Malaysia Budget 2014 on Property
Our beloved Prime Minister Datuk Seri Najib Razak has unveiled Malaysia Budget 2014 on 25 October 2013 in Parliament. Budget 2014 is to address a large fiscal deficit, shrinking current account surplus and growing debt pile that are sources of concern for investors and ratings agencies.
As usual, the budget will also touch on Real property gains tax and also affordable house. The Prime Minister has shared some of the topics that gain a lot of response from Malaysia especially on the RPGT. Lets see what, PM have to say on the above.
REAL PROPERTY GAINS TAX
- For gains on properties disposed within the holding period of up to 3 years, RPGT rate is increased to 30 percent.
- For disposals within the holding period up to 4 and 5 years, the rates are increased to 20 percent and 15 percent, respectively. Malaysian property firms with exposure to this tax change include UEM Sunrise, Mah Sing Group and Tropicana Corp .
- Raise the minimum price of property that can be purchased by foreigners to 1 million ringgit from 500,000 ringgit.
- Prohibit developers from implementing projects that have features of Developer Interest Bearing Scheme (DIBS), to prevent developers from incorporating interest rates on loans in house prices during the construction period.
- Financial institutions are prohibited from providing final funding for projects involved in the DIBS scheme. Malaysia’s top three banks are Maybank, CIMB and Public Bank.
- To further increase access to home ownership at affordable prices, an estimated 223,000 units of new houses will be built by the government and the private sector in 2014.
- Companies that specialise in affordable housing development include Hua Yang Bhd.
- Government to allocate 578 million ringgit to the National Housing Department (JPN) for low cost flats consisting of 16,473 housing units.
- Malaysian’s government to provide 80,000 housing units with an allocation of 1 billion ringgit under affordable housing scheme. The sales price of the houses will be 20 percent lower than market prices.
- Introduce the Private Affordable Ownership Housing Scheme (MyHome) to encourage the private sector to build more low and medium-cost houses. The scheme provides a subsidy of 30,000 ringgit to the private developers for each unit built.
- Preference will be given to developers who build low and medium-cost houses in areas with high demand and limited to 10,000 units in 2014.
- The scheme is for housing projects approved effective from 1 January 2014 with an allocation of 300 million ringgit.