PETALING JAYA: The real property gain tax (RPGT) revision which had been one of the highlights of Budget 2012, should be either reverted or adjusted based on proper understanding of the market situation, according to property sector associations.

Real Estate and Housing Developers Association Malaysia (Rehda) revealed in its Budget 2013 wish list that the Government should not review taxation or policies which were beneficial for the industry and recommended the previous RPGT regime be reinstated.

“Under the current market conditions such as the softening market and early signs of better growth of the economy ahead and the uncertainties of the United States and eurozone economy, we urge the Government not to interfere with the existing policies which are business friendly,” Rehda told StarBiz.

With the local Gross Domestic Product announced recently at 5.4%, Rehda believed that Government should grab the opportunity to facilitate market growth by introducing punitive and restrictive measures and suggested the new budget included reverting to the previous RPGT regime of 5% tax if a property is disposed before five years and no RPGT if disposed after five years.

The revised RPGT in Budget 2012 meant that gains from property held for less than two years were subjected to a 10% tax while a 2% was imposed for properties held between two and five years, and those who kept it for more than five years are exempted from tax.

National House Buyers Association secretary-general Chang Kim Loongsided Rehda’s recommendation, noting that the current RPGT was not effective in reducing market speculation.

“Developers typically need two years to complete landed properties and three years to complete stratified properties. This would mean that speculators could buy properties from developers, flip on completion and in effect pay the same 5% RPGT rate that was before Budget 2012,” he explained.

The Master Builders Association Malaysia (MBAM) opined that more focus should be put on affordable housing which will benefit more stakeholders and purchasers.

In addition, MBAM wished for the Government to release more land for affordable housing especially in the Klang Valley to meet the demand from first time time housebuyers as well as to sustain the housing and construction sectors.

On MBAM’s Budget wish list was also lower coporate tax rate to be on par with Singapore and Hong Kong.

On construction, MBAM pointed out a shortage of skilled workers for heavy engineering like the My Rapid Transit (MRT) project.

“We wish to appeal for skilled workers from China to be allowed to work on these projects as many Chinese workers are now available after completing MRT and high speed rail projects in China,” it said, noting that MBAM would like to source foreign workers from Asean and India too.

With the announcement of the Budget 2013 inching closer, the property sector associations have again reiterated the need for more measures to be taken to supply the market with affordable property.

For the coming Budget, Rehda recommended a closer look into the capital contribution charges on developers that is eventually passed on to housebuyers.

It said that currently developers are required to pay various capital contributions such as sewerage, electricity, water, telecommunications, Construction Industry Development Board levy and surrender of land, construction of facilities and infrastructure as well as compliance of other planning requirements.

Through Rehda’s own research, it found that all these compliance costs payable to various authorities could be as high as 30% of the selling price of the housing units.

What Rehda recommended is for private utility companies to not impose capital contribution charges on developers as developers are already required to lay infrastructures in their development projects and bring in new customers to the utility companies.

“These utility companies should revise their own capital and collect revenue via tariff based on consumption,” the association said.

Source: The Star

Penang properties said to increase 5%-10% due to more costly cement

GEORGE TOWN: The selling price of properties in Penang will soon surge by 5%-10% following the recent move by Lafarge Malayan Cement to raise cement prices by about 6%, according to housing developers here.

Following Lafarge’s announcement, a 50kg bag of cement is now priced at RM17.50, compared to RM16.50 before the hike.

Penang Master Builders & Building Materials Dealers Association president Lim Kai Seng said 60% to 80% of the materials used for a building comprised cement and cement-related materials.

“This is why an increase in cement price will have a significant impact on property prices.

“The other cement manufacturers in the country have sent signals that they will raise prices very soon,” Lim said.

There are six cement producers in Malaysia, namely YTL Cement Bhd,Tasek Corp Bhd, Cement Industries of Malaysia Bhd, Lafarge, CMS Cement Sdn Bhd, and Holcim (M) Sdn Bhd.

Only Sarawak-based CMS Cement has confirmed it would keep prices at the current level.

Lim said the price of other essential building materials such as sand and aggregate had also increased.

“The price of sand is now between RM40 and RM43 per cu yard, depending on the grade, compared to RM38-RM40 earlier this year.

“The price of aggregates is now at RM21 per tonne, compared to RM20 per tonne earlier this year,” he said.

House prices on the island are expected to rise by 10%, while in Seberang Prai, housing prices are expected rise by 5%, following the hike in cement price.

