Clarification

In reference to our story “Switch to building manager?” in StarBizyesterday, Building Management Association of Malaysia secretary-general Prof S. Venkateswaran said if the bill was gazetted into an act, about 80% of non-valuer managing agents currently managing residential stratified properties owned by joint management bodies and management corporations would end up jobless instead of as reported. - The Star

George Town still belongs to locals, says GTWHI

IT is untrue that most heritage buildings in Penang’s Unesco World Heritage Site are owned by foreigners as alleged by certain quarters, said George Town World Heritage Incorporated (GTWHI) acting general manager Lim Chooi Ping.

Refuting claims that most of the property in the inner city had been bought by foreigners, she said out of the 4,600 plus pre-war buildings in the heritage zone, only a small percentage belonged to foreigners.

“Certain quarters have identified 83 such buildings as belonging to foreigners but if you look at how many pre-war buildings there are here, it is only a small percentage.

“While the (foreign ownership) situation is not critical, we recognise that gentrification is an issue and a series of roundtable discussions will be held with the various stakeholders and non-governmental organisations to come up with a strategy to address it.

“The proposal will then be presented to the state government and we may include it in the Special Area Plan (SAP) for the heritage site,” she told a press conference yesterday.

State Local Government and Traffic Management Committee chairman Chow Kon Yeow, who was also present, said the state government viewed the matter seriously but could not stop private owners from selling off their property to foreigners.

“We are concerned that locals are selling off their buildings, more so to foreigners, when they cannot afford to restore or maintain their property,” he said.

He urged Think City Sdn Bhd (a wholly owned subsidiary of the Federal Government’s investment arm Khazanah Nasional Bhd) to come up with RM500mil so that it could purchase and restore such buildings instead of allowing them to fall into foreign ownership.

“Think City has been doing a good job with its RM20mil seed-funding initiative for urban rejuvenation projects within the heritage site.

“If it obtains more federal funding, pre-war home owners can at least give Think City priority to purchase their property before they sell it to foreigners,” he said.

Chow also called on the state Valuation and Property Services Department to provide more details on foreign ownership of pre-war houses in the heritage zone.

“According to the data given, 61 transactions involving foreigners have taken place in the heritage zone since 2008.

“The number seems to have dramatically risen from June to September this year, constituting 27 out of the 61 transactions. However, the numbers refer to lot-based transactions, not buildings,” he added.

“Each lot may have five or 10 buildings on it so we really do not have an accurate idea of how many pre-war buildings have been sold to foreigners,” he said.

On Oct 8, state Barisan Youth chief Oh Tong Keong called on the state government to control foreign ownership of heritage buildings in Penang.

He claimed that foreign companies, mainly European and Singaporean firms, owned 83 of some 120 heritage buildings surveyed in the inner city of George Town. - The Star

Developers: We don’t want property flippers

KUALA LUMPUR, Oct 9 — Too much speculation is bad for the property market, and buyers should take a longer-term view, said the Real Estate and Housing Developers Association of Malaysia (REHDA) today.

This comes after widespread complaints that speculators or “flippers” were responsible for pushing up property prices faster than the level of income increase especially in urban areas, crowding out genuine homeowners and investors.

File photo of condominiums in Kuala Lumpur. Housing affordability was the number one issue identified by the recent Budget 2013 online feedback gathering platform.

“We, as developers, we also don’t want them (speculators) to come and buy to flip,” said Datuk Ng Seing Liong, REHDA’s past president, at a media briefing on the upcoming Malaysia Property Exposition (MAPEX) 2012 here.

“Too much speculation is no good. We want a long-term and sustainable market.”

Ng also said that after the hike in real property gains tax (RPGT) announced in Budget 2013, the rate was now at a “healthy” level.

He noted however that it would give the public the impression that the government was “flip flopping” on the issue of RPGT as it has been raised twice in the last two budgets after having previously abolished it in 2007.

REHDA treasurer N.K. Tong said he did not expect a severe impact from the RGPT hike as it would not affect long-term investors.

“We want people to take a long-term view of property investment,” he said.

The RPGT was raised from 10 to 15 per cent for properties sold within two years and from five to 10 per cent for properties sold between two and five years from time of purchase.

There will be no RPGT levied on properties sold after five years.

Housing affordability was the number one issue identified by the prime minister’s Budget 2013 online feedback gathering platform, which ran from July 16-29, receiving almost 3,000 separate forms of feedback on the topic.

Apart from the RPGT, the government’s previous measures to cool off the market include capping the loan-to-value ratio for property purchases for third houses and responsible lending guidelines introduced in January which calculated loan eligibility based on net income rather than gross income.

