PR1MA to launch home-buyer assistance programme early next year

KUALA LUMPUR: PR1MA Corporation Malaysia (PR1MA) will introduce a homebuyer assistance programme early next year to help those who are not eligible for a housing loan from banks but were chosen to own a 1Malaysia People's Housing house.

Chief Executive Officer Datuk Abdul Mutalib Alias said PR1MA is working with a partner to develop the special financing schemes, and is currently ironing out the final details.

Speaking to Bernama in an interview here, Abdul Mutalib said some of the successful balloted buyers failed to secure bank financing.

"We have seen cases where people cried after balloting because they could not get financing. We're thinking there must be another mechanism where we can provide assistance, hence our buyer assistance programme," he said.

 PR1MA says while it hopes a higher percentage of buyers would be able to get bank financing, it saw a need to design such a scheme to act as a buffer. "This kind of programme is covered in our PR1MA Act 2012.

PR1MA is allowed to come out with various buyer assistance programmes to assist the targeted buyers who can't get financing. So far we are only relying on bank financing," Abdul Mutalib said.

There will be two schemes 'Rent & Pay Plan' and 'Rent & Stay Plan' and once buyers adopt either one, they have the right to buy the house at the original price.

"Progressively, when their income increases, they should be able to get bank financing and convert the scheme into normal traditional financing at the original price," he added. 

Giving an example, Abdul Mutalib said for a property priced at RM200,000, the buyer first has to come up with about RM20,000 in down payment. "On top of that, to qualify for a loan, they need to have a household income of RM3,865 a month. In case of a RM400,000 property, it's RM7,700, and so on.

Monthly payment, on the other hand, ranges from RM966 to RM1,933," he said.

PR1MA, recognising some people fell short of these requirements, decided to address their cash flow problem, he said.

"We don't want to see a situation where buyers get disappointed, where after a successful ballot they could not get a home. We want the public to not lose hope," he explained.

The schemes are also open to applicants seeking a second house.

"We always maintain that people who already own a house are eligible to apply for PR1MA. The rationale is simple. Some people have already bought a house in an unfavourable location because that was what they could afford at that time.

"For us not allowing them not to participate is unfair, but of course weightage is given more to people who don't own a home," Ahmad Mutalib said. 

He added that a lot of people have the misperception that PR1MA is only for the low-income group, and urged the interested public, especially younger people, to register and apply.

PR1MA is an affordable housing scheme in key urban areas for middle-income groups earning between RM2,500 to RM7,000 monthly. - Bernama

Overcoming headwinds in the property market

With the sentiment for in the property market turning more lukewarm, developers are all on their toes to see how the market will be like in the next few months.

The number of residential units transacted in the third quarter by the National Property Information Centre shows a decline in Selangor, Kuala Lumpur, and Penang while Johor bucks the trend. (see table).

In a phone interview with StarBizWeek, IJM Land Bhd chief executive officer and managing director Datuk Soam Heng Choon says that most players are still adopting a “wait-and-see” approach to the impact due to the new cooling measures that was announced in the Budget 2014.

“We will be able to gauge what the impact is like in the next two months and make adjustments accordingly,” he says, noting that players cannot make drastic changes with what they are already doing.

Changing focus

Mah Sing Group Bhd, which entered the high-rise market the high-rise market with grade A office tower The Icon Jalan Tun Razak in 2006 followed by a number of high rise residential projects in prime areas, targets to build houses for the middle-income group going forward.

“Over the pass two years, our landbanking strategy has been more focused on locking in larger tracks of township lands for the affordable range of mid-end products,” says group managing director and chief executive officer Tan Sri Leong Hoy Kum in an e-mail reply.

This week, Mah Sing announced its foray into mainland Penang by acquiring 76.38 acres in Jawi, Penang to build landed-houses below RM500,000.

Leong says: “This is our sixth project in Penang and we want to heed the Government’s call to build properties for the middle income segment, as these products are in short supply in Penang.

“We have found a land which is rightly priced with good payment terms, and we aim to build houses that are rightly priced as well.”

