The Malaysian Institute of Professional Estate Agents and Consultants (MIPEAC) said the proposed implementation of vacancy tax on developers who fail to sell their properties within a certain period of time is rather untimely, given the challenging environment brought about by the Covid-19 pandemic.
It believes that the proposed tax is ineffective in solving Malaysia’s overhang problem, and may only dampen the property market, reported the New Straits Times (NST).
In other countries, a vacancy tax is imposed on units that have been sold but are not occupied.
In Australia, Canada, France, China and Singapore, the tax was imposed to make more housing available to the public as well as curb speculation, especially by foreign buyers, during boom times.
In Singapore, the tax was also levied on developers for unsold units that were held two years following the Temporary Occupation Permit.
“The property market and situation in those countries are different from Malaysia and we do not have the same problems. Malaysia needs more foreign investment, so a vacancy tax will be counter-productive,” said MIPEAC president Francis Loh as quoted by NST.
In fact, investment research analysts and bankers expect the potential implementation of the said tax to negatively affect the overall property market.
“The overall property prices are expected to fall as developers may re-price their existing stocks and lower the selling price for new launches. We can expect there will be more competition in the property market, comprising the primary, secondary, and rental segments. In addition, buyers may delay purchases to 2021 in anticipation of a potential fire sale by developers following the vacancy tax,” he said.
“We urge the government to relook at the decision. Apart from the unsold units from developers, there are also other contributors to the current supply glut in the market such as unreleased Bumiputera lots, low-cost housing in undesirable locations and PR1MA homes.”
He said a proper study is needed to get a detailed picture of the causes and distribution of Malaysia’s overhang units.