The housing industry remains uncertain on how to implement the Goods and Services Tax (GST) that takes effect from today, property developers and real estate agents have said.

Malaysian Institute of Estate Agents (MIEA) president Siva Shanker said he and many other real estate agents do not know whether GST will have to be paid if someone were to buy or sell a shophouse, for example.

“If I [were] to sell a shophouse to a client and I cannot even advise him whether he’s going to be paying GST or not, what good am I as a consultant?” Siva told Malay Mail Online in a recent interview ahead of the new tax.

Siva also noted that a panel of accountants at a convention he had attended in early March said they did not know if the GST would affect a property signed for before the April 1 implementation date of the tax, if the purchase was only completed after that date.

The Real Estate and Housing Developers Association (Rehda) echoed Siva’s frustration with the ambiguity surrounding the implementation of the broad based consumption tax in the housing industry.

Rehda secretariat Karen Siow said players in the housing industry at different stages of the supply chain are still unsure what portion of the GST that they pay to the government can be claimed back.

“The industry is still facing ambiguity and uncertainty,” Siow told Malay Mail Online ahead of the tax rollout.

“[People] don’t really know what’s claimable and what’s not,” she added.

Siow said Rehda has submitted numerous proposals to the government in an attempt to clarify things, including recommendations to zero-rate houses priced below RM500,000 and to abolish stamp duty on property transactions.

“Regrettably, we have yet to receive any official reply,” she said, noting that Rehda has had discussions with the Customs Department and the Urban Wellbeing, Housing and Local Government Ministry.

Siva also complained about the government’s lack of engagement on the GST, saying the Customs Department has done little to resolve the numerous uncertainties.

“I really don’t think they did very much,” he said.

“I remember going to one seminar organised by the board of valuers where somebody from the Customs Department came and gave us a talk for an hour and a half maybe. But I remember at the end of the hour and a half being even more confused than when I first went in there. Subsequently, I think every other initiative that I’ve gone to on GST was organised by private entities or individuals,” the real estate agent added.

Rehda official Siow said Rehda estimates house prices to rise by 2.6 per cent after the GST comes into effect on April 1 at a flat rate of 6 per cent.

She noted that building material suppliers may increase prices because their cash flow is restricted, as they have to pay GST to the Customs Department at the time of supply before receiving payment from their customers.

Siow also said the GST will raise the cost of legal fees, sales and purchase agreements and bank loans, noting that such costs will eventually be borne by property buyers.

Developers will not be able to absorb these costs, she maintained, as they are already struggling with the rising costs of doing business.

Detractors argue that the GST is “regressive” and that the broad based consumption tax takes a larger percentage of income from those in the low-income groups than from high-income earners.

Economists, however, view the GST favourably, saying that it is necessary to broaden the tax base, but cautioned the government to cut wastages and leakages at the same time to improve the country’s finances.

Source: The Malay Mail Online

Penang’s secondary property market transaction volume is expected to remain resilient with the implementation of the Goods and Services Tax (GST).

Malaysian Institute of Estate Agents (MIEA) Penang branch Chairman Mark Saw said the GST would have a minimal impact on the secondary property market, driven by high demand especially for residential properties.

He said as long as there was population growth, the demand for properties would always be there.

“There won’t be too much impact from GST in property, and in fact I believe by August, GST will be fully understood by all,” he told reporters after introducing the MIEA Youth Penang Branch here today.

He said the demand for properties in the secondary market would likely rise due to the expensive newly-launched properties.

He explained that only new house prices, even with GST exemption, would increase slightly by three to five per cent due to the GST on building materials.

However, he said the upcoming Malaysian Secondary Property Exhibition (MASPEX) Penang 2015 from Aug 13-16 at Penang Queensbay Mall would offer buyers a wider choice of secondary properties not only in Penang but also in Johor Baharu and Kuala Lumpur.

He said the four-day exhibition would showcase affordable properties ranging from RM400,000 to RM1.2 million.

“There will be over 35 booths to exhibit various residential properties including landed, condominiums, apartments, flat and also commercial properties from the three cities,” he added.

He said the exhibition was expected to attract 50,000 visitors as it would be held in a shopping mall. – Bernama

Ewein Zenith Sdn Bhd, a joint venture between Ewein Land Sdn Bhd and Consortium Zenith BUCG Sdn Bhd (CZBUCG), has received planning permission from the Penang Island City Council to go ahead and develop a mixed project on a 3.67-acre freehold land in Bandar Tanjong Pinang, Penang.

In a filing with Bursa Malaysia today, Ewein Bhd said Ewein Zenith, a 60%-owned subsidiary of Ewein Land Sdn Bhd which in turn is a wholly-owned unit of Ewein, received approval from the council on the planning permission yesterday.

CZBUCG holds the remaining 40% in Ewein Zenith.

The parcel of land, which is vested with the Penang state government, has been alienated to Ewein Zenith for the proposed mixed development on Feb 17 this year.

“The alienation of the land is partial payment for the works to be carried out by CZBUCG for the major road project and the third link tunnel project (in Penang) and it will be treated as CZBUCG’s contribution,” Ewein had told Bursa in June last year.

It forms part of the 110 acres of land in Tanjong Pinang that the Penang government is using to compensate CZBUCG for the construction, feasibility studies and detailed design work of a RM6.3 billion integrated road transport project. The project involves a 12km paired road and a 6.5km undersea tunnel linking the island and the mainland in an agreement signed on Oct 6, 2013.