He opines that the general lending environment is still conducive as interest rates are still low due to the competitive mortgage space where banks are now offering base lending rates of minus 2.4%, more attractive than minus 2.1% to 2.2% a year ago.

“As such, we believe that buyers will take advantage of this to lock in their purchases as property has always been viewed as the best hedge against inflation,” he says.

Leong also notes that land for landed residential, niche projects, high rise residential and integrated projects were acquired and developed in selected locations which had market demand for those specific products.

At the same time, the launches were planned in phases to ensure good take up, with the developer typically seeing 70% take up within 6 months of initial preview or launch, he says.

Demand for townships

For IJM Land, the company’s growth will continue to be supported by its strong pipeline of township developments such as Rimbayu, Seremban 2 and Shah Alam 2 that have been very well-received.

“Townships are our bread and butter as there will always be demand whether in good or bad times,” Soam says.

The various components of townships like retail shops, commercial components and landed property will help to diversify developers’ income sources.

“Affordability can be relative based on location,” he notes.

He says the demand for niche high-end products is determined by the pricing point and location of the project and should not be a problem if the developer gets it right.

Margins-wise, he says those for townships tend to improve as they mature whereas land cost for niche products are usually very high.

The difference between developing a township and a niche project is the developer’s stamina and knowledge, Soam notes.

Challenges

Infrastructure and planning are the important elements that make a good township and it takes a different and more sophisticated set of know-how compared with smaller niche projects.

Besides the technicalities, understanding the costing of township development is also essential in ensuring profitability.

A property player who declined to be named says that there are numerous “unseen” compliance and subsidy costs that township developers have to bear.

He says developers have to build low cost and low-medium houses, which are not profitable to comply with the requirements by authorities.

Besides that, they will also have to surrender land for amenities such as schools, power generators and sewerage treatment.

“Due to all these extra costs, developers have to alleviate some of them by passing partly to the end buyers,” he explains.

Maybank IB Research analyst Wong Wei Sum tells StarBizWeek that the demand is more for affordable housing, which is mostly found in townships.

“Usually land cost for townships is cheaper compared with small parcels, hence, make it more sustainable for such development,” she says.

She points out that luxury properties are impacted the most following the new cooling measures and expects developers to focus on affordable housing going forward.

She opines that property priced below RM500,000 per unit will continue to be in demand.

This is due to the young demographic of first home buyers in the country.

“Due to land scarcity and high prices in city centre, we expect to see new property hotspots in suburban areas such as Rawang and the southern Klang Valley such as Semenyih, Puchong South, Putrajaya and Canal City,” she says.

Some of these areas would be enhanced by the upcoming mass rapid transit lines.

This would benefit companies like IOI Properties, Glomac Bhd, IJM Land, LBS Bina Group Bhd, Gamuda Bhd and WCT Holdings Bhd, she adds.

According to her, people are willing to pay between RM600,000 to RM800,000 for landed properties while high-rise residential properties below RM500,000 are considered affordable.

Commenting on the margins for affordable houses, she says it will be lower than the high end products.

She estimates the margins for such products to be around 20% but that depends on the stage of development the township is at.

“During the initial stage, it will be less than 20% as the companies will have to allocate resources to build infrastructure,” she explains.

She notes that, however, the margins may change over time.

This is based on the product mix the players roll out as they may delay launches for certain property types until they are in demand again.

An analyst from Hong Leong Investment Bank Research concurs that developers will focus on township development backed by the strong demand for landed properties while the outlook for high-rise residential properties is challenging.

In an earlier report, CIMB Research says the residential segment will remain robust as the policy measures are meant to rein in speculation but not to restrain genuine demand.

“We believe that buying interest should progressively return in the first half of 2014 as potential house buyers come to the realisation that property prices are unlikely to fall and that potential inflationary pressures from the implementation of the goods and services tax (GST) in April 2015 could push up property prices further,” the brokerage said.

According to the property player, the implementation of GST could potentially push property prices up by about 2% to 4%. - The Star

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Mah Sing to expand Penang ops, plans to buy 20 parcels of land

PETALING JAYA: Mah Sing Group Bhd has proposed to acquire 20 pieces of freehold land in mainland Penang amounting to about 76.38 acres from four separate vendors, for a total of RM42.59mil cash.

