PETALING JAYA – Higher withdrawals from retirement funds and stamp duty exemptions are among measures for first-time home buyers likely to be announced in Budget 2017.
CH Williams Talhar & Wong managing director Foo Gee Jen said a 100% stamp duty exemption would help first-time home buyers as it could result in a RM2,000 to RM3,000 difference in stamp duty payment.
“That is something that would help. The other option available is to give grants to first-time home buyers. It will be definitely a good thing. At the end of the day, we do not want to give the impression that you must rush into buying houses, even for first-time home buyers. You must be able to afford before you jump into this big ticket item,” he said.
VPC Alliance (Malaysia) Sdn Bhd managing director James Wong said the stamp duty exemption, which is currently 50%, could be enhanced to 100% for first-time home buyers and expanded to houses below RM750,000 from the current RM500,000 limit to allow more first-time home buyers to qualify.
However, Malaysian Institute of Estate Agents (MIEA) immediate past president Siva Shanker warned that the system could be abused, if it is unable to determine whether the buyers are genuinely first-time home buyers.
“I think you must also differentiate a first-time buyer from a first-time home buyer. There are some people who never bought residential but have invested in commercial properties and made their money. When they decide to buy a house, they also enjoy all sorts of exemptions which is not fair,” he said.
National House Buyers Association of Malaysia (HBA) secretary-general Chang Kim Loong concurred, adding that enforcement against false declarations are as important as the statutory declaration itself.
“I would support it (100% stamp duty exemption) as it helps the new generation of home buyers but the selection criteria is very important. Making them swear a statutory declaration is important. However, prosecuting on false declaration is equally important as there are a lot of cases where there’s been a lot of deviation,” he said.
Chang said in the past, there have been buyers who claimed that they are first-time home buyers when purchasing low-cost homes but it was discovered later that these buyers own several low-cost units.
“That’s where the leakages are. The problem in Malaysia is that we don’t have a consolidated system on ownership. We don’t have data on whether they are first-time buyers or not,” he said.
Meanwhile, the announcement by Second Finance Minister Datuk Johari Abdul Ghani on allowing higher withdrawals from the Employees Provident Fund (EPF) Account 2 for first-time home buyers has been well-received.
“A better bet than allowing developers to give out loans (under moneylending licence) is to allow first-time home buyers to take extra money from EPF to bridge the gap. That is your own money. Whether you are investing it in EPF or in your home, it is fine because a home is an appreciating asset,” said Siva.
Wong, who also hopes that the withdrawal limit will be raised, said the move will result in higher equity and lower loan margin, thus reducing the total principal and interest cost to the buyer.
“The EPF dividend is only about 6%. Withdrawing EPF savings to buy the house will make sense as the future capital appreciation of the house will definitely be higher than 6%,” he said.
It was reported that the government and EPF were in discussions to increase the withdrawal limit from 30% to 40% for first-time home buyers. EPF declined to comment on the issue at press time.
Both Siva and Wong believe that developer interest bearing schemes (DIBS) will make a comeback in Budget 2017.
Siva, who in the past had said that such schemes led to speculative buying, said if such schemes return, it must be limited to first-time home buyers and a system must be in place to deter abuse.
“We are not in favour of DIBS to be revived in Budget 2017 as such packages actually distort property prices and the property market. DIBS actually created artificial demand in the market,” said Wong.
Chang, who also strongly rejects DIBS, hopes that the government would re-consider the Build-then-Sell (BTS) 10:90 scheme and suggested that the scheme be limited to houses priced not more than RM300,000.
Under BTS 10:90, buyers only pay a 10% downpayment and nothing more until the property is completed. The scheme was announced by former Urban Wellbeing, Housing and Local Government Minister Tan Sri Chor Chee Heung and was to be implemented beginning 2015.
However, it hit a snag when Datuk Abdul Rahman Dahlan, who replaced Chor, said that the scheme will be reviewed again.