Buying Your First Home

There are 2 keys every Malaysian should have in their lifetime; car keys and house keys. You already have the car, and now you’ve finally reached that stage in your life where you want to have a place to call your own. Be it for personal or investment, buying your first property can be a rather daunting task if misinformed. But by asking the right questions and understanding the process flow, things might not be as complicated as it seems.

It’s very important to differentiate between wanting to buy a property and being able to buy a property. Always remember, if you can buy the property and manage your monthly expenses comfortably, then you’re ready to consider the purchase.

 

Here are 5 questions you need to ask yourself before deciding:

1. What type of home best suits me?

There are many types to choose from; a condominium, an apartment, a townhouse, a semi-D bungalow, or even a patch of land to build your own dream house. Each has its own pros and cons, which you need to weigh to better suit you.

2. What am I looking for in a new home?

A home is a long-term investment, which is why it’s very important to consider a property that fits both your wants and your needs while keeping within your budget. Location, neighborhood, size, and layout should be part of your consideration.

3. How much mortgage can I actually get?

It’s important to get an idea of how much a lender will be willing to loan out for your first home. The amount may vary depending on your debt, monthly income, and job patterns.

4. How much home can I actually afford?

You will need to look at the house’s total cost (not just the monthly payment) such as the amount of down payment you can afford, how much you anticipate spending to maintain or improve the house, and how much your closing costs will be.

5. Who will help me find a home and guide me through the purchase?

A real estate agent will help you find homes that best suit your criteria. Once you’ve decided on a home to buy, these professionals will help you with the entire purchase process including making an offer, getting a loan, and completing the paperwork.

Just keep in mind these 5 questions and you’re good to go. All the best!

Factors To Be Considered Before Buying A Property

After months of searching, you’ve finally found your ideal home. But before you sign on the dotted line, here are a few things you might want to consider:

Which way does the house face?

This is essential, especially when it makes a difference between an overly heated home with little ventilation and an airy home that has ample lighting.

What is the area like?

Take a walk around the property and observe the area. Are there a lot of noisy restaurants around? What are the neighbours like? Are there any convenience stores around? Is there public transport nearby? This is to give you an idea of what to expect before you move in.

How safe is the area?

If the property is within a gated community then you’re all set. If not, then you might have to look at the surrounding houses and see if there are ample residents living around the neighbourhood. You might also want to check if there is sufficient public resources around.

Are there sufficient facilities available in the community?

It helps to ensure sufficient public facilities around your neighbourhood such as a swimming pool, a community centre, a sports complex and/or playgrounds. These amenities provide a sense of community and is a great way to get to know your neighbours.

Is the property easily accessible to major roads?

It helps to know which major roads the property links to. This will help with the ease of traveling, avoiding any future congestion going in and out of the property

Will there be any major developments happening in the area in the near future?

Apart from determining the appreciation of the property value, this would also help in determining if the density of population around the area is looking to be increased and whether that increase is something you wish to be a part of.

Is there sufficient drainage in the area?

Examine the whereabouts and levels of external drains and see if they are accessible and fully functional.

All You Need To Know About Mortgages

Finding the right home can be tricky, from the location, to the type, the design as well as size. But eventually it all comes down to what you can afford. As we’ve mentioned earlier, it’s very important to differentiate between wanting to buy a property and being able to afford one.

Here, we’ll be talking about mortgages and how you too can finance your home the right way.

The most important question you should ask yourself is “how much can I afford and how much can I borrow?” The percentage of down payment you pay at the beginning will affect the amount of monthly mortgage payments you pay later on. If you can afford to pay a higher down payment, then you will be borrowing less, thus lower mortgage payment every month.

When determining how much you can afford to pay for your home, there are a few things you might want to consider:

  1. down payment amount,
  2. monthly expenses,
  3. credit rating, and
  4. income.

The simple rule to follow; your collective monthly debt should not exceed a third of your monthly income. This debt includes any car payments, education loans or any other costs you have on a monthly basis. Working out your collective debt plan will help determine a ceiling price for the mortgage you are able to afford. We advise you to calculate the amount of mortgage you can afford before considering a property.