On Tuesday, the group said the proposed acquisition by its unit Nature Legend Development Sdn Bhd allowed it to expand its existing presence in Penang.

“The proposed acquisition is timely and in line with the group’s strategy to continuously scale up development in locations with strong growth potential,” it said in its filing with Bursa Malaysia.

The land parcels are located in Jawi, Penang, 6.6km from the Jawi Toll on the North-South Highway and 15.6km from the interchange to the second bridge inBatu Kawan.

Mah Sing plans to develop Southbay East, a gated guarded lifestyle township, which will include link homes, linked semi-detached homes, semi-detached homes, town houses and shops as well as a clubhouse.

The project will span over three to four years, and will have a gross development value (GDV) of some RM400mil.

Mah Sing already has five projects in Penang, all located on the island, across the second bridge. “With the proposed acquisition, the group now has remaining land in Penang worth about RM3.8bil in combined GDV and unbilled sales, representing 13% of the group’s total GDV and unbilled sales of RM28.78bil,” it said.

The group said Nature Legend would be submitting the proposed development plans to the relevant authorities for approval. Subject to timing of the approvals, Mah Sing expects to commence the project in the first half of 2015.

It intends to fund the acquisition and the development cost of the land via a combination of proceeds from the rights exercise, which was completed in March, internally generated funds, and bank borrowings. - The Star

Penang property slowdown

GEORGE TOWN: The property market in Penang will slow down next year, as there will be reduced transactions and fewer new launches.

Real Estate Housing Developers’ Association (Penang) chairman Datuk Jerry Chan said that the real property gains tax (RPGT) and tighter loan conditions imposed by banks were the reasons for the property market slowdown.

“However, this will not affect property prices, which will remain stable,” Chan said.

The price of land has increased substantially in prime locations over the past five years, as have the prices of raw materials such as sand and steel, according to Chan.

“There is also no property bubble, as there had been no large supply of properties coming into the north over the past five years.

“There hasn’t been any irresponsible lendings either,” he said.

Chan was speaking at Rehda’s annual press conference on the property market outlook for 2014.

According to Chan, the state government also played a role in jacking up land prices.

“For example, when the state government compensates Beijing Urban Construction Group (BUCG) for the cost of building the proposed RM6.3bil undersea tunnel project in Tanjung Tokong with a 110-acre land, the state government has indirectly influenced the price of land in the area.

“The value of the 110-acre site is about RM1,200 per sq ft, when divided by the value of the project.

“This automatically sets a new benchmark for the price of land in Tanjung Tokong, Tanjung Bungah and other prime locations on the island,” he said.

Current land prices in Tanjung Tokong, Tanjung Bungah and prime locations in the northeast district hover between RM500 and RM1,000 per sq ft.

In the southwest district, land prices are priced from RM120 per sq ft onwards.

Chan also said there were no provisions to help out first-time buyers in Budget 2014.

“We would like to see some kind of help for first-time buyers.

“Currently, first-time buyers of affordable housing units will have to pay the full base lending rate of over 6%, as they are in the high risk group, compared with about 4% enjoyed by those in the low-risk category,” he added. - The Star

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Penang imposes new housing rules for affordable homes from February 1

The Penang government will impose new rules for low- and low-medium cost and affordable homes that will come into effect on February 1 next year.

Chief Minister Lim Guan Eng said today that all public housing units priced up to RM42,000 (low-cost) and up to RM72,500 (low-medium cost) cannot be resold within the first 10 years after purchase.

The state government's consent must be obtained if the owner of such a unit wants to sell the house in less than 10 years.

The new buyer must be a "listed buyer" registered with the state Housing Department and certified as a low-income earner who qualifies to purchase low-cost or low-medium cost housing.

"This 10-year rule will cover all past and future purchases. The balloting of houses will be subject to scrutiny by an auditing firm," he said in a statement.

For affordable homes purchased under RM400,000 on Penang island and below RM250,000 on the mainland, owners are prohibited from selling them during the first five years unless with government consent.