Kuala Lumpur-based developers such as Mah Sing Group Bhd and SP Setia Bhd with projects in Penang will continue to absorb the cost of the cement price increase.

Ideal Property Development Sdn Bhd managing director Datuk Alex Ooi said the company was now revising the selling prices of its new projects upwards, due to the hike in cement price.

“There will be at least a 10% hike in the selling price of properties on the island.

“A hike in cement price means the price of all cement-related products such as concrete and bricks will rise. Construction cost will go up by between 15% and 20%.

“We expect the rest of the cement manufacturers in the country to adjust the price of cement upwards in the next one to two months,” he said.

In addition to the rise in cement prices, the cost of labour and transportation charges have also increased this year.

Tambun Indah Land Bhd managing director K.S. Teh said the cost of labour had increased to RM45 per day this year, compared to RM35 a year ago.

Transportation charges for sand have increased to RM450 per truck load this year from RM400 a year ago.

“There is also a labour shortage, as many Indonesian workers have gone back to Indonesia, which is booming currently.

“The selling price of properties will be impacted by the hike in raw materials and labour costs.

“However, Tambun Indah will absorb the increase in the price of raw materials until year-end.

“We will revise our pricing next year,” he added.

Teh said the selling price of properties on the island would increase more because of the additional transportation charges to ferry the raw materials to the island.

“This is why the increase in property prices on the island will be around 10%, compared to about 5% in Seberang Prai,” he said.

Tambun Indah will be launching next month the Straits Garden@Jelutong on the island, the Pearl Residence@Pearl City and Pearl Indah@Pearl City projects in Simpang Ampat.

The Straits Garden is a high-rise project comprising 183 condominiums priced from RM688,000 onwards, while the Pearl Residence@Pearl City and Pearl Indah@Pearl City schemes comprise landed properties priced between RM353,000 and RM508,000.

Mah Sing managing director and chief executive Tan Sri Leong Hoy Kumsaid the cement price hike would have less than a 1% impact on construction cost.

“Most of our projects have been tendered out and the construction costs are already locked in,” he added.

SP Setia property (north) general manager Khoo Teck Chong said the group would absorb this impact for now to be competitive.

”If other raw material prices such as bricks, rebar and tiles were to increase drastically, we may then have to review and adjust our property selling price accordingly,” Khoo added.

Meanwhile, the Malaysian Competition Commission (MyCC) chief executive officer Shila Dorai Raj had said the price hike by cement manufacturers did not at this juncture warrant a formal investigation.

“Price increases are by themselves not anti-competitive in nature. However, if there is evidence of collusion among the competitors to increase prices, this would be of concern to MyCC and may merit an investigation,” she said.

Source: The Star

PETALING JAYA: Housing and Local Government Minister Datuk Seri Chor Chee Heung said the housing needs of the middle-income group, which formed more than 40% of the community, must be addressed and hoped that the 1Malaysia People’s Housing Scheme (Prima) announced last year would progress speedily.

Low cost housing is capped at RM42,000, while affordable housing cost between RM85,000 and RM300,000.

Chor said the Government had been successful in providing low cost housing, but there was a need to look into the grouses of the middle-income group.

Chor said this to reporters after attending a roundtable discussion entitled “Housing Affordability: Issues and Challenges”, jointly organised by the Real Estate Housing Developers Association (Rehda) and the Eastern Regional Organisation for Planning and Human Settlement yesterday.

“The Ministry will consider the views and suggestions by the task force to be formed and we will put forward views and perspectives to the Federal Government.

“Affordable housing has become an important topic, with the greatest need being in urban centres like Kuala Lumpur and Penang and to a certain degree in Johor Baru due to urban migration.

“The Prima scheme is a laudable project…(but) it is moving sluggishly. We hope to see Prima making speedy progress. At the same time, we also hope the developers will play their role,” he said.

He said it might be more efficient to streamline the different agencies which provided housing. Chor said it was not possible to compare Malaysia’s housing situation with Singapore because the government there was able to step in quickly to provide both low and middle-cost housing units.

Earlier, at the discussion, Rehda president Datuk Michael Yam listed out the challenges faced by developers when providing social housing including the high cost of land. “Planning requirements need to be reviewed because we are beginning to see a proliferation of small serviced apartments into the market. Developers are resorting to building small units in order to increase the number of units to make the project viable,” Yam said.

He called on the Government to free government and state land for affordable housing and to exempt developers from having to fork out capital for utilities infrastructure like reservoir and sub-stations.