The property market has shown some signs indicative of a cooling this year as the home loan approval rate dipped nearly seven percentage points in the first half of the year to 46.8 per cent from 50.1 per cent during the same period last year.

The House Buyers Association (HBA) said however that the increase in RPGT in Budget 2013 was too “feeble” and would not be able to deter flippers as they typically buy newly launched properties and sell them after construction is completed two years later, by which time they escape from having to pay the highest tax bracket of 15 per cent under the revised RPGT.

MAPEX 2012, which is organised by REHDA, will be held from October 19-21 at MidValley Megamall.

Based on feedback received from exhibitors, the exhibition will have 2,119 units for sale worth some RM2.74 billion.

Ng encouraged people to visit the exhibition even if they were not going to buy as it was a means to educate themselves on property.

He said they could attend free talks by experts as well as compare prices and offerings from some 70 developers.

“Don’t rush into property,” he said. “It is a long-term investment.”

BMAM urges Govt to change the term property manager in strata bill

PETALING JAYA: The Building Management Association of Malaysia (BMAM) is lobbying to the Housing and Local Government Minister to amend the term “property manager” to “building manager” in the Strata Management Bill.

President Datuk Teo Chiang Kok said the “property manager” should be substituted with a more open term, and not be subject to the interpretation of valuers.

Under the new bill, the association said that property management would be monopolised by licensed valuers following the use of the term “property manager”.

Therefore, it came up with the proposal to use the term “building manager”.

BMAM has proposed the definition for “building manager” to be “any person who has been deemed competent to undertake the normal functions of building management and who has been accredited to, or admitted as a member of, or duty certified by an appropriate professional or registered body”.

BMAM secretary-general Prof S. Venkateswaran said if the bill was gazetted into an act, about 80% of joint management bodies (JMBs) would end up jobless.

Furthermore, the minimum fee that valuers must charge under the proposed act is RM50 per unit, which would be “a great burden to stratified property owners”.

“More than 2.5 million low and middle income earning Malaysians live in flats and apartments countrywide, and they are grappling with the ever-increasing costs of living.

“Any additional layer to building management in the form of a monopoly favouring licensed valuers will most certainly burden them financially, bearing in mind that many of them are registered voters,” BMAM said.

It is understood that BMAM was not consulted or requested to attend or contribute input at any workshops and meetings that were held prior to the drafting of the bill.

The association had released a statement to clarify issues raised by the Malaysian Institute of Professional Property Managers and the House Buyers Association.

Among the issues highlighted were the fiduciary duties and responsibilities of JMBs and management corporations, professional indemnity insurance coverage, Valuers, Appraisers and Estate Agents Act, 1981 scale of fees, building management as a multi-disciplinary function, and the monopolisation of licensed valuers on the management of property.

BMAM is the only multi-stakeholder organisation that represents stakeholders in the building industry and property owners. - The Star

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Owning a home - benefit or burden?

Property ownership is seen as an essential part of wealth creation by many Malaysians but there are some who rent for various reasons.

IN all her 19 years of being employed, Sofia (not her real name) has never once felt the need to buy her own house and that's exactly how she likes it.

“I value my freedom too much. I like the feeling of being able to just quit my job, pack up and get on the next plane, and take off.

“I don't want to be tied down by a housing loan for 20 to 30 years because if I want to travel, I'll have to worry about paying my loan or renting out my place,” says the 40-something writer.

Instead, Sofia rents a 1,200 sq ft (111sq m) fully-furnished apartment for RM1,400 a month, a price she is comfortable paying.

“I've been staying in this apartment for the last 10 years, and the rent hasn't really gone up. But if it does, I would consider looking for another place.

“I'm not married, don't have children My two sisters are also not married, and we have the family home in our kampung. So I really don't see a need to buy my own house,” explains Sofia, an avid globetrotter.

She adds that there are other factors behind her decision to rent rather than buy.

“I'm a Muslim, and because I have no male kin, when I die, the law is such that the state takes a share.

“For my lifestyle, this works out best. I love to travel and eat, and I'm not willing to give that up. I don't have a house, but I think I've been able to live a quality life. It's a deliberate choice,” she says.

For others, such as Navesh (not his real name), 32, being a property owner is the way to go.

“For me, renting doesn't make sense. Instead of paying rent, I'd rather pay for the mortgage, and at the end of it, I own the property.

“It's also forced savings for me because if I don't use the money to pay for my properties, I might be spending on other things. But now, it's going towards accumulating an asset,” he says, adding that the property investment would act as a hedge against inflation.

Navesh, a banker, currently owns a double-storey semi-detached house, and a Soho unit which is rented out for RM2,000 a month. Both are in the Klang Valley.

