THE government must introduce measures in Budget 2023 to help the low- and middle-income groups to own homes, the Real Estate and Housing Developers’ Association Malaysia (Rehda) president N. K. Tong said.

Tong asked for tax breaks, grants and rent-to-own schemes.

“Tax deductions can be given on the interest incurred during the construction period for first time house buyers or RM20,000 personal tax relief for first time house buyers on property priced up to RM500,000,” he told The Malaysian Insight.

“The government can introduce a grant of RM30,000 for property priced up to RM500, 000 for first-time homebuyers.”

Tong added there was also a need for the government to help lower the cost of building materials.

He said Putrajaya can do so by temporarily waiving or reducing duties on certain construction materials until prices are back to normal or more manageable, and by lifting taxes and levies on imports.

The Rehda Property Industry Survey 2H2021 and Market Outlook 2022 released in March showed that in the last two years, the price of aluminium had risen 55%, timber 52%, steel 38%, cement 19%, sand 18%, and concrete 16%.

The survey estimates an average 19% rise in construction costs in 2022 and that could cause new properties to cost 8-12% more.

“In addition, prices of most building materials such as aggregates, sand, bricks and walls, roofing materials, and ceiling materials also registered increases,” said Tong.

There is also a need to review or reduce unnecessary charges, he added.

“Charges imposed by utilities companies or authorities, such as on land to build social and community facilities, road and drainage, open spaces, need to be reviewed,” Tong said.

“Developers are already required to lay down the necessary infrastructure in their development projects. The government must reduce the cost of doing business so that the savings can be passed on to home purchasers. 

Affordability

Tong also called on the banks to implement the step-up financing scheme to help first-time homebuyers.

For foreigners hoping to buy homes in Malaysia, Tong said the government should relax the conditions in the Malaysia My Second Home (MM2H) programme. 

In August 2021, the government announced new requirements for MM2H applicants to have permanent savings of at least RM1 million and a declaration of liquid assets of at least RM1.5 million.

Previously, applicants were only needed to have savings of between RM300,000 and RM500,000 to qualify for the programme.

MM2H applicants must now also have offshore income of at least RM40,000 a month, up from RM10,000 per month.

Data from the MM2H Consultants Association showed the programme contributed RM38.17 billion to the economy between 2002 and 2019.

The new requirements saw MM2H applications slump.

“As the country continues to open up from the pandemic lockdowns, we need to ensure that our economy is firing from all cylinder to ensure a smooth recovery. 

“It is tempting for the many stakeholders, such as state and local authorities as well as utility companies, to impose additional requirements on the industry to the detriment of the rakyat aspiring to own their first home, but the temptations must be resisted,” Tong added.

The government recently introduced the home ownership programme to build 500,000 affordable homes.

The budget will be tabled on October 7. – September 11, 2022.