Housing experts in Malaysia are urging the government to implement a vacancy tax to curb the rising number of vacant and unsold homes, and to stabilise property prices by deterring speculation.

According to a report by FMT, many so-called “affordable” housing units are being held vacant by owners or investors, reducing availability for genuine homebuyers. The move to tax empty homes, they argue, could encourage more responsible ownership and push developers to build in line with actual market demand.

K Theebalakshmi, a research associate with Khazanah Research Institute, believes a vacancy tax would help prevent speculative hoarding and drive more balanced development. She noted that between 2010 and 2022, Malaysia’s housing prices increased by 5.8% annually—well above the healthy range of 3% to 4%.

“In highly urbanised states where vacancy and overhang rates are high, a vacancy tax would help stop people from holding on to homes for quick profit,” she said.

Citing data from the Department of Statistics, Theebalakshmi highlighted that nearly 20% of homes in Selangor and Penang were vacant in 2020. Selangor alone had over 343,000 empty homes, with nearly 200,000 newly completed or pending occupancy. In Penang, more than 53,000 units remained unoccupied.

As of mid-2024, 22,642 completed homes nationwide remained unsold for more than nine months, with a combined value of RM14.24 billion, based on figures from the National Property Information Centre (NAPIC).

Countries such as Canada, Australia, and Singapore have already implemented similar measures. For instance, Vancouver imposes a 3% vacancy tax on homes left empty for over six months. Melbourne applies a sliding scale starting at 1%, while Singapore levies higher property taxes on non-owner-occupied homes.

Professor Azree Othuman Mydin, dean of Universiti Sains Malaysia’s School of Housing, Building and Planning, echoed the call for a vacancy tax. He said it could particularly discourage flipping and hoarding in the RM300,000 to RM500,000 price range, which is often targeted for speculation.

Azree also proposed tightening rules around affordable housing by increasing the real property gains tax for premature sales, and restricting future eligibility for government housing if buyers leave units empty without valid reasons.

“If we want housing to go to those who need it most, we must stop treating homes as trading tools,” he emphasised.