The units must also be resold to "listed buyers" from the middle-income group whose names are also registered with the Housing Department.

Like the low and low-medium cost homes, the ruling covers all past and future purchases.

The state is also imposing a new ruling on foreigners buying properties. They can only buy properties in Penang in excess of RM1 million.

If they are buying landed property on the island, the value must exceed RM2 million.

All purchases of properties by non-residents will also be subjected to a 3% levy on the transacted price from February 1 next year.

However, exemptions are provided for purchases for industry purposes or for boosting employment, education, human talent or promoting Penang as an international and intelligent city.

The state is also introducing a 2% levy on property purchased from February 1 next year that are sold within three years from the date the Sales and Purchase Agreement(SPA) is signed.

"In other words, this is not retrospective. Properties bought with the SPA signed before February 1 will not be subjected to this levy. This 2% levy is also not applicable to affordable housing," Lim said.

He said preliminary discussions had been held between some property players and housebuyers but the state government is still prepared to have further discussions with all stakeholders on the new rulings.

The new housing policies were first announced on November 29 when Lim tabled the state's 2014 budget at the state legislative assembly.

When reporters asked him about them, he said the administration might become "unpopular" for imposing the new rulings.

Lim further explained in his statement today that the new rules are to protect the state from being adversely affected by the property bubble and to ensure that public and affordable housing are bought by genuine and qualified first-time buyers.

"As a responsible government seeking sustainable economic growth and development, we are careful to avoid the pitfalls of any property bubble that will bring hardship to the rakyat and damage the economy. Japan is a good lesson of the dangers of a property bubble.

"As a people-centric government, we want to achieve housing democracy that allows every working family to own their own home. Ensuring that public housing is owned by the poor and genuine first-time buyers is our priority," he said.

Lim also reminded the people of the state's pledge to build 20,000 units of public and affordable housing units in all five districts of Penang with the RM500 million Public And Affordable Housing Fund.

"This is the largest amount set aside by any state government in Malaysian history to build affordable and public housing," he said. - December 8, 2013.

Penang project lift for SP Setia

SP SETIA Bhd's latest offering - Setia V Residences - has seen a strong take-up rate among local investors, with 70 per cent of its 178 units already sold.

The upscale development project, which straddles Penang's famous seafront promenade Gurney Drive, Lorong Burma and Jalan Kelawei, is set to be marketed in China, Hong Kong and Taiwan, said SP Setia North general manager Khoo Teck Chong.

"This project has been instrumental in helping us to exceed our revenue targets for this year. We hope to convince more local investors to check out our second tower, which each unit tagged at between RM1.7 million and RM2.5 million," he told Business Times during the official launch of the Setia Gallery and Suites on Gurney Drive.

The units in Tower B, each having a built-up area of between 1,300 sq ft and 1,800 sq ft, will offer either city or shoreline views.

In addition, there will also be facilities the that developer has tagged as "six-star".

They include a sky deck with an infinity pool, a pavilion and landscaped gardens, guest lounge and viewing decks, concept kitchen and barbeque area, as well as a large balcony with a dip pool in Tower A.

He said the company is targeting to chalk up RM250 million in revenues for its projects in the north next year.

On the island, SP Setia is also expected to focus on the Tanjung Bungah area, where it is planning to launch a RM1.1 billion mixed development project.

The proposed high-end project - tagged Setia Eco-Forest - will comprise landed properties and luxury condomiums.

It will boast of a green concept that is similar to the company's Setia Green project, which promotes eco-living.- Business Times

Mainland Chinese investors the most influential buyers globally

PETALING JAYA: Mainland Chinese investors are the most influential buyers in the world’s prime new-build sector, favouring properties in Hong Kong, New York and London, according to Knight Frank’s Global Development Insight 3Q13.

Investors from Singapore and Russia come in second and third place respectively, said Nicholas Holt, head of research for Asia-Pacific. 

Since the global financial crisis five years ago, private investors have looked to bricks and mortar as a means of preserving and growing their wealth. As a result, prime real estate prices in key locations such as Dubai and Hong Kong have reflected this, rising by 63% in Dubai and 81% in Hong Kong since early 2009.

