According to the Mid-Term Review of the 12th Malaysia Plan (12MP MTR) 2021-2025 report, Malaysia’s economy is on track to grow between 5.0% and 5.5% per annum for the remainder of the 12th Malaysia plan, with domestic demand as the key driver, particularly private sector expenditure.
With Bank Negara Malaysia’s announcement in September to maintain its overnight policy rate (OPR) at 3% and expectations that the OPR will remain unchanged this year, Mah Sing is optimistic about the outlook of the property sector as stable OPR will bring confidence to the real estate market and investing in properties is a good hedge against inflation.
We hope that the government will implement further measures with the aim to help first-time home buyers, ease their home-buying process and accelerate the property industry’s recovery. This is particularly important given the significant multiplier effect on more than 140 industries, which will then have a broader impact on the overall economy. We hope that the government will consider the following as part of its effort to help the rakyat, stimulate the property sector as well as support its vision for Malaysia Madani:
1. Revive Home Ownership Campaign (HOC), and Enhanced Financing Scheme to Ease Home Ownership for First Time Home Buyers
We hope that the government will implement additional measures aimed at first-time home buyers, specifically in home financing, to increase home ownership. Impactful measures would include:
Revive the HOC as the incentives given under the campaign has proven to be vital in helping home buyers secure their home while reducing the housing overhang situation, such as the 100% stamp duty exemption for properties priced from RM300,001 to RM1 million.
A one-off First-Time Home Buyers’ Grant of RM30,000 for properties priced up to RM500,000 and/or to reactivate the MyHome Scheme programme to eligible purchasers.
Lower, fixed rate financing for first-time home buyers, for properties priced up to RM500,000.
Step-up financing allows middle-income buyers more time to improve their income during the first few years of home ownership.
For all buyers, we propose restoring the maximum loan tenure to 40 years and referring to gross income rather than net income when reviewing loan applications.
2. Tax exemption for interest incurred during construction
We hope that the government will consider introducing tax exemption for end-financing interest incurred during construction. This is an ideal way to promote home ownership as there will be direct tax savings for homebuyers.
3. Reduce and standardise minimum threshold for Foreign Property Ownership to RM600,000
The current minimum threshold for foreign property ownership varies according to states. We hope that the government can review and standardise the minimum threshold to RM600,000 across all states. With the current currency rate, it will attract foreigners to invest in tangible investments.
4. Incorporate Appealing Policies into Malaysia My Second Home Programme (MM2H) and promote Malaysia Premium Visa Programme’s (PVIP)
We would like to propose to the government that more appealing policies be incorporated into MM2H and promote PVIP, for Malaysia to remain competitive in encouraging more eligible foreigners to stay and invest in Malaysia.
We hope that the below proposal for MM2H can be considered:
Lower the qualifying minimum income, liquid assets, and fixed deposits instead of the high threshold applied during the revision in 2021.
Impose different classes of applications, tailored for various foreign applicants.
All existing MM2H pass holders should not be affected by the new rules.
The duration of the MM2H pass to remain at 10 years.
5. Waiver or reduction of duties on construction materials until prices normalise
We hope the government could consider lifting the taxes and levies imposed on imported construction materials. According to the Department of Statistics Malaysia in June 2023, the unit price index of construction materials recorded an increase between 2.1% and 8.4% on a year-on-year comparison, for almost all construction materials except for steel & metal sections, steel and plywood. This added to the challenges faced by property developers, on top of inflationary pressures and economic uncertainties.
6. Incentives for developments incorporating green features
We hope the government will continue to expand green building development and consider providing small grants to developers to encourage industry participants to incorporate more green features and renewable energy sources such as solar panels into their developments. These measures will contribute to the goal of becoming a carbon-neutral nation by 2050.
7. Incentives for adoption of Industrialised Building System (IBS) and Building Information Modelling (BIM)
As announced in Budget 2021, the tax incentive given to manufacturers of IBS components was extended for another five years, until 31 December 2025. We hope that the government will consider extending attractive incentives to property developers who utilise IBS and BIM in their construction projects, particularly affordable residential developments. This will encourage more property developers to adopt IBS and BIM, resulting in higher quality developments, reduced labour dependence, increases site neatness, and increased productivity.