The recent Budget 2012 announcement by Prime Minister Datuk Seri Najib Tun Razak on 7th October 2011 indicated several supportive measures by the Government on housing for the public, especially for low and medium-income earners. This is significant, because the rising cost of living has resulted in upward pressures in property prices, making it difficult for young working adults to afford purchasing their own homes.
Earlier this year, on March 2011, the government launched My First Home Scheme to exempt first-time home buyers earning below RM3,000 from coming up with the standard 10% downpayment. This is for buying properties costing RM220,000 and below.
In the recent budget, the government proposed to expand the scheme by increasing the limit of house prices from a maximum of RM220,000 to RM400,000, making this improved scheme available to house buyers through joint loans between husband and wife beginning of January 2012. The expansion of the scheme addresses the concerns of young couples who seek to own their first home, and the increased price ceiling should make it possible for them to own a home in the Klang Valley.
In addition to the rising cost of living, and other factors such as inflation, speculation in the real estate market is driving property prices upwards. The government recognised its impact and proposed for the review of the Real Property Gains Tax (RPGT). For properties held and disposed within two years, the RPGT rate is set at 10%; while properties held and disposed within a period of two to five years, the rate remains at 5%.
The government has also introduced a policy to protect home buyers by encouraging the construction of more houses using the build-then-sell (BTS) concept.
In the budget, it was announced that Islamic banks have agreed to provide Shariah-compliant financing and undertake construction risks. Home buyers would only need to pay their installments after the house has been completed. This is favorable to home buyers because they currently bear the risk of projects being delayed or abandoned, through the sell-then-build (STB) concept.
1Malaysia People’s Housing (PR1MA), the sole agency to develop and maintain affordable and quality housing, has already built 1,880 houses in Putrajaya and Bandar Tun Razak this year, and is going to build another 7,700 houses next year in Cyberjaya, Putra Heights, Seremban, Damansara and Bukit Raja.
The Prime Minister has announced that several plots of government-owned land around Sungai Besi and Sungai Buloh will be developed for such housing. Other areas in the vicinity of mass rapid transit (MRT) and light rail transit (LRT) areas are also expected to be identified by PR1MA for development. Property prices under this scheme are expected to be lower as land and facilitation funds would be provided to developers.
To sum it up, this year’s budget has paid particular attention to the concerns of the people in regards of home ownership, and it is pleasing to see several policies introduced to address these concerns.