Over the next 12 months, mainland Chinese, Russian and US-based investors are all expected to retain and grow their market share in new-build property.

The growing influence and importance of mainland Chinese reflects the rise of Asia as a wealth creation hub. Asia is second only to North America in terms of its billionaire population, and the number of high net worth individuals in China is forecast to rise by 137% over the coming decade, according to data contained in Knight Frank’s Wealth Report.

About 39% of people surveyed named political and economic risk in a buyer’s home market as a key driver for international demand while 47% of respondents stated that “the safe haven effect” was the biggest draw for their market. Education and lifestyle are increasingly important when investing overseas. New York, Paris and London are among the most sought after markets.

Governments across Asia-Pacific have introduced a number of restrictions for non-resident foreign purchasers of residential property. They are trying to strike a balance between giving domestic citizens an affordable stake in their country while still attracting high value international investment.

As well as understanding buyer trends, Knight Frank also looked at the reasons which underpin the decision to buy new-build residential property around the world. 

Amid the global uncertainty caused by the financial crisis and the political instability caused by the Arab Spring, it is evident that the overall trend in global property investment over the past year has been driven by a search for safe havens.

Education and lifestyle are playing an increasingly important role when it comes to cross-border property investment. Cities that are home to world-class schools and universities, that offer a high quality of life and safe environment, stand to benefit in the long run.

Knight Frank is a leading independent global property consultancy. Headquartered in London, Knight Frank and its New York-based global partner, Newmark Grubb Knight Frank, operate from 330 offices in 48 countries across six continents. The firm handles in excess of US$1 trillion (RM3.23 trillion) worth of commercial, agricultural and residential real estate annually, advising clients ranging from individual owners and buyers to developers, investors and corporate tenants.


This article first appeared in The Edge Financial Daily, on November 29, 2013.

Penang Worldcity records 85% take-up rate for its first four towers

PETALING JAYA: Four out of six towers in the first phase of Tropicana Corp Bhd’s joint venture project with Ivory Properties Group Bhd, Penang Worldcity in Penang have sold 85% since the preview in Febuary.

Named Tropicana Bay Residences, the first phase of the waterfront integrated development has a gross development value (GDV) in excess of RM835 million. The project will be developed by Tropicana Ivory Sdn Bhd, a JV company between the property groups.

During the official ground breaking ceremony on Wednesday at Penang WorldCity sales gallery at Bayan Mutiara, Penang, Tan Sri Danny Tan Chee Sing, founder and group executive vice-chairman of Tropicana said  the company is encouraged by the response.

Datuk Low Eng Hock, CEO of Ivory, said the ground breaking ceremony marks the creation of an amazing history in Penang.

“There is a lot of work [construction] to do and we are still on a mission to set a new benchmark in urban living as well as provide comfortable luxury green homes for our first batch of privileged buyers,” he said adding that the target market is young local and expatriate urban professionals, second home buyers as well holiday home seekers.

Penang WorldCity is a 102.6 acre (42ha) freehold integrated waterfront development worth a GDV of RM10 billion. Penang WorldCity will be developed over an eight to 10 year period. Construction of the first phase is expected to begin in 2013 and is slated for completion in 2017.

The development comprises residential towers, office blocks, recreational and retail outlets, a wellness centre, an international hotel as well as an international school. The waterfront city is located at the gateway of Penang Island, right off the iconic Penang Bridge, in the vicinity of the eastern part of the Tun Dr Lim Chong Eu Expressway (formerly known as Bayan Lepas Expressway) and Sungai Nibong.

The units in Tropicana Bay Residences are between 455 sq ft to 1,950 sq ft priced at RM850 per sq ft. Facilities include an overhanging pool, children’s playground, tennis, squash and badminton courts, multipurpose halls, a gym as well as a foot reflexology and jogging path.

Jagdeep Singh Deo, state executive counselor for Town and Country Planning and Housing, Tan and Low performed the gound breaking. Also present was Datuk Yau Kok Seng, group CEO of Tropicana, Datuk Dickson Tan, group managing director of Tropicana and Datuk Andy Khoo, managing director of Tropicana Ivory Sdn Bhd.

