The sales and service tax (SST) is emerging as a major concern for property developers, with more than 70% planning to raise property prices by 3% to 5% due to higher costs, according to a survey by the Real Estate and Housing Developers’ Association (Rehda) Malaysia.

The survey, which covered 187 developers, showed that 62% expect the SST to significantly increase project costs and disrupt business operations. About 70% anticipate construction costs will rise by at least 3%, prompting 73% of respondents to consider price hikes.

Rehda president Datuk Ho Hon Sang said the association is working with the government to refine SST rules, stressing the need for clearer guidelines for the construction and property sectors. He noted that measures such as avoiding double taxation and offering tax incentives for key materials and eco-friendly products would help ease the burden.

Developers are also calling for input tax credits or faster refunds to improve cash flow, simplified SST rates including tiered options, and enhanced digital systems to facilitate smoother dealings with Customs and relevant authorities.

Highlighting the complexity of the tax, Ho explained that while residential properties are exempt, commercial properties are subject to SST, creating confusion in mixed developments. “Materials are generally exempt, but human labour and machinery rentals — which make up a significant portion of our cost inputs — are taxed. It’s very cumbersome for developers to itemise each component. That’s why we are proposing a simplified approach, such as a flat 3% SST,” he said.

Beyond tax reforms, Rehda is also pushing for the revival of the Home Ownership Campaign (HOC), which previously offered stamp duty exemptions. Ho said past campaigns recorded strong take-up rates and believes a reintroduction could boost market confidence and encourage buying activity.

The Penang government has officially gazetted revised quit rent tax rates for the entire state, marking the first adjustment in more than three decades. The new rates, published in the Penang Government Gazette No. 37 on September 11, will come into effect on January 1, 2026.

Chief Minister Chow Kon Yeow said the revision, approved by the National Land Council in 2024, will apply to nearly 370,000 land titles across Penang. The rates will remain unchanged for at least 10 years, with the next review scheduled only after the current term.

“The last review was conducted in 1994. The state skipped two cycles in 2004 and 2014, which delayed adjustments for 30 years. This long gap has limited revenue growth and made it harder to address arrears and leakages in collection,” Chow explained at a press conference in Komtar.

The revision will not affect the state’s 300,000 strata parcel accounts, where owners will continue paying their existing parcel-based rates. Instead, the adjustment is aimed primarily at industrial and commercial land, which has seen significant returns for landowners over the years.

“For residential and agricultural land, the increase will be modest. For example, the minimum rate for residential land in urban areas will only rise from RM40 to RM50,” Chow noted.

Rebate and Incentive Measures

To cushion the financial impact, the state will introduce a rebate scheme beginning in 2026. Landowners will receive a 32.5% rebate in 2026, followed by 20% rebates in both 2027 and 2028. Chow clarified that landowners must continue paying their 2025 rate if the post-rebate amount falls below the existing charge.

The rebate programme is expected to reduce state revenue by RM80 million to RM100 million annually during the three-year period.

In addition, several incentives will be rolled out in 2026:

• Penalty waiver: Full exemption of penalty charges on quit rent and strata parcel arrears for payments made between January 1 and December 31, 2026, valued at about RM25 million.
• Conversion discount: A 50% reduction in land conversion premiums for agricultural lots converted to residential use, applicable to individual housing and subject to planning guidelines. This aims to support landowners in areas where farming has ceased.
• Digital payment rewards: Attractive prizes and lucky draws for those who pay quit rent and strata parcel taxes through the PG Land mobile application, to encourage online transactions.

Chow said these measures are designed to balance the need for revenue with financial relief for landowners.

“With the revised rates, Penang expects a stronger revenue base, which will enable us to provide more targeted financial support and long-term cost-of-living assistance for the people,” he said.

