PETALING JAYA: Property developer Mah Sing Group Bhd (Mah Sing), while lauding the government’s proactive measures in rolling out economic stimulus, hopes it will consider additional incentives to encourage homeownership, particularly among first-time homebuyers.
Mah Sing founder and group managing director Tan Sri Leong Hoy Kum believed that the mid- to long-term property outlook remains positive despite the challenging market conditions brought on by the Covid-19 pandemic.
This is because the market is supported by strong fundamental demand from a young demography, he said in a press statement expressing Mah Sing’s wish list for Budget 2021.
The list includes reinstating the maximum loan tenure to 45 years from the current 35 years, higher debt service ratio and using gross income rather than net income in loan applications.
“We also hope the government can consider implementing the developer interest bearing scheme (DIBS) for first-time homebuyers as the current interest rate is low enough for such a scheme,” said Leong.
A return of DIBS would eliminate homebuyers servicing the interest on new home loans whilst paying for existing rentals during the construction process.
Mah Sing is hopeful the government will continue working with financial institutions to relax lending requirements as part of efforts to boost homeownership.
The wishlist further urged for the resumption of the Malaysia My Second Home (MM2H) programme, which was temporarily halted pending a comprehensive review.
According to Leong, the MM2H programme has received a lot of interest from foreigners in recent years due to Malaysia’s tropical weather, cleaner air, good education system, attractive properties and mix of Asian values and Western infrastructure.
“We also would like to propose for the reduction in the minimum threshold for foreign property ownership to RM500,000 in all states especially the key regions with high overhangs like Klang Valley, Johor, and Penang,” added Leong.
In regards to house prices, Leong stated that compliance cost remains one of the most significant factors affecting developers’ cash flow.
Citing statistics by Real Estate and Housing Developers’ Association (Rehda) Malaysia, compliance cost takes up an average of approximately 20% of the total cost.
“Apart from land conversion premiums and development charges, the capital outlay for private utility companies is very high.
“This encompasses surrender of the land, construction of the infrastructure, and contributions to the utility companies such as TNB, Syabas, Telekom and Indah Water Konsortium,” Leong stated.
Mah Sing hoped that compliance costs such as capital outlay for private utility companies could be borne by respective asset owners so that savings can be passed on to homebuyers.