Suggestions on boosting the real estate prospects
The country will soon know the details of Budget 2018 and how the financial blueprint will boost economic landscape for next year.
To further understand what property developers are anticipating and expecting from the nation budget, StarProperty.my organised a roundtable discussion for leaders in the property industry to voice their views.
Extend the flexible PRIMA financing
Participants of the roundtable agreed that the flexible end-financing scheme should be extended to not only houses classified as PR1MA homes but also to other development as well.
IJM Land Bhd managing director Edward Chong said that the scheme is a welcome move from the government, he said the limited choice could restrict buyers.
The step-up financing scheme is a government initiative in which the monthly instalments are reduced to a lower amount for the first five years and will increase to a higher value for the for the consecutive years until expiration of the loan.
Overcoming the housing problem
JKG Land Bhd managing director Datuk Teh Kean Ming said that although the affordable housing effort by the Government is beneficial to the rakyat, he suggests that the authorities should create a sustainable model for affordable homes.
He cited Housing and Development Board (HDB) model as an example to mitigate the issue. By allowing the rakyat to rent, with the possibility of purchasing the home in the future, the problem could be alleviated and the livelihood of the rakyat could be improved as well.
Reintroduce DIBS to help buyers
One of the problems facing first-time home buyers is the inability to acquire funding to purchase property. The roundtable participants called for the Developer Interest Bearing Scheme (DIBS) to be reintroduced to help buyers.
Under the DIBS, a property developer absorbs the home loan interest of the buyers during the construction period.
The speakers also recommended the DIBS for first time buyers especially for the properties below RM600,000.
MIEA deputy president Kelvin Yip said: “There are many first-time buyers in the primary market. DIBS increases the affordability for buyers.
“The profiling on potential income of buyers will also help because their earnings should increase alongside their career growth.
“The bank can impose a higher instalment based on income growth,” said Yip.
Elevating stamp duty exemption
The developers also suggest that the exemption of stamp duty for houses priced below RM300,000 – which was introduced in last year’s budget – should be extended to houses priced up to RM700,000.
The speakers say this is because the mid-range or affordable properties are usually priced between RM500,000 and RM700,000, which is above the threshold set by the Government.
Deferring the 4% stamp duty
Yip also suggested postponing the increase of stamp duty in January 2018 from 3% to 4% for houses priced at RM1mil and above to ease the pressure on the housing market.
The increase in stamp duty could be a deterring element that hinders potential buyers searching for homes within that price range.
Championing the IBS cause
The property players expressed the positive impact of IBS to developers, to home buyers and the property industry.
Ho suggested that the Government could provide a wider range of incentives for IBS, including fast-track approvals, higher plot-ratio for IBS projects, tax incentives in the form of GST exemption for developers, and stamp duty exemption for IBS property buyers.
Lowering compliance charges
The industry players recommended a reduction of compliance charges and the developer’s contribution for utilities as well as a review of the basics of cross-subsidy elements because the costs incurred could affect housing prices.
GST incentive for affordable housing
To encourage developers to build more affordable houses, the corporate chiefs have asked the Government to provide GST returns for the affordable housing project.
Lim said that the Government should review the GST scheme for developers so that developers can claim back GST for affordable housing.
Review 24-month defect period
Lim also suggested money held back by the 24-month defect period be used by developers.
He reasoned that the developers could reinvest the money and reduce the overall cost which could potentially reduce house prices.
Attract more foreign investments
Foreign investment is vital in stimulating the national economy. Encouraging the influx of expats and high net-worth individuals will increase the demand for local housing and help the property industry.
The property leaders suggested lowering restrictions on foreign ownership of properties from RM1mil to RM500,000, with the provision of a tighter standard on financing options.
The developers think that fewer restrictions will encourage more expats to own a home and increase the demand for properties.