CONTINUING from last week’s article, National House Buyers Association (HBA) president, Chang Kim Loong, raises more concerns and issues pertaining property, some which were not taken up in next year’s budget.
Pleased by the fact that the government has looked into curbing measures which it implemented in the 2014 budget like increase in RPGT (Exit Costs), LTV and prohibition of DIBS, Chang says: “These have achieved its objectives in partially deterring speculators and ‘bogus’ house buyers. It has also brought some sense of orderliness to the housing arena.
“However, HBA have appealed to the government to adopt further measures to be implemented in Budget 2016.”
These are outlined below.
A) Increase in entry cost for owners of multiple properties
Chang revealed that the association has requested that the government increase the entry cost for owners of multiple properties via the stamp duty charges on the transfer of a property. HBA’s proposal refers:
The current allocation refers – if the value of the first property is RM100,000, stamp duty is at 1%; properties valued between RM100,000.01 and RM500,000 at 2%; and those valued RM500,000.01 and thereafter at 3%.
“The above calculations disregard the number of properties an owner already has. As a result of low entry cost to acquire a piece of property, speculators have taken advantage of the low stamp duty regime, and are therefore able to acquire multiple properties at the same time. This deprives genuine house buyers the opportunity to acquire those houses,” Chang explains.
He recommends that the current stamp duty regime be maintained for the first two properties held – one for the owner’s own stay
and the other, perhaps as a long-term investment, but says, “Stamp duty must be increased for the third and subsequent properties held.”
» first two properties based on current rate as above;
» third property – flat 5% on the value of the property;
» fourth property – flat 7.5% on the value of the property; and
» fifth property – flat 7.5% on the value of the property.
Based on HBA’s definition of affordable property (RM300,000) and Rehda’s definition of it (RM1,000,000), the table below clearly shows that HBA’s proposal on stamp duty will not affect the majority of the rakyat who can mostly afford to buy only two properties max.
HBA reiterates its concerns on the political accountability of the PR1MA scheme. It questions why the scheme does not fall under the Housing Ministry, which has the appropriate experience. It instead comes as a unit under the prime minister’s department which HBA deems, has been operating in relative obscurity from public scrutiny and has some high level protection on the aspect of affirmative action.
Some of HBA’s other concerns pertaining PR1MA include:
» Why isn’t PR1MA under the current legislation that regulates housing ie: Housing Development (Control & Licensing) Act, 1966 and its regulations?
» Why shouldn’t there be “safety nets” like the imposition of mandatory Housing Development (Project) Account?
» Why should the statutory Sale & Purchase Agreement in Schedules ‘G’, ‘H’, ‘I’ & ‘J’ be used?
On the above, Chang says: “Without PR1MA being catalogued under the Housing Development (Control & Licensing) Act (HDA), PR1MA developers will then not need to be licensed (to build) and there is no need for the Advertisement & Sales Permit.
“Thus, buyers who buy into PR1MA projects will not be protected under the HDA legislation and the ‘speedy, cheap and effective’ Housing Tribunal will not be available for aggrieved and ‘short changed’ buyers and victims,” Chang explains.
C] Build Then Sell 10:90 (BTS10:90) concept
This raises the ABANDONED HOUSING PROJECTS issue which continues to dampen and raise fears plus dim hopes of many house buyers – those who have bought into such projects, and potential earnest buyers.
“The presence of this on-going ‘thorn in the housing industry’ does not bode well for the wellbeing of affected buyers, nor the reputation of the Ministry of Urban Wellbeing, Housing and Local Government, being the regulatory body and approving authority,” says Chang.
He also raises issues associated to this “bug in the system” and the subsequent “mess” it induces. These include a dilapidated environment; unnecessary hardships to the lives of those who have bought into such abandoned development projects having to still service their bank loan instalments and so on.
“In many cases unless the projects are successfully revived, there will be no end in sight as to how long they have to bear their ordeal. There is no solution to save abandoned housing projects except to seek out the intervention of the government, using taxpayers money and seek the so-called ‘white knights’ to rescue those abandoned projects,” Chang shares.
Continuously lobbying for the BTS10:90 system to be enforced to curb the abandoned housing projects matter, Chang shares once again that the government, through its housing minister Dato Wira Chor Chee Hueng in February 2012, it once said that the BTS 10:90 system would be mandatory by year 2015.
“This was also recorded in the Parliament Hansard in year 2013 in the Dewan Rakyat. Under the BTS 10:90 system, house buyers only need to fork out the initial down-payment of 10% when booking a house and do not need to make any further payment until the vacant possession of the property is delivered to them whereupon the balance 90% will be paid,” Chang reiterates.
Not only does Chang deem this system more orderly where errant housing developers are concerned, it is a far safer mode of delivering houses which will “drastically if not totally eliminate cases of housing projects being abandoned,” Chang adds.
To the disappointment of many, there was no mention of BTS10:90 in the recent budget. Instead, the current housing minister was quoted saying earlier this year, that he would propose the allowance of both the BTS10:90 system to co-exist with the “Sell-Then-Build” concept, allowing the developers free rein to choose.
“This has drawn flak and adverse criticism from the house-buying public, the consumer associations, especially victims of abandoned projects and unlicensed developers. We still wait and hope to see if the government will hold true to their slogan “Janji DiTepati” which means promises fulfilled.