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Budget 2022: 4...

Budget 2022: 4 main property sector initiatives for Keluarga Malaysia

Local property developers are confident that the initiatives introduced in Budget 2022 will spur the country’s property industry and accelerate its recovery.

This article was translated from Bajet 2022: 4 inisiatif utama sektor hartanah untuk Keluarga Malaysia by Ashraf Wahab. On 28 October 2021, Finance Minister YB Senator Tengku Datuk Seri Zafrul Tengku Abdul Aziz tabled Budget 2022 in parliament , which carries the theme ‘Keluarga Malaysia, Makmur Sejahtera’ (A Prosperous Malaysian Family). With an allocation of RM332.1 billion, this is the largest budget in Malaysia’s history. In facing the global pandemic, most countries are forced to deal with two heavy challenges — saving lives and protecting the economy. However, the Government remains positive that next year, the country’s economy will expand between 5.5% and 6.5% based on strong fundamentals and a diversified economic base. Budget 2022 focused on three key areas, namely protect and drive recovery of lives and livelihoods for the people, rebuild the resilience of the economy, and catalyse socio-economic reforms. The COVID-19 pandemic and the Movement Control Order (MCO) enforcement have resulted in a sluggish number of transactions in the country’s property sector. According to Tengku Zafrul, the country’s real estate sector recorded 295,968 transactions worth RM119.08 billion in 2020, a contraction of 9.9% in number and 15.8% in value compared to 2019. Therefore, multiple initiatives have been introduced to revitalise the country’s property sector.

4 main property sector initiatives for Keluarga Malaysia

The following are the four main property sector initiatives for Keluarga Malaysia (Malaysian Family) which were unveiled during Budget 2022. We can make comparisons between the initiatives in Budget 2022 and the property initiatives for Budget 2021 which focused on first homeownership for Malaysians, especially those in the B40 and M40 categories.

1. Housing projects for the low-income group

The Government recognises that every member of Keluarga Malaysia has the right to own a home as a necessity of life. Towards that end, the Government will continue housing projects specifically for low-income groups, with an allocation of RM1.5 billion.

This particular move in Budget 2022 will indirectly help ease the burden of potential house buyers, especially those who belong in the B40 category.

During Budget 2021, the Government allocated RM500 million to build up to 14,000 homes under Program Perumahan Rakyat (PPR) and RM315 million to build 3,000 units of Rumah Mesra Rakyat (RMR).

2. The abolishment of Real Property Gain Tax (RPGT)

The Government will no longer impose Real Property Gains Tax (RPGT) from the disposal of real property by residents, permanent residents (PR), and other than companies starting from the sixth year onwards. For Real Estate and Housing Developers’ Association (REDHA) president Datuk Soam Heng Choon, he hoped that this measure will help invigorate our property market to make it more resilient and eventually translate into a positive multiplier effect on the economy. Additionally, he hoped that it would help spur the subsale market.

3. Housing Credit Guarantee Scheme (HCGC)

The Government has allocated RM2 billion under the Housing Credit Guarantee Scheme (HCGC). This was to help those without proof of fixed income. The Government is cognisant of the challenges facing gig workers, small business owners, and farmers in getting a housing loan.

In reality, many of these individuals have the capacity of repaying their loans but without documents proving of fixed income, the process of applying for a home loan is complicated. This initiative will not only benefit potential house buyers but also accelerate the growth of the local property market.

So far, BSN MyHome (Program Perumahan Rakyat) 2021 is one of the housing schemes in Malaysia intended to help people without any fixed income to own a house.

4. Optimal management of Malay Reserved Land

The Government will ensure that unused Government land and Malay Reserve Land (MLR) will be rented out for agricultural and business projects. This move will not only optimise the management of these lands but will also be a source of income for the Government. However, this move will need caution to avoid management leakage. It will increase areas of agriculture and also serve as opportunities for low-income groups, youths, and graduates to generate income.

Comparison of the property sector initiatives between Budget 2022 vs Budget 2021

There are a few initiatives in Budget 2022 and 2021 that are worth paying attention to:

Stamp duty exemption

Although the Government didn’t directly announce a stamp duty exemption in the latest budget, it was already stated during Budget 2021 that stamp duty exemption will be given for any Memorandum of Transfer (MoT) and purchase of a first home up to RM500,000. This exemption applies for purchase agreements from January 2021 until 31 December 2025.

Rent-To-Own (RTO) scheme

The RTO scheme will continue in 2022. It is made available for first-time home buyers. During the tabling of Budget 2021, the Government announced that it was collaborating with selected financial institutions to provide this scheme which involves 5,000 PR1MA homes worth over RM1 billion. This is a golden opportunity for those in the B40 income group to own their first home.

Program Perumahan Rakyat (PPR), Rumah Mesra Rakyat (RMR), dan PR1MA

The Government will continue the PPR programme and RMR scheme under Syarikat Perumahan Negara Berhad (SPNB) and PR1MA with a much higher allocation compared to last year’s budget.

Perumahan Penjawat Awam Malaysia (PPAM) programme

Through Budget 2022, a larger allocation is provided towards civil servants and this includes maintenance of quarters under the Property Management Division (BPH). A total of RM365 million is allocated in Budget 2022 compared to the RM125 million last year. The Government also expand personal accident protection up to RM100,000 for 40,000 new Lembaga Pembiayaan Perumahan Sektor Awam (LPPSA) borrowers.

Home Ownership Campaign (HOC)

HOC 2021 is scheduled to end on 31 December 2021. So far, it seems that the Government will not continue this programme as there was no announcement during Budget 2022. Many developers have urged this campaign to continue to help the property market to recover. However, the abolishment of the RPGT was a welcomed move by property developers as it is expected to stimulate the property market.

Presented by LBS Bina on 17 May 2022

Edited by Rebecca Hani Romeli

Published at: https://www.iproperty.com.my/guides/budget-2022-property-sector-initiatives-for-keluarga-malaysia/

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Budget 2022: 4 main property sector initiatives for Keluarga Malaysia

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