DEVELOPERS who refuse to lower prices for new houses and commercial buildings will have to pay the 6% service tax, as the sales and services tax exemption for the construction sector is meant to drive down costs, said Lim Guan Eng today.

The finance minister said this is to ensure that new houses are affordable, following the government’s decision to make construction services and building material costs SST-exempt.

House prices are expected to drop by up to 10% with the move.

“We will take action. I am sure when Rehda (Real Estate and Housing Developers’ Association Malaysia) informs its members, the members will abide,” Lim told a press conference at the Parliament lobby today.

“For new homes that are not subject to SST, we want to see a drop in prices. Otherwise, we will consider reimposing the 6% service tax (on developers).”

The exemption does not apply to low- and medium-cost units, which are price-controlled.

Lim said the SST exemption is meant to stimulate the property sector and ensure more people are able to afford homes.

Savings from the tax exemption should be passed on to house buyers, he said.

A Bank Negara Malaysia report earlier this year said unsold residential properties in Malaysia were at a 10-year high, with 146,497 units as of the second quarter of 2017.

Of the total, 82% were priced above RM250,000. – October 30, 2018.