“I'll be moving into the house after my wedding next year,” says Navesh who now lives with his parents.

The monthly instalments for his house and Soho come up to RM3,500 and RM1,400 respectively, but Navesh, who earns about RM10,000 a month, says he doesn't feel burdened by the payments.

After deducting the rental income from his Soho unit, he pays a total of RM3,000 towards his loans.

“Also, I'm quite low maintenance I don't club often or have expensive hobbies, and I'm not really fussy about buying branded items,” says Navesh, who drives a Toyota Vios.

He is open to selling his property if he gets a good opportunity to work elsewehere.

RAM Holdings Bhd group chief economist Dr Yeah Kim Leng notes that in the Asian culture, property has always served a dual purpose consumption and investment. And because the value of property in Malaysia has steadily climbed over the last few decades, it is seen as an essential part of wealth creation by many Malaysians, he says.

Interestingly, The Economist recently published a debate on home-ownership titled “Should home-ownership be discouraged”.

In that debate, Andrew Oswald, Professor of Economics with the University of Warwick, said it should.

All for renting

“Modern generations have been brainwashed into believing there is something wrong with them if they rent,” he said, in his argument.

Citing examples from Europe, he pointed out that home-ownership did not always equate to a thriving nation.

Switzerland, for example, “has tiny unemployment, wealth, high happiness and mental-health scores; visible democracy; people flocking to get in. Does it have high home-ownership rates? Absolutely not. In Switzerland, about seven in 10 of the population are renters. Yet, with Europe's lowest home-ownership rate, the nation thrives.

“Spain has approximately the highest home-ownership rate in Europe (at more than 80%). One-quarter of its population is unemployed, and Spaniards leave their country in droves,” he argued.

Oswald added that high levels of home-ownership “mess up the labour market” because it does not encourage mobility.

“In a sensibly functioning economy, it is easy for people to move around to drop into the vibrant job slots thrown up by technological change. That movement is particularly necessary for the young, who are looking for their early jobs. High home-ownership in a nation is like a treacle blanket thrown over the surface of the country and economy,” he said.

Against the motion, however, was Richard K. Green, director of the USC Lusk Centre for Real Estate who reportedly argued that the statement “home-ownership inhibits mobility” was impossible to prove.

He said it was more likely the other way around where “people who choose not to be mobile are more likely to become home-owners”.

“But what if home-owning does indeed impede mobility? There are benefits as well as costs to stability. For example, stability of tenure has been associated with good outcome for children,” he said.

He added that home owners with an equity stake in their communities had a greater interest in making sure their common areas were well maintained (such as better schools) as these would be reflected in higher property value.

Currently, demand in Malaysia for residential property outweighs supply, which is one factor that has contributed to sky-rocketing prices in the last two years.

“As of June this year, there are 4.5 million residential units in the country but an estimated 6.5 million households,” Dr Yeah says, citing statistics from the National Property Information Centre.

Property takes the biggest cut of the pie in Malaysia's Net Capital Stock. According to the Department of Statistics, in 2010, Structures and Buildings (which covers residential and commercial properties) was valued at RM996.5bil, about 66% of the total Net Capital Stock of RM1.5tril, compared with other asset types.

(Net Capital Stock reflects the market value of the stock of fixed assets in the economy and, as such, provides an important indication of overall wealth.)

In an effort to make homes more affordable, Prime Minister Datuk Seri Najib Tun Razak announced that a total of 123,000 affordable housing units priced between RM100,000 and RM400,000 will be built next year under an allocation of RM1.9bil in the 2013 Budget.

These houses will be built in Kuala Lumpur, Shah Alam, Johor Baru, Seremban and Kuantan.

These efforts are commendable, says Malaysian Rating Corporation Bhd (MARC) chief economist Nor Zahidi Alias, but “the speed of the implementation is key to its success”.

“The measures introduced by the government are rather mild in our view, as there is fear of a broad-based decline in property prices,” he says in an e-mail interview.

He adds that more measures can be used to stabilise the property prices here, such as limiting the purchase of landed property to Malaysians only, giving the example of our neighbouring countries where foreigners are not allowed to purchase landed property.

For many Malaysians such as Navesh, owning their own property is still the preferred choice.

“I don't worry too much about it I don't see it as tying me down. I don't remember ever wanting to buy or do something, and not be able to afford it because of my properties,” he says. - The Star

Inexpensive ways to increase your home’s resale value

WHEN it comes to selling your home, the old adage “location, location, location” is the mantra for success.

However, a strategically located property is not the only criterion for getting the best resale value for your home. First impressions can speak volumes for potential buyers when they walk into a house that's up for sale, and for many, appearances can either make or break a deal.

