roofing or water-proofing. This could consequently lead to extra expenses for repairs and maintenance.

Architect Centre is a joint venture between the Malaysian Institute of Architects and Australian service provider Archicentre Ltd. It provides property inspection and building advisory services to the Malaysian public.

The figure was reported in 2009 but it still applies to the industry today, Architect Centre accredited building inspector and trainer Anthony Lee Tee tells EdgeProp.my, citing the rapid pace of property development as one of the factors affecting the quality of construction work.

“The quality of properties sold by some developers have improved significantly but the majority of developers are still delivering substandard properties. Overall, we still see the same statistics of one in every five,” he says, adding that there are some unscrupulous developers out there who use low-quality materials to profiteer.

“Today, some properties are built very quickly but you have to know that speed can kill quality. So if you want good quality, you cannot rush it,” he continues.

The intense competition in tendering for construction jobs and the increase in cost of construction materials have also contributed to the current situation, he says. “This is why some quality of properties falls short of the price demanded.”

Nevertheless, most developers and contractors would not want to become the black sheep in the industry, notes Lee. “On the bright side, quality is getting better today as good developers and contractors continue to improve their work.”

 

Defects liability period

After being handed over the keys to a new property, the first thing the owner should do is to check for defects during the defects liability period, which is governed by the Sale and Purchase Agreement.

The defects liability period for residential property is usually 18 months after vacant possession whereas for other types of property it is usually 12 months, Lee says.

“The defects liability period covers defects due to shrinkage, leaks, cracks and workmanship. However, for stratified properties, the huge issue is defects in common areas which are usually not reported or identified within this period,” he notes.

Lee points out that there are also a rising number of old properties on the secondary market and if they are not well-maintained, defects in older properties could pose serious problems as the safety of owners could be at stake.

“Sometimes people know there is a defect or some things need to be repaired but they just ignore it and when something happens they give all kinds of excuses,” he says. For instance, he has seen a strata property management with limited maintenance funds place a Milo tin under a leaking ceiling to collect water.

“It may seem like a small leak but it could be a very serious problem. I’m seeing a lot of this kind of things in my work inspecting properties,” he shares.

Based on his observation, the most common defects are cracks and leaks on walls, floors and roofs. “There are also issues with electrical safety, which is the most serious problem we are currently seeing.”

He says that the electricity regulations in Malaysia are very good but there is a lot of shoddy workmanship when it comes to electrical installations, which will result in incidents of breakdowns and short circuits.

Buying a property is usually the largest investment one would ever make, so it is crucial for buyers to be informed before buying into the asset, Lee counsels. “Property defects will kill the value of a property, not to mention the fact that they could cost people’s lives as well,” he says.

Hence, homebuyers are advised to do their research and homework by checking out and surveying every aspect of the property before they purchase or right after vacant possession of a new property, he concludes.

 

 

Source: The Edge

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Oct 14 deadline for Penang property owners to appeal against assessment rate hike

GEORGE TOWN (Sept 13): Penang property owners have to be prepared to pay higher assessment rates next year as the state’s two local councils review the rates to counter increased expenditures.

All property owners will receive the notices on the increase this month, and they have up to October 14 to send in appeals against the new rates, reported the Malay Mail today.

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Minister: Unsold high-end properties here to be offered to HK, China buyers

KUALA LUMPUR, Sept 11 — Housing and Local Government Minister Zuraida Kamaruddin plans on taking Malaysia’s Home Ownership Campaign (HOC) to Hong Kong and China.

Speaking to a press conference at the outskirts of the 2019 Smart Cities Asia Annual Conference and Exhibition, she explained that properties in Malaysia are far cheaper than those found in Hong Kong. Read more