Ivory was established in 1999 and has a strong presence in north Malaysia. Its project portfolio includes medium- to high-end apartments, luxury condominiums, semi-detached houses and bungalows, boutique gated communities, retail and commercial lots.

Tropicana has been listed on the Main market of Bursa Malaysia since 1992 and is involved in a variety of businesses including property and resort development, property investment, manufacturing, land trading and investment holding.

A week ago, the group announced its collaboration with Marriott International Inc to develop the 200-room Courtyard by Marriott (with a GDV of about RM150 million) in Tropicana 218 Macalister.


This article first appeared in The Edge Financial Daily, on November 29, 2013.

Rising assessment rates and your rights

BY CHANG KIM LOONG

Chang Kim Loong is the honorary secretary-general of the National House Buyers Association (HBA) and an NGO councillor at the Subang Jaya Municipal Council.

Zero engagement, public relations exercise non-existent

THE simple, routine exercise of a property revaluation in the city of Kuala Lumpur has somehow turned controversial due to the lack of apparent justification, given the magnitude of the increase and scarcity of explanation.

Perhaps, the people in Government think there is no need for some form of elementary public relations and that having power is enough. There was practically no public engagement, consultation or attempt to seek feedback from stakeholders.

If such a simple task as revaluing the properties in Kuala Lumpur cannot be carried out diligently and in a responsible manner, I am concerned with the impending introduction of the more complex goods and services tax (GST). Will the levy and collection of the GST be properly handled?

The National House Buyers Association (HBA) is dismayed with the unilateral and arbitrary proposal by the Kuala Lumpur City Hall (DBKL) to increase the revaluation of properties in Kuala Lumpur for both private and commercial properties. It is not that DBKL cannot exercise the process of revaluation under the Local Government Act, but the issue is that it is “simply doing it”, literally speaking. The media has widely reported that the increase could range between 70% and 300% in certain areas.

The reasons given by DBKL for the increase as reported in the media are as follows:

(i) the last increase was more than 20 years ago; and

(ii)property prices have increased in value.

HBA would like to highlight certain pertinent issues which should be taken into consideration.

(i) Most private properties are owner-occupied

A majority of private homes in Kuala Lumpur are owner occupied, and many are retirees and pensioners.

Based on this logic, regardless of the increase in the market value of the said property, the owner does not reap any benefit as he is still living in the said property. It would, thus, be unfair to penalise the owner for the increase in property prices when he has not enjoyed any such benefit arising from the continuous ownership.

The owner would only be able to enjoy any increase in property prices when he decides to sell the said property to a third party. To say that property owners should be thankful to DBKL for affixing a high valuation on the property because property owners would be able to sell their property at a higher market value is preposterous. Assessment is based on market rental and not vice versa.

(ii) Many private homes are long-term investments

Many individuals use private homes as long-term investment to fund post-retirement needs or their children’s education expenses. It would be very burdensome to these people who have managed to save enough to acquire a second private home as a long-term investment as the returns from such an investment are just barely enough to cover expenses of the property itself such as this savage increase of rates proposed by DBKL.

(iii) An increase in assessment rates does not translate into better services

Would such a revision commensurate with the quality of services to be provided by DBKL in justifying such an increment? Currently, it would seem that there is no discernible improvement in either service or facility. It is only reasonable to expect a 300% increase in the level of service quality if DBKL is going to increase the assessment rates by up to 300%.

For DBKL to increase assessment rates without promising an equal increase in the level of service quality is morally wrong and akin to snatching candy from a baby; the culprit merely snatches the candy away knowing that the baby cannot fight back.

(iv) Poor planning and indiscriminate approvals

Poor planning and indiscriminate approvals granted by DBKL to new developments without indepth studies on the impact to the surrounding environment, especially existing housing estates, have overloaded the existing infrastructure. The servicing highways, byways and main carriageways today have excessive volume of traffic that was not catered for originally. This has resulted in long crawls at peak hours in many places.

In certain neighbourhoods, the communities are plagued by haphazard parking along the road reserves due to lack of enforcement.