That's where home-staging comes in.

A good home-staging technique is to bake fresh cookies or bread to give the house a family home-like feel.

According to US-based property website HomeBuyingInstitute.com, home-staging is the act of preparing a home (and its contents) for sale, with a special emphasis on presentation and appearance.

“Staging a home for sale normally involves things of an aesthetic nature, such as design, organisation and overall appearance (as opposed to mechanical or functional improvements),” it says.

The website says that the goal of staging is to improve the home's appearance in the eyes of potential buyers, with the ultimate goal of selling the home more quickly and for the highest possible price.

The concept of home-staging is popular especially among countries in the West. In Malaysia, however, the idea hasn't quite taken off at least not officially.

“In Malaysia, the mindset is a little different. A seller rarely spends money to spruce up a property before selling it because the new buyer will almost always tear it down and end up making new changes to it,” says Malaysian Institute of Estate Agents (MIEA) deputy president Siva Shanker.

Siva: ‘In Malaysia, the mindset is a little different.’

“Sadly, the house is like a tong sampah(rubbish bin) and will just end up being sold in the condition of a tong sampah,” he enthuses.

MIEA president Nixon Paul concurs that the concept of home-staging is rare in Malaysia.

“It's rarely done. In the secondary property market, if the buyer is still staying in the property, then he might clean it up a bit. But if the house is empty (if the seller is not living there), nothing will be done.”

Siva however notes that “home-staging” in Malaysia is done to an extent when estate agents host open houses, or when developers have an official property launch.

“When developers have an official launch, the showhouse will usually look quite amazing. A lot of design and ideas, often worth hundreds and thousands of ringgit, are put into it.

“The prospective buyer will end up buying an empty shell. But when he sees the developer's showhouse, he is fuelled into thinking that he can also do the same thing. In Malaysia, developers have perfected the home-staging concept into a fine art. But among individuals, it's not so popular.”

Still, the smart seller should realise that a cleaner, better-looking house would be more appealing than one that looks dirty or run down. And unlike the developers' version of fine-art staging, individual home-staging doesn't have to cost you a bomb.

The following are some simple, relatively inexpensive home-staging ideas that can help you boost your property's resale appeal.

Clean it up

Paul: The concept of home-staging is rare in Malaysia.

According to an article by American real estate magazine Homes & Land, when it comes to home staging, less is more.

“Few things are less attractive than clutter and one of the first lessons of proper home staging is to clear out the clutter. Clutter is not only visually unappealing, but it makes the house feel smaller and less spacious.

“Additionally, clutter makes it difficult for prospective buyers to visualise their own furniture and belonging in the home a critical step to making a sale,” it says.

One industry observer says a fresh coat of paint can also help spruce up the appearance of a property.

“It makes your house look clean and new. Also, painting the walls with bright colours, especially white, helps make a room look bigger then it actually is,” she says.

Siva also says anything that's broken should be fixed or replaced as soon as possible.

De-personalise it

According to online financial website Bankrate.com, packing away personal items is one of the simplest and cheapest ways one can do to help sell their house.

“The reason you want to de-personalise' your home is because you want buyers to view it as their potential home.

“Prospective buyers won't be able to picture themselves in the house if they're surrounded by dozens of photos of your children and grandparents,” it says.

Set the mood

When inviting potential buyers into the house that you wish to sell, one should strive to make the experience as pleasant and comfortable as possible, says Nixon.

“When you bring in prospective buyers, you should turn on the air-conditioning and play soft, soothing music to make the atmosphere comfortable. This is so that when people walk in, it's a feel-good experience.”

One industry observer points out that the home should not feel “stuffy.”

“If you have no air-conditioning, open up the windows to let in fresh air. If everything is closed, there could be a stale smell and this will put off prospective buyers.”

According to an online article by Canada-based interior design and home-staging firm, Design Decor Staging, the first thing potential buyers feel in a house is the way a house smells.

“It is wonderful if they sense pleasant freshness or light home aroma. Odours are linked to memory and affect our emotions and interpretation of the reality,” it says.

In countries like the United States, smell plays an important role in home-staging.

“Take advantage of the sense of smell to make your home the most memorable,” according to Homes & Land.

A good home-staging technique is to bake fresh cookies or bread to give the house a family home-like feel, it says, while the usage of fresh flowers and leather top the list of indoor fragrances associated with luxury. - The Star

Affordable housing – let it be a reality not fallacy

DURING the major festivals in this country, we see the authorities conduct vigorous enforcement activities on various price-controlled food items. This is to prevent unscrupulous traders from exploiting the situation by increasing prices of what are deemed as essentials. Sometimes they even secretly stock up such items to create artificial shortages. It is outright profiteering.