“In developed countries, the government build all these and the developers pay a contribution. When developers have to fork out capital expenditure for the infrastructure, invariably the consumer will have to pay for it. This results in an increase in housing cost,” said Yam.

Secretary-general of the House Buyers Association Chang Kim Loong called on the Government to bring back the real property gains tax in full force to curb speculation.

Effective since Jan 1, this year, the gains from property held for less than two years were subjected to a 10% tax. For properties held between two and five years, a 2% was imposed while those who kept it for more than five years are exempted from tax.

Under the previous ruling, a Malaysian individual who sells his property within the first two years of purchase is taxed 30% of the gains. The rates slide to 20% (third year), 15% (fourth year) and 5% (fifth year). He is not taxed on the sixth and subsequent year.

Source: The Star

ALL the OCPDs in Penang have been instructed to form special teams to patrol residential areas where there are houses that will be left vacant when the occupants balik kampung for Hari Raya Aidilfitri.

State deputy police chief Senior Asst Comm Datuk Abdul Rahim Jaafar said that the police wanted to stop rampant house break-ins during the festive season and this move was to enable people to travel with peace of mind.

“Those travelling out of town are urged to contact their nearest police station so that patrolling can be carried out in their neighbourhood,” he said.

He was speaking to reporters after the Ops Selamat Campaign in conjunction with the coming Hari Raya Aidilfitri celebrations at the Juru Toll Plaza yesterday.

SAC Abdul Rahim said people could fill up a form to tell the police when they would be away.

The form can be downloaded from the Royal Malaysian Police website.

He also said there were fewer road accidents in the state be-tween January and July this year compared to the same period last year.

“There were 37,158 cases in 2011 during the same period and only 21,984 cases this year.

“As such, there is a difference of 15,174 cases,” he added.

SAC Abdul Rahim said there were only 220 cases involving fatalities between January and July this year compared to 392 cases last year.

He said police would monitor three ‘black spots’ or accident-prone areas in the state — Jalan Baru in Prai, Jalan Chain Ferry and the Penang Bridge.

He said Ops Selamat, a joint initiative of various agencies such as the police, Road Transport Depart- ment and Civil Defence Department, would end on Aug 26.

“All the agencies will work together to ensure that the public feel safe,” he added.

Source: The Star

THE government will initiate measures to address various issues gripping the property sector, including curbing rampant speculative activities in the market.

Housing and Local Government Minister Datuk Seri Chor Chee Heung said he would present to the cabinet findings of an industry meeting which could be used to come up with innovative ways to build affordable homes.

“The government has done fairly well in addressing the housing issues of the lower income. However, 40 per cent of the medium-income society still need accommodation.

“My ministry will use some of the findings to improve the sector,” Chor told reporters here after opening a roundtable discussion on “Housing Affordability – Issues and Challenges”.

The government will put forward recommendations, which will be based on proposals made by Real Estate and Housing Developers Association Malaysia (Rehda) such as on how to curb speculative property prices, financing, abandoned projects and sluggish developments.

Metro Kajang Holdings Bhd group managing director Datuk Eddy Chen Lok Loi said for example, a house built in Perlis cost RM250,000 but the same house using the very same materials but built in KLCC would cost RM1 million.

“This is caused by land cost due to two different locations. Nevertheless, there are some of the issues which Rehda will look into to address this such as materials prices. Working groups and a task force have been set up,” said Chen.

Meanwhile, National House Buyers Association secretary general Chang Kim Loong said all parties, including the government and developers, need to launch proactive measures to stop steep price increases in the property market due to false demand and excessive speculation fuelled by easy mortgages and low real property gain tax.

“There is a huge mismatch between what the average household income can afford to buy compared to what is available in the market. A homeless generation will emerge and create various social problems,” said Chang.

Chang said the average rakyat in a major urban area was struggling to buy his dream home where the average household with income of RM5,962 in 2009 would not be able to qualify for a 90 per cent loan over a 30-year period.

Assuming the average household income rises 15 per cent this year, the household may still not qualify for a 90 per cent loan in far areas such as Kajang, let alone in hot areas such as Kuala Lumpur.

He added that the government must also fine-tune the Bumiputera quota which has not made any headways.

“Don’t get me wrong, we have no qualms over the discount for the first buy. But when you buy properties for the fourth and the fifth time and get up to 15 per cent discount … that is wrong,” said Chang.

Source: Business Times