HOC (Home Ownership Campaign) Malaysia 2020–2021: All You Need To Know!
*HOC has ended on 31 December 2021
You may have heard about the Home Ownership Campaign (HOC), which was introduced by the Malaysian government with the aim to encourage homeownership and bring down the residential property in the county.
It was launched on 1st January 2019, but extended several times before it ended on 31st December 2021. Read on to find out what this campaign was all about!
What was the Home Ownership Campaign all about?
The HOC was a government initiative designed to support homebuyers looking to purchase property. At the same time, it also encouraged the sales of unsold properties in Malaysia’s housing market.
With growing desire for home ownership amongst Malaysians, particularly in popular urban areas, the HOC initiative was designed to match aspiring homeseekers with all those empty homes.
What empty homes, you ask? We’re referring to Malaysia’s residential overhang, which stood at a total of 31,661 units, according to records from the National Property Information Centre (Napic)!
A property overhang is defined by Napic as completed units that remain unsold nine months after launching, and after they’ve been certified as fit for occupation by local authorities.
It operated in collaboration with a number of major reputable developers, linking potential buyers with qualifying properties.
But the real value for you, as a potential buyer, came from the financial incentives that were offered as part of the scheme.
What are the benefits of the Home Ownership Campaign?
The Home Ownership Campaign aimed to encourage the purchase of certain properties with the support of key financial incentives. Those incentives are:
1) Full stamp duty exemption till RM1 million
Under the scheme, successful applicants enjoyed 100% stamp duty exemption on Instrument of Transfer for any residential home purchase up to the value of RM1 million.
2) Partial stamp duty exemption till RM2.5 million
For properties worth more than RM1 million up to RM2.5 million, you paid 3% stamp duty on the Instrument of Transfer for the amount that’s more than RM1 million.
RM100,001 to RM500,000
RM500,001 to RM1,000,000
RM1,000,001 to RM2,500,000
3% (as compared to the 4% which was to have come into effect in July 2019)
3) Instruments on securing loans exemption
All properties within the scheme enjoyed a further stamp duty exemption on the Instrument of Securing Loan.
Up to RM2,500,000
4) 10% house discount
As well as the stamp duty exemption, you enjoyed a minimum 10% reduction on the purchasing price of properties listed under the scheme.
What are the benefits of the Home Ownership Campaign?
The HOC this time around carries the same set of benefits as previously, notably:
- Stamp duty exemption on the instruments of transfer and loan agreement for the purchase of residential homes priced between RM300,000 to RM2.5 million (subject to at least 10% discount provided by the developer).
- The exemption on the instrument of transfer is limited to the first RM1 million of the property price, while full stamp duty exemption is given on loan agreement effective for Sale and Purchase Agreements (SPA) signed between 1st June 2020 to 31st December 2021.
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Let’s say you bought a property at RM400,000…
Without HOC, you’d have paid:
|Down Payment (RM400,000 x 10%)||RM40,000|
|Stamp Duty Loan (RM360,000 x 0.5%)||RM1,800|
|Stamp Duty MOT (100,000 x 1% + 300,000 x 2%)||RM7,000|
|Monthly Repayment (3.5% @ 35 years loan, 90% of purchase price)||RM1,487.85|
With HOC, you’d only pay:
|*Down Payment [(RM400,000 x 90%) x 10%]||RM36,000|
|Stamp Duty Loan||RM0|
|Stamp Duty MOT||RM0|
|Monthly Repayment (3.5% @ 35 years loan, 90% of purchase price)||RM1,339.06|
*As properties under HOC is entitled to a minimum 10% discount, thus the new property price under HOC is RM400,000 x 90% (10% off).
Who is eligible for the Home Ownership Campaign?
Unlike many of Malaysia’s restrictive affordable housing schemes which come with stringent rules in place, the Home Ownership Campaign had relatively relaxed criteria in a bid to encourage growth in property buying.
- Registered properties: Eligibility only applies to those registered properties listed by developers within the scheme.
- Residential purposes: Purchasers must be buying the property for the purpose of residing within it only.
- Malaysian citizens: Purchasers and co-purchasers must be Malaysian citizens.
- 1 June 2020 to 31 December 2021: To be eligible for the exemptions and discount, a Sale and Purchase Agreement (SPA) must be stamped between 1 June 2020 and 31 December 2021.
What properties does the HOC 2021 cover?
The Home Ownership Campaign covered registered residential properties with a value between RM300,000 and RM2.5 million. Those properties must be registered with the relevant authority for each region.
- Sabah: Properties registered with Sabah Housing and Real Estate Developers Association (SHAREDA).
- Sarawak: Properties registered with Sarawak Housing and Real Estate Developers’ Association (SHEDA).
- Peninsular Malaysia: Properties registered with Real Estate & Housing Developers’ Association Malaysia (REHDA).
HOC 2021 was designed to ONLY support residential home purchases. That means all qualifying properties must be built and used as a place of dwelling. Properties cannot be for, or converted to, commercial activities.
What else is there to know about the HOC 2021?
So with all that in mind, what else do you need to know about the Home Ownership Campaign? Let’s go through some important questions:
1) Does HOC apply to secondary markets?
No, the HOC 2021 only applies to new properties registered under the campaign from specific developers.
2) When is the last day for HOC?
The campaign will end on 31st December 2021. All qualifying SPA agreements must be signed between 1 June 2020 to 31 December 2021.
3) Do I have to pay a fee for HOC?
No, the campaign is free. Developers must pay a registration fee but that does not apply to home owners.
4) Can I buy multiple properties under HOC?
Yes, you can. There was no limit to the number of properties you can purchase, and get stamp duty exemptions on all of them, under the HOC 2021.
5) Do all HOC properties receive a 10% discount?
A minimum 10% discount applied on all properties within the scheme, with the exception of those subject to government price controls.
6) What is the exemption amount on the Instrument of Loan?
The exemption on an Instrument of Loan amount covers 0.5% of the loan agreement. That amount covers the standard stamping fee for such an instrument.