The amount you can borrow is determined on the value of your property, your income and your repayment capability. When looking for an ideal loan, do consider the interest rate and the duration of the loan. The higher the interest rate, the more money you will pay each month. Interest rates can be fixed or adjustable. Adjustable interest rates change overtime whereas fixed interest rates remain the same.

As for the financing, you have the choice of conventional financing or Islamic financing. Under conventional financing, your loan consists of a principal amount, plus the interest charged on you. Islamic financing works on a different concept of buying and selling, where the financial institution purchases the property and then sells it to you higher than the purchased price.

It’s important to pay attention to every little detail, like the margin of finance, the lock-in period, as well as branch location. It’s just as important that you keep in mind all the other fees involved in purchasing a home. It is obviously not just going to cost you the down payment and the subsequent mortgages. Other fees such as the legal fee, insurance fee, transaction fee etc. are items you would need to calculate in as well.

Generally, most mortgages are calculated for either 15 years or 30 years. A 30-year mortgage involves a lower monthly payment than a 15-year mortgage for the same amount, but the total amount paid in interest will be greater. The following reference can be used when calculating the best mortgage rates: https://www.imoney.my/home-loan.

Always remember, choose a mortgage plan that meets your needs best and is carried out with the least amount of financial strain.

References:

  1. http://www.mortgagecalculator.net/buyers-guide/
  2. http://www.iproperty.com.my/financing/faqs.aspx#22
  3. http://www.iproperty.com.my/news/8992/5-common-home-loan-mistakes-to-avoid

GST And The Property Sector

The Goods and Services Tax (GST) was introduced in Malaysia back in April 2015. Prior to its inception, spending spiked before decreasing drastically after its implementation. This decline is expected to continue as consumers and businesses alike adjust to the new taxation.

The list below contains information regarding GST and how it might affect the property sector:

  • GST is a consumption-based taxation system which works as a replacement for the existing Sales and Service Tax (SST).
  • The introduction of GST in Malaysia is not a new idea; the first announcement of a possible implementation was made by the government a decade ago back in September 2004, but was postponed twice before its implementation.
  • GST will be charged on all types of supply of goods and services in Malaysia (except for goods prescribed as zero-rated and exempt-rated).
  • The Real Estate and Housing Developers’ Association (REHDA) has forecasted that residential property prices may rise by 3-3.5% after GST.
  • The Royal Malaysian Customs (RMC) has also forecasted that housing prices may increase by 0.5% to 2%.
  • A purchaser of residential property will not be subject to GST since the supply of residential property falls under the category of exempt-rated supply.
  • Even though residential property developers are not allowed to claim any input GST incurred on their business purchases, the cost of their own purchases will increase. Due to this, the developer may adjust its selling price to reflect the extra costs due to the unrecovered input GST.
  • As for commercial and industrial properties, the cost is expected to increase as those sectors will be subjected to GST.

 

References:

  1. http://www.iproperty.com.my/news/9853/the-gst-a-quick-look
  2. http://www.iproperty.com.my/news/9846/gst-under-the-microscope

Property Terms Glossary: Memorandum Of Transfer

What is a Memorandum of Transfer (MOT)?

A Memorandum of Transfer (MOT) is a transfer of ownership procedure of a property for the price agreed between the buyer and seller. It is used to transfer ownership of the property from the developer to buyer, or in the case of secondary market purchases, transfer ownership of the property from the seller to buyer. The property can be transferred to a family, boyfriend, girlfriend, friend or any stranger. The cost of a MOT borne by the buyer will include professional legal fees, stamp duty, disbursement fees as well as sales and service tax.


 

Components of a MOT

  1. Company letterhead
  2. List of parties involved in the transfer of property
  3. Description of and valuation of items in the transfer

 

Documents needed prior to transfer of property

a) Copies of all present and previous SPAs
b) Copies of present and previous Loan Agreement, Deed of Assignment, Deed of Receipt and Re-assignment (if any).
c) Strata Title (from the developer)
d) Current year quit rent receipt
e) Current year assessment receipt
f) Facility Agreement

 


 

Stamp duty charge on the MOT

House PriceStamp Duty Charge
First RM100, 0001%
Next RM100,001 to RM500,0002%
From RM500,001 to RM1 million3%
Subsequent amount4%

Stamp duty waived: Between husband and wife by way of love and affection

TransferorTransfereeExemption Ratee
Husband/WifeWife/Husband100%
Parent/ChildChild/Parent50%

Stamp duty exemptions

First-time homebuyers will be exempted from stamp duty on the first RM300,000 of the property price on any instrument of transfer and the loan agreement, for SPA completed between 1 January 2019 and 31 December 2020.