Esra Residences marks the continuation of the landed residential component within IJM Bayouri, a 70-acre freehold township development by Chen Yu Land Sdn. Bhd., a subsidiary of IJM Land, in Nibong Tebal. Following the introduction of Ayra Terraces, Esra Residences expands the range of homes offered within the township, which is strategically located near the Jawi toll and roughly a 12-minute drive south of the Penang Second Bridge. The area is also served by nearby public amenities and government offices such as the Land & District Office, District Education Office, and District Police Headquarters.

This second residential phase comprises a total of 92 homes, made up of 84 two-storey terrace units and 8 two-storey semi-detached units. The terrace homes feature four bedrooms and four bathrooms, with an indicative starting price of RM868,000. The semi-detached homes, designed with four bedrooms and five bathrooms, start at RM1,254,000.

Project Name: Esra Residences
Location : IJM Bayouri, Jawi/Nibong Tebal
Property Type : Terrace / semi-detached
Built-up Size: 1,916 sq.ft. onwards (terrace), 2,551 sq.ft. (semi-d)
Total Units: 84 (terrace), 8 (semi-d)
Land Tenure : Freehold
Indicative Price : RM868,000 onwards (terrace), RM1,254,000 onwards (semi-d)
Developer: Chen Yu Land Sdn. Bhd. (IJM Land)

Penang has redrawn its urban map for the first time in nearly 60 years, declaring 25 new towns and expanding the boundaries of 10 existing ones to reflect the state’s transformation from agricultural landscapes into thriving city hubs.

The sweeping amendment, gazetted on Sept 4, impacts more than 210,000 land titles and 84,000 strata titles across Penang. Chief Minister Chow Kon Yeow said the move was necessary as the state’s population and economy had long outgrown the original town declarations made in 1966.

“Many areas once designated as country land have experienced substantial growth. The state authorities are now responding to this by reclassifying these lands to reflect their urban status,” Chow told reporters in Komtar yesterday.

With the changes, Penang now has 42 towns—17 existing and 25 new. Among the existing towns, George Town, Butterworth, Bayan Lepas, Balik Pulau, Batu Ferringhi, Tanjung Bungah, Air Itam, and Bukit Mertajam will see boundary revisions, while Tanjung Tokong, Jelutong, Gelugor, and Prai retain their current limits.

The new towns span both Penang island and Seberang Perai, ranging from Bayan Baru, Batu Maung, and Sungai Ara to Seberang Jaya, Alma, Bandar Cassia, and Tasek Gelugor. Notably, Batu Kawan—home to the state’s Silicon Island industrial expansion—has also been incorporated as an urban zone.

Chow said the reclassification would reshape Penang’s administrative and economic landscape through more efficient zoning, planning, and taxation systems. Property owners, however, will see financial implications as their holdings are upgraded from country to town status.

“For more than 210,000 landowners and 184,000 strata titleholders, these changes will result in higher taxes,” Chow acknowledged. To ease the transition, the state government has postponed new strata property tax rates until 2027, giving over 184,000 strata property owners a two-year reprieve.

The decision is aligned with the Second National Urban Policy (DPN2) by PLANMalaysia, the federal town planning agency. The policy calls for urban classification in areas with a minimum population density of 10,000 and where most residents are engaged in non-agricultural activities.

Chow emphasised that the amendment positions Penang to manage growth more effectively. “Areas once considered rural or village lands, such as Batu Kawan and Bertam, are now integrated into urban zones, reflecting their transformation into bustling hubs of activity,” he said.

By updating its urban boundaries after nearly six decades, Penang aims to ensure its governance, infrastructure, and economic strategies remain in step with the state’s rapid development trajectory.

About Orange Hartamas

Located in Kubang Semang, this mixed development by Tahwah Group is just a 10-minute drive from Bukit Mertajam and 15 minutes from Kulim Hi-Tech Park. Several public schools, including SJKC Kubang Semang, Sri Penanti Primary School, SMK Penanti, and SMK Mengkuang, are within easy reach. The development features 61 units of 2-storey terrace houses, 12 units of 2-storey semi-detached houses, and 27 units of 2-storey shop offices

*Photo taken in Aug 2025

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