Existing Taxation Mechanisms Enough To Prevent Speculation

Pavither February 13, 2019

 

While it lauds the rent-to-own (RTO) programme as a good initiative to help low-income earners secure homes by credit scores, Knight Frank Malaysia Sdn Bhd believes the government’s direct intervention and acquisition of homes to prevent speculation in affordable housing is not advisable.

“As far as speculation is concern, taxation mechanisms such as real property gains tax and stamp duty are good enough to prevent the situation,” said Knight Frank managing director Sarkunan Subramaniam.

The RTO scheme allows property buyers to rent a housing unit for five years and apply for end-financing to acquire it during the sixth year.

Sarkunan also expressed concern on the government’s plan to provide micro-housing for low-income singles, such as the Kuala Lumpur City Hall’s proposal to allow unmarried individuals in the B40 group to rent small capsules at a monthly rate of RM100 only, reported The Malaysian Reserve.

According to him, properties measuring below 200 sq ft are not ideal even for a single owner since they also need a reasonable amount of space.

“Even in Hong Kong, which is known for its unaffordable property prices, several developments featuring shoebox flats had failed to achieve favourable sales results,” he said. “Therefore, proper market research is needed to find out the actual demand for these sort of developments. Furthermore, these types of housing are at risk of becoming ghettos and drug dens.”

Sarkunan noted that Malaysia is also not yet ready for the build-then-sell structure, which will be reviewed by the Ministry of Housing and Local Government (KPKT) this year.

He believes that the structure generally runs against lowering home prices and affordability as it increases cost on housing units.

On the second National Housing Policy (NHP 2.0), Sarkunan called on the government to create a standard policy for Bumiputra quota that is in line with market trends.

“While land is a state matter, the federal government should try to streamline the Bumi quota and the release mechanism on Bumiputera housing units in all states,” he said.

“For example, the situation in Johor where the Bumi quota is 40 percent, the slow release is choking developers on their cashflow.”

 

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