Process developer and buyer will sign the MOT (Form 14A) which indicates who is the owner and who is the transferor, transferee, and how much shares the transferor wants to transfer.

Conversation between Preeta and Adam (developer’s agent) discussing about a property transaction worth RM400, 000. Adam is finalising the MOT with the developer.

Adam: Hi Preeta, are all the documents in order for us to finalise the MOT?

Preeta: Yes, I have all the relevant documents ready.

Adam: I will calculate the stamp duty for the MOT.

The first RM100,000, stamp duty is 1%

RM100,000 x1% = RM1,000

From RM100,001 to RM500,000, stamp duty is 2%

RM400,000 x 2 = RM8000. So, the total Stamp Duty that I need to pay is RM9,000

Preeta: Let’s sign this MOT and complete the transaction and the property will be transferred to your name officially.

Braving The RMCO Extension

Let’s be honest – all of us pretty much had a hunch, if not positively knew, the RMCO was going to be extended. Seeing how there are plenty of active new cases every day, both nationwide and worldwide, there is no way of denying our new normal.

On August 28, Prime Minister Tan Sri Muhyiddin Yassin announced the extension of the Recovery Movement Control Order (RMCO) – which was supposed to end on September 1 – to December 31, 2020. The decision was made based on the latest development, as more time is needed to clear Malaysia of the pandemic. Throughout the extension, enforcement would continue under the Prevention and Control of Infectious Diseases Act 1988 (Act 342).

According to the Prime Minister, everything is under control but should there be an increase in infections in particular localities, the government will carry out the implementation of targeted measures such as the Enhanced Movement Control Orders (EMCO) or the Targeted Enhanced Movement Control Order (TEMCO).

Now the million-ringgit question is, how are we, the mere citizens, planning to cope with at least, another four (4) months of RMCO, or a possible EMCO and TEMCO? We have seen reports saying around 70,000 people were retrenched up to August. The actual figure is believed to be higher as we have to include retrenchment practised by micro-enterprises, and not forgetting, retrenchment that goes unreported.

The severity of the COVID-19 impact on businesses is unprecedented. It started as a health crisis, which quickly evolved into a global economic crisis at a speed and magnitude we have not seen in our lifetime. Weak economic and financial results, demand cut-backs, supply chain disruptions, and knock-on effects of troubled sectors on employment are the main contributing factors to this crisis. The ripple effects are still unfolding on a global scale and it is unlikely that the true impact of this pandemic can be measured until the situation stabilises.

In February, the government together with financial institutions announced the first economic stimulus package. Even though the outlook is not good, SMEs can persevere against the financial adversities by leveraging on all available resources to help them get through these difficult times. In March, they announced the second stimulus package valued at RM250 billion. In April, the third stimulus package was announced worth RM10 billion. Seeing how the cases weren’t dying down and many businesses were starting to close doors, the government announced the fourth stimulus package in June to help support businesses affected by the pandemic.

Many of the local businesses are affected and although they are resilient and learning to make changes, most of the businesses said they can sustain themselves for only two months during heightened restriction periods. Even after resuming operations, some services are still not allowed, which reduces these businesses income significantly.

While they agree restrictions are needed to stop the spread of COVID-19, they also believe the government should explore further and address this issue so that employees will continue to have job security. They said an extension should also be accompanied by additional stimulus measures to help businesses continue the recovery momentum. It is truly an unprecedented time and whether we agree with it or not, these additional stimuli are needed for our economic growth in the demand and supply chain.

In addition, it goes without saying that the uncertainties we are facing during this unprecedented time is understandably nerve-wrecking, and it may have caused some profound anxiety in some of us. It is 2020, and we are going through a pandemic, it is okay to take things one day at a time. Try not to bite more than you can chew, so you won’t become overwhelmed. The hours may become blurry during this partial-quarantine, so stick to a routine and this will make you feel functional and in-control. Until then, hang in there.