“In consideration for the performance of the contract, Consortium Zenith will be given 110 acres of freehold land in Tanjong Pinang (at an approximate rate of RM1,300 per sq ft),” a circular from Ewein to shareholders in June 2014 read.

In February 2014, both Ewein Zenith and CZBUCG had signed a supplementary agreement where the former will pay RM133 million to CZBUCG for the land to be alienated to Ewein Zenith for the development of the mixed project.

Last August, CZBUCG chairman Datuk Zarul Ahmad Zulkifli was reported as saying that the second phase of the feasibility study for the RM6.3 billion Penang undersea tunnel project was on-going and the construction will commence in 2016.

CZBUCG is a special purpose vehicle formed among Zenith Construction Sdn Bhd (99.94%), Beijing Urban Construction Group Co Ltd (0.02%), Juteras Sdn Bhd (0.02%), and Sri Tinggit Sdn Bhd (0.02%).

Ewein shares closed unchanged at 49 sen today, bringing a market capitalisation of RM103.35 million.

Source: TheEdgeMarkets.com

House buyers are advised to do their homework first to avoid booking fee headaches.

A woman paid RM2,000 as deposit for an apartment to the developer without her family’s knowledge. Her parents objected because when they came to know about it because they were afraid she would be tied down by the added commitment. She wanted to know if she could cancel the booking and get a refund.

A man paid RM200 as a booking fee for an apartment unit. He later visited the site and found that the construction progress was not to his satisfaction. He went back to the developer’s office to cancel the booking and request for a refund. At first, he was verbally informed by the company’s marketing manager that a refund will be given. After waiting two weeks, he called the company again to be told that deposit would not be refunded. His argument is that since he had not signed the sale and purchase agreement (SPA), he is entitled to a refund.

A woman paid the 10% booking fee and signed the SPA for a house. She later learned that she was only eligible to secure a bank loan of 85% of the purchase price, instead of 90%. Because of that, she wished to cancel the booking. She was asked by the developer to show proof that she was not eligible to obtain a loan.

Another woman booked a unit and paid RM1,000 as the booking fee. She was supposed to come up with the remaining 10% downpayment within two weeks. However, she decided not to buy the property and wished to cancel the booking and get a full refund.

The National House Buyers Association (HBA) receives many enquiries each year from such people about their deposit problems, including some from buyers who have given up hope of seeing their deposits refunded.

In a normal conveyancing practice where the property is completed, there is a chain of events starting with an ‘offer to purchase’ together with a payment of an initial deposit. There is no fixed guideline on this, and it is up to the vendor, purchaser and their lawyers. This offer to purchase is legally binding once the offer is accepted and should one of the parties withdraw, there is a penalty involved – usually the forfeiture of the deposit or compensation in lieu thereof.

However, with the purchase of housing from plans or under construction from housing developers, there is no provision under the law for collection of booking fees. Obviously, this is confusing to potential purchasers, as there are many advertisements offering initial booking fees as low as RM1.

Collection of booking fees in whatever name is illegal. Regulation 11(2) of the Housing Development (Control & Licensing) Regulations 1989 (revamped 2002) states that: ‘No housing developer shall collect any payments except by whatever name called except as prescribed by the contract of sale.’

The statutory SPA forms – the Schedule of Payments of Purchase Price (Third Schedule of Schedules G and H) – specifies that 10% of the purchase price is to be paid immediately upon signing of the agreement. Our conclusion is that the developers must have obtained prior written consent from the Controller of Housing to be allowed to collect the booking fees.

Some creative developers than devised ways to circumvent this illegal ‘booking fees’ by getting the buyers to ‘offer to purchase’ and to accept the fees to book their units. These forms/letters provided by the developers also require the purchaser to pay the rest of the booking fees within two weeks. There is usually no cooling-off period, and purchasers are often bound by the offer letter as the monies are now in the hands of the developer.

To serious buyers, it means you do not have to provide a deposit if you have an SPA and the initial payment of 10% of the purchase price. Even after payment of 10% of the purchase price, in cases where the purchaser is unable to obtain a loan, he is able to back his deposit, albeit with a deduction of 1%. This has been provided for in the recent amendment to the contract of sales according to the Housing Development (Control & Licensing) Regulations. This only applies if the purchaser fails to obtain the loan due to his ineligibility of income and has produced proof of such ineligibility to the developer.

Purchasers in the situations above still have an avenue to seek the refunds by going to the Tribunal for Homebuyer Claims. Our advice to serious buyers is to do your homework well, such as checking the construction site and your credit eligibility, before you make any bookings to prevent any regrets.

Reference: National House Buyer Association

Disclaimer
The information contained in this pages was obtained from www.hba.org.my and sources believed to be reliable. While every effort has been made to ensure the accuracy and reliability of this material, www.hba.org.my does not guarantee the information is complete or accurate, or up to date. The information contained is for informational purposes only and should not be construed as advice on facts specific to the reader.

Botany Bay Residence, an upcoming luxury residential development by Blossom Acacia Sdn. Bhd. in Tanjung Bungah, Penang. It is strategically located on the hill of Tanjung Bungah overlooking the Andaman Sea.

This is a 5-storey low rise low density development with only 47 units of luxury residences. Unit size ranging from 2,760 sq.ft. onwards.

Property Project : Botany Bay Residence
Location : Tanjung Bungah, Penang
Property Type : Low rise residence
Total Units: 47
Built-up Area: 2,760 sq.ft. – 6,246 sq.ft.
Tenure: Freehold
Developer: Blossom Acacia Sdn. Bhd.

Location Map: