The elimination or reduction of stamp duty on property purchasing, increased support for first-time buyers, and a lowering of the Property Gains Tax are among the Malaysian real estate sector's hopes for the country's upcoming budget, according to a new survey.

Conducted through Juwai IQI, the survey features responses 344 Malaysian real estate agent panellists between June 16 and August 10 2020. 

Juwai IQI Executive Director Kashif Ansari said the real estate industry shared the same Budget 2021 aspirations as most property buyers and investors. 

At a glance:

• The Malaysian property sector has given its recommendations for the upcoming budget to be delivered on November 6.
• The elimination or reduction of stamp duty on property purchasing, increased support for first-time buyers, and a lowering of the Property Gains Tax were the top three issues identified in a survey conducted through Juwai IQI.
• Malaysian Institute of Estate Agents (MIEA) former director and registered estate agent, Christopher Chan has also outlined several key recommendations.

“A stamp duty exemption is an essential item for supporting the property market, according to the surveyed real estate agents," he said.

"A stamp duty exemption would save home buyers at least RM20,000 on a typical purchase.

"It would also make it easier for first time home buyers to get into the property market, stimulate investor activity, and encourage trade-up buyers to move while the exemption is in effect.  

"In regards to first-time buyer support, they are generally the most vulnerable of property buyers, with the least amount of money on hand.

Juwai IQI Executive Director Kashif Ansari. Source: Juwai IQI 

Any measure that reduces their costs limits the size of the loans and monthly payments or makes their first purchase more affordable would be of great benefit both to the real estate market into society as a whole."

Mr Ansari identified the lowering the Property Gains Tax as the "most important" budget measure for the industry.

“The government has already put in place a Real Property Gains Tax exemption for Malaysians who sell their residential property between June 1, 2020, and December 31, 2021.

"The exemption is, however, limited to the disposal of three residential properties by an individual. 

“The Real Property Gains Tax exists to curb speculation and to discourage people from buying and selling houses for a quick profit. These are laudable goals that support long term property ownership and the financial health of families."

Malaysian Institute of Estate Agents (MIEA) former director and registered estate agent, Christopher Chan

More equilibrium needed in the marketplace to spur the secondary property market 

Malaysian Institute of Estate Agents (MIEA) former director and registered estate agent, Christopher Chan has also shared his thoughts on the upcoming budget, outlining seven recommendations he believes should be included.

1. Stamp duty exemption on the Memorandum of Transfer (MOT) and loan agreement for the secondary property market
 
"The threshold for the stamp duty exemption on the Memorandum of Transfer (MOT) should be set higher from the property price of RM 500,001 to 2,500,000 (note: stamp duty waiver is limited to the 1st RM 1 million).

"The existing threshold of RM 500,000 is unrealistic as most of the residential property prices are above this level especially within the Klang Valley area.

"The threshold for the stamp duty exemption on the loan agreement should be set higher up to the loan amount of RM 2,250,000.

"The above exemption should be for a period of 2 years.

 "This benefit should be extended to all Malaysians for the secondary property market and not merely for 1st time home buyers.

"Why is it that currently all Malaysians are entitled to the many benefits of the Home Ownership Campaign (HOC) while only 1st time Home Buyers are entitled to certain benefits in the secondary property market?"

"There need to be some standardization here"

2.  On Housing Loans for the secondary property market

"The current 70 per cent margin of financing limit applicable for the third housing loan onwards for property valued at RM 600,000 and above should be uplifted for the secondary property market.

"At the present time, only the purchasers of the primary market are entitled to this.
 
"To further encourage property ownership among Malaysians, I recommend that the interest on the housing loan for purchases for own stay should be able to offset against the individual taxable income for the next 3 years with a cap on the cost of interest allowed to be offset at RM 15,000 per year. "
 
3. On the Real Property Gains Tax (RPGT)
 
"To have a zero RPGT tax rate for 6 years and above for Individuals (Citizens and Non-Permanent Residents of Malaysia) from the existing 5 per cent as the 5 per cent tax rate is putting a dampener on the property market. 
 
4. For Malaysia My Second Home (MM2H) visa holders:
 
"In recognition of their contribution to the country (e.g. bringing in money into the country and doing business here), we should give this group of people a more favourable tax rate for RPGT (a separate more favourable tax rate compared to the non-MM2H foreigners) and special benefits when buying properties. 
 
"The above programme is now temporarily suspended. 

"The above recommendation should be put in place once it resumes. 
 
5. On the retention sum for RPGT (for Malaysians and Permanent residents)
 
"The current 3 per net is too high and should be reduced to 2 per cent.
 
6. Spurring the rental market 

"To spur the rental market that the government has so vigorously promoted of late, the government should continue on this momentum and allow for expenses to be deducted from the rental income on the following (for first time rental of property):

• Cost to obtain the first tenant
•  Advertising cost
•  Legal cost in preparation of the tenancy agreement
• Stamp duty on the tenancy agreement
• Professional fee paid to a registered estate agent (note: the estate agency firm must be registered with The Board of Valuers, Appraisers, Estate Agents and Property Managers of Malaysia).

 "This will also go in line with the government’s proposed ‘Residential Tenancy Act’ which will set a legal framework for residential tenancy in Malaysia.  

"This will also create a more robust and efficient rental market in the country."
 
7. Greater flexibility for owners of commercial buildings

"The government should seriously consider giving flexibility to owners of commercial buildings such as offices the opportunity to be able to use their property as a SOHO (Small Office Home Office). 

"This will directly help to address the oversupply of office space that we are experiencing at the present time. 

"This will enlarge the target segment for these buildings as owners would be able to rent it out for office or residential use. 

"A budget should be set aside for the municipal council to evaluate the suitability of the building to be used for this purpose."

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