How Penjana Benefits Young Property Buyers

How Penjana Benefits Young Property Buyers, HOC

The National Economic Recovery Plan (PENJANA) is said to be good news for young, middle-income prospective homebuyers into realising their dream to own a property. Here at LBS Bina Group Berhad (LBS), we welcome the government’s measures to stimulate the property sectors through the incentives announced by the Prime Minister, Tan Sri Muhyiddin Yassin on 5 June 2020.

LBS Group Managing Director, Tan Sri Lim Hock San, believes that these incentives can spur the property market during this pandemic. As to support this measure, LBS will be unveiling additional incentive package through the LBS #DudukRumah Deals to help Malaysians own a home.

According to Scott International (Malaysia) chairman, Datuk Sr Lau Wai Seang, given these trying times, with various uncertainties and economic challenges, where there are many layoffs and pay adjustments, many potential purchasers very probably will defer their plan to own a house.

Buying a property is a big commitment, and for first time buyers, hunting for a dream house is an experience the buyer is not likely to forget. The entire process could be intimidating when not equipped with the right knowledge, and you might overlook certain critical elements in calculating the total expenditure of acquiring your home.

Proper research is required when one is about to purchase a property, and with the announcement of these PENJANA incentives, property buying activities is expected to heighten in the next few months and help stimulate the Malaysian economy. So, what were the incentives announced? Let us briefly go through it one by one.

From 1 June 2020 to 31 May 2021, the Home Ownership Campaign 2020 (HOC) is to be reintroduced. Buyers will be granted stamp duty exemption on the instruments of transfer and loan agreement for the purchase of residential homes priced between MYR300,000 to MYR2.5 million, subject to at least 10% discounts provided by the developer.

For buyers, it is important to note that you can get these exemptions only if the property is registered with REHDA Malaysia (for Peninsular Malaysia), SHEDA (for Sarawak), and SHAREDA (for Sabah).

The exemption on the instrument of transfer is limited to the first MYR1 million of the home price, while full stamp duty exemption is given on loan agreement effective for sales and purchase agreements signed between the period stated above.

Under the incentive, the 70% margin of financing limit that was applicable for third residential property valued at MYR600,000 and above will also be uplifted. Which means financial institutions can now choose to approve up to 90% property loan, even if the buyer is already buying his third property. The ability to obtain loans however is subject to internal risk management and assessment of the respective financial institutions.

The incentive also caters to existing home owners who would like to sell their residential property. Between 1 June 2020 to 31 December 2021, any gains arising from the disposal will be exempted from RPGT, and it is applicable up to three properties for each home owner. This exemption will help owners who need to liquidate due to financial woes caused by the pandemic.

For first time property buyer, the question that lingers on your mind would be if it is a good time to commit to buying a property post-MCO. If you have been looking into owning a property, if it is currently in your short-term goal, now would be the absolute best time to proceed with the idea.

Owning a property is good for you as it is an asset that increase in value over time (value appreciation) as a result of changes in inflation or interest rates. Why does appreciation matter so much? At the most basic level, it makes us feel financially secure, especially knowing that we are able to liquidate our asset in time of need.

The Home Ownership Campaign (HOC) is exceptionally beneficial and you get to save a whole lot of money from the exemptions. TA Research believes that home buyers and investors are expected to be the biggest beneficiary from PENJANA, as measures unveiled would help to reduce their entry and exit cost.

For those who have been working for a few years, this is the best time to start looking into a property. Getting one at a young age would be one of the best investments you can make, especially with the PENJANA incentive introduced, it would be highly wasteful to not make full use of it. This is the only time when bank would be lenient with their loan, and to not seize the opportunity presented would not be a smart thing to do.

We cannot stress enough on how this sort of campaign does not happen often so when it does, it is best to not miss out on it – seize the opportunity and reap the benefits for your own self.

Adapting To The New Normal

Life has been full of uncertainties for us lately. Every two weeks we wait in front of our televisions, our mobile phones, to find out what is next? Where do we go from here? What is the news we will be receiving today? What will the prime minister tell us? Will the MCO be extended? Are the number of cases going down? Are we in the clear now? Can we, finally, go back to normal? Hundreds if not thousands of questions go through our heads and most of the time, we do not like the answers to it.

As much as we hate to admit it, and as in denial as we want to be, life will never go back to normal for us, those days are over – until a vaccine for the COVID-19 virus has been developed at least. Even so, it is unlikely for our lives to go back 100% to the way it was – we are all traumatised now. We will always involuntarily be extra conscious among strangers. Having a person sneezing near us will make us anxious, and when we start sneezing the next day, even for a completely different reason, our anxieties will shoot up through the roof.

Whether we like it or not, we must start adapting to the new normal. Wearing a mask when we go out even for just a short while, is vital – it is literal life or death. Having to be alert of your distance to a stranger at all times may feel odd in the beginning, and will feel taxing after a while, but this is our reality now, this is our new normal. We have to do it!

Recently we have been requested to go back to work as per normal to restart our economy. We were taking in major losses every day and our country could no longer afford it. It was a tough decision but one that had to be made. From small businesses to companies with substantial revenue, many Malaysians are losing and have lost their jobs. According to BNM Annual Report, the unemployment rate is expected to hit 4% this year due to the outbreak – that is over 2 million citizens, and the livelihood of even more will be affected.

It is understandable for us to feel fear of having to go back to work in the middle of a pandemic, and to deal with the anxiety that tags along with it, it is important for us to have knowledge on how to stay safe. It is crucial for us to abide by the rules of the new normal. Wash your hands for at least 20 seconds, wear a mask when going out, practice social distancing for at least 1 metre from the next person in the office, and always carry a hand sanitiser with you, just in case. Do not gather for lunch, and do not eat others’ food. These may all seem tedious, but it could be lifesaving.

Will this new normal change us? Hopefully, for the better. In a way, it trains us to have self-discipline and be aware of our environment. This new normal will push us to become more cooperative, and to listen to the authorities better, because our lives depend on them.

When we cooperate with the guidelines given by the Ministry of Health, we are also helping the frontliners. In fact, there is a saying that we are actually the frontliners. We are the ones who are capable of putting a stop to this pandemic. When we apply these guidelines in our daily lives, we are the one who get to decide on whether we are going to infect our society or not. The doctors and nurses are the last line of defence, when we are infected, they will be our last hope. Naturally, it is our duty to help lessen their burden.

Just the other day, we were informed that Raya gathering is permissible, provided the house contains a maximum number of 20 people, no crossing your residential state, and they must all be family members only. Although we have been blessed with this leeway by the government, we must use our own discretion and not abuse the privilege.

It is best to exercise our own judgement on whether this Raya gathering needs to be done within our families or not. Do we have many elderlies in our family? Will we be asymptomatic and unknowingly infect them? As we already know, the elders are more prone to be infected and they are unlikely to recover or survive from it. The best way to show our love for them is by staying away and using technology to keep in touch with them.

Wanting to be with our loved ones during Raya is normal, but we all must pull ourselves together so we can win this fight. We must put aside the desire to have a normal Raya gathering with our family and friends, so we can ensure we will still be able to celebrate Raya with them for many more years to come.

As much as we find this new normal to be suffocating and limiting to our normal routine, we have no other choice but to buck up and just do it. It is for the literal survival of ourselves, our loved ones, and our species as a whole. If we stay disciplined and apply the guidelines provided into our daily lives, we will get through this pandemic alive.

Flatten The Curve, Strengthen The Love

We’re treading through uncharted waters. Unless you’ve lived through the Spanish flu, the deadliest pandemic in history, we’re facing an unprecedented event. It’s been a little over a decade since the world experienced the last pandemic – the 2009 H1N1 swine flu. 1.4 billion people across the globe were infected and over half a million did not make it. Therefore, it seems reasonable to expect stringent measures by the authorities.

But that’s not the case.

The world is in the midst of the COVID-19 pandemic caused by a novel coronavirus called SARS-CoV-2, a virus that has no precedent hence no vaccine yet. By all serious estimates, it is going to be a major killer. Our government has taken all the necessary measures to curb it from spreading further and as socially responsible citizens, it is our duty to follow orders.

What was initially a two-week Movement Control Order (MCO) has now become a month, with expectations of an extension. Although it feels a little suffocating to be cooped up in your house for a month, this decision was made after a thorough analysation by the authorities and considering the curve we were heading towards, this measure is not extreme at all but highly necessary. Based on global data collected, so far, COVID-19 is most deadly for people over 60 who have underlying health conditions. If you’re a student who’s feeling stuck at your university during this period, missing your parents and family and dreading not being able to go home, change your perspective. You are not stuck, you are safe and sheltered, a privilege that plenty are unable to enjoy during this pandemic.

