REAL-ESTATE players are warning consumers to be wary of attractive discounts and cash rebates offered by developers and agents during the Covid-19 pandemic.

Behind these offers are a mark-up of the property’s actual value by developers when declaring to the bank, they said, urging buyers to assess such offers carefully.

Zaini Yusoff, vice-president of the Real Estate and Housing Developers’ Association of Malaysia (Rehda), told The Malaysian Insight that the bank requires developers to declare the discount amount and rebate details.

“We do not encourage developers to give rebates that are too high because it will affect the buyers’ loan application,” he said.

Mah Sing CEO Benjamin Ong said buyers should be wary of people acting as agents or as intermediaries when they have not obtained a licence to practise.

These agents will make promises, such as guaranteeing 90% financing and high rebates.

Ong said banks are cautious when approving loans for highly priced properties with a big difference between the property’s original price and the value the developer declares to the bank. The difference enables the developer to give rebates.

For example, the original price may be RM1 million but is declared as RM1.5 million by the developer to the bank. The developer then gives the buyer a discount of RM500,000.

“The government allows developers to give a discount of at least 10% but discounts as high as 40% are tricky.

“Established housing developers will not do this, while small developers might do so to get cash and continue operations,” said Ong.

Banks also generally have more confidence in larger, established developers.  

He said Mah Sing ensures agents under its group do not spread rumours or make false claims in order to boost housing transactions.

“If they are illegal (unlicensed), they will not be hired. We also work with banks to prevent homebuyers from being deceived.”

Steve Chong Yoon On, the former Rehda Johor chairman, concurred that there are irresponsible developers who raise property prices unreasonably and then offer rebates of up to 20%.

“When banks see developers raising housing prices unreasonably, they will be careful when approving housing loans.

“It is not that the bank has a high rate of rejecting loan applications. It is that developers set housing prices too high and then give high discounts. This is an unhealthy way to do promotions,” said Chong.

When buying real estate, buyers should first check the developer’s reputation, he said. They should also get a professional appraisal of the area the property is located in and even speak to residents there.

Despite the sluggish economy due to the Covid-19 pandemic, agents have reported growth in enquiries and sales, especially from among cash-rich individuals and because of government incentives as well the low interest rate which makes property investments more attractive than fixed deposits.

Bank Negara cut the overnight policy rate to 1.75% as of July 7, while the government’s economic stimulus packages to mitigate the impact of Covid-19 offer incentives targeting real estate.

These include:

(1) Relaunching of the home ownership campaign in which first-time buyers of houses priced between RM300,000 and RM2.5 million are exempted from stamp duty. This offer is valid from June 1 to May 31, 2021. The sales and purchase agreement condition is that the developer gives at least a 10% discount.

(2) Malaysian citizens who sell their properties between June 1 and December 31, 2021 will be exempt from paying real property gains tax (RPGT), limited to the sale of three houses per person.

(3) Lifting of the 70% margin of financing limit applicable for a third residential property valued at RM 600,000 and above. – October 7, 2020.