KUALA LUMPUR: In the run-up to 2024 Budget day 2024, REHDA, as well as a few leading property developers and other stakeholders in the property industry, came out with their wish lists for the government's consideration for inclusion in Budget 2024.
These proposals included the revival of the Home Ownership Campaign (HOC), providing incentives to developers to incorporate smart technologies in projects undertaken by them, incentivise the adoption of IBS (industrialised building systems), increasing incentives for developers to adopt more environmentally friendly practices, reducing compliance costs, extending incentives in the form of tax deductions and grants, as well as lower interest rates that can help lessen the burden of future homeowners. The latter, in particular, is to cater to first-time home buyers.
Other proposed measures included the setting of a ceiling price or implementing a temporary reduction or removal of levies on the importation of certain building materials as a way to minimise construction costs and thereby reduce house prices. There were also calls for the relaxation of the Malaysia My Second Home (MM2H) programme conditions.
Another interesting proposal was for the government to consider allocating a revolving fund to the commercial banks for the purpose of working with the developers to purchase unsold houses at a discount and also for the commercial banks to finance the home buyers for a period of five years. At the end of the fifth year, the tenants of such a scheme shall have the privilege to exercise their option to purchase the houses at a predetermined price.
When the Finance Minister and also the Prime Minister, Datuk Seri Anwar Ibrahim, tabled the budget on October 13, 2023, the stakeholders in the industry were certainly disappointed to discover that very little of what was on the wish lists was adopted by the government.
The budget allocation of RM393.8 billion is the largest ever in the country's history, with RM303.8 billion being allocated for operating expenditure, RM90 billion for development expenditure, and RM2 billion for contingency savings. The budget tabled by the Unity Madani Government placed priority on the rakyat's wellbeing while maintaining fiscal responsibility. But for this Budget 2024, the property sector was not accorded top priority by the government.
The following are the main budget proposals related to the property sector:'
Public Housing
●A sum of RM2.47 billion has been allocated for public housing projects in 2024.
●RM385 billion has been set aside for the construction of affordable housing projects under the Program Rumah Mesra Rakyat, which will add up to a total of 3,500 housing units.
●RM100 million will be allocated to maintain low- and medium-cost strata housing units nationwide, while another RM100 million will be set aside to upgrade the infrastructure and community facilities in Chinese new villages.
●A sum of RM460 million will be provided to aid 65,000 underprivileged individuals in rural areas to build new houses or to repair their debilitated homes.
●RM2.4 billion will be set aside to build and maintain housing facilities for civil servants under the Special Task Force on Agency Reform (STAR).
Stamp Duty on Property Transactions
●The stamp duty levied on transfers of properties between parents and children and grandparents and children will now be fixed at RM10. Currently, there is only a 50 per cent discount given for the balance of the property value above RM1 million (there is a full tax exemption for the first RM1 million).
●The stamp duty for foreign individuals and companies will be increased to a flat 4.0 per cent in 2024. Currently, the calculation of stamp duty is based on a tiered structure, with the first RM1 million being taxed within three bands at 1.0 per cent, 2.0 per cent and 3.0 per cent and the residue above RM1 million at 4.0 per cent.
New Industrial Master Plan (NIMP) 2030
●To drive NIMP 2030, the government has earmarked 10 per cent of the total NIMP investment of RM95 billion for Budget 2024, starting with an initial fund of RM200 million in 2024.
●The government has proposed the Pengerang Integrated Petroleum Complex (PIPC) as a development hub for the chemical and petrochemical sectors, and a special tax incentive will be given in the form of a special tax rate or investment tax allowance.
●The government has plans to offer a tiered reinvestment tax incentive in the form of an investment tax allowance ranging from 70 per cent to 100 per cent to encourage companies to invest in high-growth and high-value areas.
●The government will open a high-tech industrial area in Kerian, in northern Perak, in order to build a wider ecosystem for the electrical and electronics sectors.
Sick & Abandoned Housing Projects
●The government has proposed to set up a special task force under the Ministry of Local Government Development (KPKT) to tackle the problem of private housing projects that are sick, late, or have been abandoned.
●In addition, the government has proposed to set up a special guarantee fund amounting to RM1 billion to incentivise reputable developers to take up and revive selected abandoned housing projects.
Housing Credit Guarantee Scheme
●In Budget 2024, the government has proposed to allocate RM10 billion to expand the Housing Credit Guarantee Scheme, which will benefit 40,000 borrowers. This is double the RM5 billion set aside under Budget 2023 and will therefore be able to help twice the number of borrowers.
En-Bloc Sale
●Currently the agreement of 100 per cent of the owners is required before a stratified residential scheme can be sold en bloc for redevelopment purposes. In Budget 2024, the government has proposed to reduce the threshold to "a level consistent with international practices," which means that the consent of each and every owner is no longer required. Although this proposal is met with objections by some owners and NGOs like the National House Buyers Association, this move will allow some dilapidated buildings in prime locations to be redeveloped into something more in line with current trends and market conditions.
Infrastructure
The major infrastructure projects identified in Budget 2024 are as follows:
●A sum of RM4.7 billion will be allocated for the construction of the LRT 3 project.
●RM5.8 billion will be allocated for development expenditure in Sarawak, while RM6.6 billion will be allocated to Sabah.
Visit Malaysia Year 2026
●2026 has been designated as the next Visit Malaysia Year (postponed from the original 2025), and in this regard, RM350 million has been allocated for promoting tourism activities in the country, while RM80 million will be set aside for preserving heritage buildings and sites. It is the government's aim to bring in 26.1 million tourists with an estimated domestic spending of RM97.6 billion.
Malaysia My 2nd Home (MM2H)
●Under the previous Perikatan Nasional (PN) government, tougher conditions were introduced for the MM2H programme as it was the then Home Minister Datuk Seri Hamzah Zainudin's objective to push for the Premium Visa Programme (PVIP), targeted at more well-heeled foreigners, to replace the MM2H programme. This resulted in a 90 per cent drop in the number of applicants. The Madani government intends to put the MM2H programme back on track. However, no details have been announced yet, and it is left to be seen whether the refreshed MM2H programme will be more attractive, if not as attractive as its previous version.
Service Tax
●The service tax, currently levied at a rate of 6.0 per cent will go up by 2.0 per cent in 2024 and be expanded to include logistics, brokerages, underwriting, and karaoke services. However, in order not to burden the rakyat, the increase will not apply to food and beverage businesses or telecommunications.