You’re potentially saving their lives, too. Many healthy young adults are asymptomatic and silent carriers; you might infect other people especially the elders like your parents. Therefore, the MCO is highly important and must be obeyed 100%, which means no hanging out with your best friends too. Limit the number of physical interactions to only the people you’re living with, that’s how you help flatten the curve.

We understand working adults are also restless about not being able to go back to your hometown and be with your parents, too. Basically, every Malaysian right now would want to be with their family and loved ones. Don’t worry too much if you’re unable to physically be with your loved ones in this duration. It is normal to miss the sense of your mother’s touch, your father’s smell, your sister’s infectious laughter. You need to try your level best to pull it together and you will come out of this stronger. Your emotional bond, your connection with them, would also become undeniably stronger.

Now that we are home-bound, it is also a good time for us to take the time to reflect on the importance of love in our lives and how we must learn to appreciate things as they can be taken away from us in a split second. Who would have thought going out to restaurants with family and friends would become illegal, or even going to the park to do some light exercises? These are among the things that we have all enjoyed throughout our lives and somehow took for granted; because we never thought we would lose our freedom to do these basic things.

We are lucky we are living in the 21st century, where we have modern technology that is sophisticated enough to allow us to communicate with anyone we like 24/7. Besides that, not only do we get to hear their voice, we also get to see their face and see their gestures. In this pandemic, that is enough to feed and warm our soul, and to temporarily cure our longing for the natural human experience.

To date, the Ministry of Health has announced that the current MCO is working in flattening the curve. The number of new cases is lower than it was initially projected to be, which is great news for us Malaysians. This is a good example of why we must strictly adhere to the “Stay-at-Home” order accordingly. As long as we cooperate and work as one, the sooner we will be able to end this and start going back to our normal lives. Until then we all must stay strong, stay put, keep ourselves updated, take care of our health both mentally and physically, and wash our hands frequently. Stay safe, everyone. Together, we will get through this.

– Corporate Liaison and Digital Media Department

Being Grateful Amid COVID-19

This month has been a challenging month for us Malaysians what with the recent new strain virus outbreak known as COVID-19. To date, there has been more than 1,500 positive cases in Malaysia. Good news is, so far 139 patients have recovered and been discharged.

Now that Malaysia is under Restricted Movement Order (RMO), we at LBS hope everyone is quarantining themselves at home to help flatten the curve. Go out only when it is absolutely necessary and practice social distancing at all times. It is up to each one of us to help stop the spread of the virus. Only with our collective effort, we will be able to end this and stop the nightmare.

During this RMO period, let’s take the time to really dig deep and reflect on every little aspect of our lives, do a little soul searching. Look at the things we have been taking for granted for years, and how important it is for us to start being grateful for every blessing that comes our way, be it big or small. You don’t have to be picky, there is nothing too small for you to be thankful for. It can be as simple as appreciating the clear weather or how quickly your online shopping parcel arrived despite the current restriction.

Find gratitude in your challenges. Sometimes, thinking about negative or difficult situations can help to really nail down what you have to be thankful for. Dig a little deeper into some of your own past experiences and try to figure out how they have helped shape you into the person you are today. How those experiences have matured you and strengthen you, and how they’ve prepared you for future obstacles.

Take this time to cultivate better health habits. Eat more nutritious food to help boost your immunity, do some home exercise to keep fit, and avoid risky behaviours such as going out unnecessarily. Our health is one of the things we tend to subconsciously take for granted, and this will stop us from having optimistic and healing attitudes. When we take better care of our physical health, our mental state will be better too.

We know by now a lot of people are starting to get restless. A sudden halt from the hustle and bustle of life, and we understand completely. In times like these, you must learn how to slow down and take things one day at a time. Don’t think about two weeks, but rather focus on today. Do some breathing exercises. Count your blessings. Say it out loud if you have to! Make small goals for the day that you would like to achieve. This is a reset, and a chance for you to look at life from a different perspective.

Until then, stay safe, follow the orders, and wash your hands frequently!