We often read about wayward traders being taken to court simply for failure to display prices. Whether such measures breach our free market policy may be open for debate. The bottom line is that it does curb profiteering to a certain extent. Having said that, we would now like to refer to the present scenario in the housing arena.

Affordable housing is now the buzzword. There is no denying that the price of suitable housing has reached a crisis level, beyond the affordability of the average wage earners. This is a highly undesirable situation and, if left unchecked, it can lead to adverse and far-reaching problems. We will end up with a whole generation who will be tenants, subjecting themselves to the whims and fancies of landlords, or who have to commit a vast proportion of their household incomes to service house mortgages.

Bear in mind that the Malaysian household income to debt ratio is among the highest in the world and that the bulk of these debt is incurred in the servicing of house mortgages.

Those who are tenants face the uncertainties of landlords either increasing their rentals or even evicting them. The mortgage group faces a delicate and risky situation where they may get into financial trouble if events do not turn out well. These include the raising of interest rates by financial institutions, any downward trend of property prices, drops in their incomes or the cropping up of other emergencies.

Yes, house prices will go up given any period of time due to natural inflationary forces. This is probably beyond the control of any party. But the recent spate of price escalation is certainly not due to natural forces, the cost of building materials or construction costs, much as industry players would like to make us believe. In the case of land cost, it is a chicken and egg situation.

If house prices have been pushed up (either speculatively or naturally), it goes without saying that land owners would expect higher prices for their land. It is also not due to shortfall of supply over demand as National Property Information Centre (Napic) figures show otherwise.

Rather, it is due to unbridled speculative forces.

On the real property gains tax (RPGT) in Budget 2013, it is unfortunate that our Prime Minister has been ill-advised on the true situation. The rakyat can expect to see an increase in speculative property investments which will in turn further drive up the prices.

Typically, if the property is purchased directly from the developer, it takes 2 years (for landed properties) and 3 years (for strata properties) to be completed. During these construction stages, house buyers are not allowed to sell their properties without the consent of the developer and can only sell the properties after they have been completed.

What the revised RPGT means in lay-man terms is that speculators can purchase properties from property developers upon launch and then flip these properties on after 2 years and having to pay only the proposed 10% (i.e. within the 3rd to the 5th year). After the 5th year, all profits are not taxable. With additional attractive financing packages, very often these speculators just need to pay the 10% downpayment and walk away with a lucrative gain at the end of the construction period.

Stronger and more positive governmental intervention is critically required. We are not suggesting that houses should be subjected to price control like other commodities. But we would like the Government to put in measures to discourage speculation. Alter the landscape to make it less encouraging and less worthwhile for speculation to take place.

We have heard housing developers claim credit for having built X-million number of houses and having created immense wealth when the houses appreciate in value. We also see large numbers of speculators who reap immense profits by just buying/booking and flipping over their purchases and reaping enormous profits. While industry players have cited a host of other causes not all are justified. In any event, the escalation of house prices is good for them as it encourages quick sales brought about by an artificial shortage. On the humanitarian side, there is nothing to feel good about.

Speculative profits are not real profits. Speculators are, in effect, taking money from our future generations to enjoy today. Our future generations and under the prevailing circumstances, even the present generation as well will suffer the effects of exorbitant house prices that have resulted in the high household income to debt ratio. This may be legal but it is downright immoral!

The country's economy will be an unbalanced one because with such a large proportion of family income committed to house mortgages, a typical household will be compelled to be stingy on other expenditures. Thus, the other industries will suffer.

Statistics have proved that the present high income to debt ratio is brought about primarily by house mortgages. It looks like the proverbial horses have already bolted and we are still dragging our feet in closing the barn door!

We do not see the logic when the Government is so serious about controlling the prices of essential items such as cooking oil, sugar, chicken and a host of other essential items but yet on the subject of house price, it has allowed the situation to remain laissez faire.

We believe that the issue of affordable houses is even more crucial than some of the price-controlled items because one can always find alternatives or reduce the intake of some of those items. But the alternatives for a roof over one's family are the squatter areas, the shelters under our highway flyovers or the five-foot paths in front of shophouses!

While PR1MA is a good move (barring some of our apprehensions), it is also a typical case of treating the symptoms rather than the cause. In this case, the cause is unbridled speculative activities.

l Chang Kim Loong is the honorary secretary-general of The National House Buyers Association, a non-profit, non-governmental, non-political organisation manned by volunteers. For more information, checkwww.hba.org.my or e-mail info@hba.org.my