The Real Estate and Housing Developers’ Association (REHDA) asserted that banks in Malaysia should coordinate with home buyers regarding the issuance of strata titles for high-rise residential units, reported New Straits Times (NST).
Banks and homebuyers must both have roles to ensure that titles are transferred. It is the banks that must “perfect the charge” over the legal document when the title is out. It should make the transfer to the unit’s rightful owner.
“By doing this, nobody can play around with the title. Otherwise, there is a piece of title which is free from encumbrances running all over the place,” said REHDA president, Datuk Soam Heng Choon.
In this regard, REHDA has been discussing with banks to compel the buyers to get their strata titles, Soam told NST.
“If the buyer can’t afford to come out with that bulk of the money to pay the stamp duty, what the bank can do is add that amount on to the loan and defray it over the loan payment,” he said.
Such disbursement is seen as one of the solutions to address the problems concerning strata titles, especially in cases where the buyer has no money to pay the stamp duty tax involved, instead of leaving the title uncollected in the developer’s office.
“Without the title, how confident are you that the developer won’t take the title and do anything about it,” asked Soam.
To prove this point, Soam related one of the possible dangers of not collecting such titles.
“There was a case whereby someone bought a landed property with cash but did not collect the title. Years later, a certain individual from the developer’s office took advantage of the situation. He took the title and used it as an instrument of charge to the bank to get a loan without the buyer’s knowledge.”
“When the buyer started asking for the title, that individual said no title has been issued for the property. The buyer got his lawyer to do a search at the land office and discovered that the title had been charged to a bank. So, if you don’t get the strata title, somebody at the developer’s office can misuse it,” he narrated.
Aside from this danger, the buyer’s failure to collect the strata title also leads to delayed revenue for the Malaysian government.
Soam explained that the government stands to lose revenue from stamp duty payments as well as registration fees that could amount to millions of Ringgits.
To illustrate, homeowners are required to pay stamp duty taxes to the Inland Revenue Department according to a scale.
The rate ranges from 1% for the first RM100,000 or RM1,000 per parcel to 2% and 3% respectively for RM200,000 and RM300,000.
The rate of 4% or RM40,000, on the other hand, is charged for properties worth more than RM1 million.
“When owners do not claim their strata title, the government will lose in terms of stamp duty collection,” said Soam.
Unfortunately, the new law compels the developer to get the strata title but includes no similar compulsion on the part of the buyer to transfer the title.
“It should be somewhere in the act to force the buyer to do it. By compelling the buyer and the bank to do it, the government can get revenue,” he explained.