(v) Against the Government’s aspiration to help the rakyat

Our honourable Prime Minister has decided to lower the personal income tax rates to lighten the burden of the rakyat in view of the impending GST. DBKL’s move to increase the assessment rates by such a high rate will be burdensome to the rakyat and goes against the very grain of our PM’s wishes to lighten the rakyat’s burden.

HBA does recognise the fact that there are speculators who may have amassed multiple properties. However, an increase in assessment rates will only penalise the majority of private home-owners who only own one or perhaps two properties. HBA had in the past proposed a higher real property gains tax (RPGT) and stamp duty for the transfer of properties to be imposed on such speculators who had amassed numerous properties. The measures announced in Budget 2014 by our Prime Minister and the recent strict lending guidelines imposed by Bank Negara have, to a certain degree, curbed and muted such unhealthy manipulation of property prices. The effects can be seen in the recent announcement by the National Property Information Centre or Napic under the Valuation & Property Services Departmentdata “that the property market is expected to see slower growth this year (2013), as there will be an adjustment in terms of prices, which is expected to moderate”.

This, in turn, brings us to the question: “Does this mean that DBKL will undertake another round of revaluation for a subsequent corresponding reduction following the announcement?”

Advice to taxpayers

HBA urges DBKL to reconsider its decision to increase assessment rates for private homes in Kuala Lumpur based on the above-mentioned points. If DBKL wishes to increase the assessment rates for private homes and commercial properties to cover the increase in operating costs, then HBA proposes an increase of not more than 10% of the current tax.

Although the Mayor and Federal Territory Minister have assured the people of a possible reduction as they understood the taxpayers’ plight and hardship, the ‘Notice of Revision of the Valuation List’ under Section 141 of the Local Government Act, 1976 (LGA) was sent out. Why is this so?

To the taxpayers, let’s comply with the law and its due process by filing our ‘Notis Bantahan’ (NOT LATER than Dec 17) pursuant to Section 142 of the LGA rather than be caught in a situation of ‘by default’ or Mr Mayor and Mr Minister using the usual “there were only a handful of official written objections” rhetoric. The objection letters are absolutely necessary.

We have prepared three templates as a guide to object against the proposed hike, which can be uploaded from our website at www.hba.org.my. The templates are merely guidelines to facilitate the process. You are at the liberty to improvise the drafts as well as seek independent professional advice if in doubt.

An excerpt of Section 142 of the Local Government Act, 1976 (LGA) has been reproduced below for taxpayers to understand:

Section 142: Objections.

·Any person aggrieved on any  of the following grounds:

(a) that any holding for which he is rateable is valued beyond its rateable value;

(b) that any holding valued is not rateable;

(c) that any person who, or any holding which, ought to be included in the Valuation List is omitted there from;

(d) that any holding is valued below its rateable value; or

(e) that any holding, or holdings, which have been jointly or separately valued ought to be valued otherwise, may make an objection in writing to the local authority at any time not less than fourteen days before the time fixed for the revision of the Valuation List.

·All objections shall be enquired into and the persons making them shall at such enquiry be allowed an opportunity to be heard either in person or by an authorised agent.

I would like to come clean and declare that I am a rate-payer and have a vested interest in challenging the proposed rate hike by DBKL.

Go ahead, flood DBKL with letters of objection.

Chang Kim Loong, AMN, is the Honorary Secretary-General of the National House Buyers Association (HBA): www.hba.org.my, a non-profit, non-governmental organisation (NGO) manned by volunteers. He is also an NGO councillor at theSubang Jaya Municipal Council. - The Star

Rush to sell off properties in Ipoh

REAL estate agents in Ipoh are worried that several measures announced during Budget 2014, such as the Real Property Gains Tax (RPGT) hike, will dampen the already soft Ipoh property market.

PWP Properties (N) Sdn Bhd business development director Stephanie Chang said the announcement of the increase in RPGT, ranging from 30% to 15% of profits for properties sold within five years, had caused a scramble among several of her clients to sell off their properties before the new rates are imposed on Jan 1, 2014.

