By Christopher Chan, an associate director and a registered estate agent with Hartamas Real Estate Group
To spur both the challenging property market, I strongly recommend that the government adopt the following suggestions for Budget 2020:
1) The existing benefits for the residential secondary property market should be reconfigured to the following:
- The existing threshold for the exemption on loan agreement and Memorandum of Transfer (MOT) should be set higher from RM 300,000 to 600,000. The existing threshold of RM 300,000 is unrealistic as most of the residential property prices are above this level especially within the Klang Valley area.
- The benefits such as the exemptions on stamp duty on loan agreement and Memorandum of Transfer (MOT) 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 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% as the 5% tax rate is putting a dampener on the property market.
3) 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. We should value them and accord them some benefits.
4) On the Once-in-a-Lifetime exemption for RPGT for an individual, citizen or permanent resident of Malaysia on the disposal of a private residence:
- This should be extended to include vacant residential land.
5) On the retention sum for RPGT (for Malaysians and Permanent residents):
- to be reduced from the current 3% to 2%. The current 3% is too high.
6) 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 Rent 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.
About the Contributor
Christopher Chan is an associate director and a registered estate agent with Hartamas Real Estate (M) Sdn Bhd. He holds a Bachelor of Arts (BA) (Victoria University of Wellington, New Zealand), a Post Graduate Certified Diploma in Accounting & Finance (CDipAF) (The Association of Chartered Certified Accountants (ACCA), UK) and a Master of Business Administration (MBA) (Edinburgh Business School, Heriot-Watt University, Scotland).
He is a Certified Residential Specialist (The National Association of Realtors, USA) and is a member of the Malaysian Institute of Estate Agents (MIEA).
He was a lecturer at UCSI University in the year 2008 to 2009.
He was the Director and Membership Benefits Chairman of the Malaysian Institute of Estate Agents (MIEA) for the term 2017 to 2019.
He can be contacted at firstname.lastname@example.org/ +6012 2323837.