“The day after Budget 2014 was tabled, we started receiving calls from clients urging us to speed up sales of their properties.

“Some are even willing to sell their property at lower prices, but the process is not as simple as one thinks.

“You need a willing buyer and if the property is leasehold, you need to get the Mentri Besar’s consent and go through a lot of paperwork that will take at least a month to be finalised.

“By the time the sale can go through, it will already be next year and subject to the increased RPGT rate,” she said.

Chang said she foresees a drop in the number of second-hand property next year, while investors get accustomed to the new rates but said the extent of the impact on business will only be known when the time comes.

“Having been in the business of selling second-hand property for several years now, I have watched how the industry was affected by the announcement of the RPGT a few years ago and its gradual increments.

“However, the hike is quite drastic this time around but I cannot make an assumption on how big an impact it will make.

“The market will be more challenging when Budget 2014 measures take effect, but in spite of that, there is always business to be made in property and real estate,” she said.

Another policy changed during the Budget 2014 tabling that Chang expects to affect the property market is the increase in the minimum price of property that can be purchased by foreigners, from RM500,000 to RM1mil.

“Quite a number of Singaporeans and Chinese nationals contacted us after Budget 2014 announcement in the hope of buying Ipoh property before the RM1mil minimum price is implemented.

“Personally, I am a bit apprehensive about the increase because while the minimum price makes sense in areas such as Kuala Lumpur and Penang, with sky-high property prices, there are barely any properties for sale in Ipoh that reach RM1mil.

“I feel it would be better if the policy was amended to suit the market in each state,” she said.

As for Raine and Horne International Zaki and Partners Ipoh resident valuer James Chou, he feels that Budget 2014 policies will further soften the already slow property market in Ipoh.

“Just take a look around the city and you will see quite a number of shops lying empty, as the economy in Ipoh is not as strong as in Kuala Lumpur or Penang.

“With that in mind, I feel the RPGT hike is a little too drastic and not fair to smaller economies such as in Ipoh.

“There is practically no need to curb speculation in Ipoh since the market is already slowing down,” he said.

Instead, Chou felt that the Government should look into revising housing loan rates if it wanted to make property prices more realistic.

“The difference between maximum loan rates for first property purchases and subsequent purchases should be widened if the Government’s aim is to reduce speculation.

“On the whole, I believe the property market should be left to operate with as few government regulations as possible.

“While some regulations are needed, those announced in Budget 2014 are quite drastic,” he said.

D. Henry Valuers Realtor director D. Henrey Arther concurred that the second-hand property market in Ipoh has been quite slow this year, with the number of sales at his agency taking a 50% dip compared to last year.

“During the first half of the year, potential buyers were waiting for the general election to see if there would be any changes in the political landscape that would affect the property market.

“After that, they waited for the tabling of Budget 2014 before making any purchase decisions,” he said.
However, Arther said the recurring problem affecting property sales under his watch were not directly related to any policies amended in Budget 2014 and had to do with bank loans instead.

“Ever since Bank Negara tightened its regulations for housing loans early this year, banks have followed suit and this has resulted in quite a high rejection rate for such loans.

“While they were more accommodating with paperwork and the applicant’s financial history before this, I have faced many cases this year where the purchaser is more than capable of servicing their property loans, but a slight blemish in their financial records or income tax statement causes problems in their loan applications.

“Now, the simplest mistake such as neglecting to pay a RM100 instalment a decade ago can result in a housing loan being rejected.

“This has affected first-time property purchasers such as young families significantly.

“They neither have experience in dealing with stringent regulations for bank loans nor the cash to buy property without taking loans,” he said.

Arther said that if the Government wanted to help first-time property purchasers through its Budget
2014 policies, it should also look into providing financial consultation and education to such purchasers.

“None of these people are cash-rich and they need to go to financial institutions to be able to buy their first houses.

“The problem is quite distressing in Ipoh, as property prices are low compared to bigger cities, yet locals cannot buy homes due to red tape and paperwork problems.

“If the Government is serious in ensuring that everyone is able to own a home, they should guide the people through the complicated process of obtaining property loans,” he said. - The Star