The expandatory budget announced last week touched on every industry including the much anticipated property market, a sector that has been languishing since January. Requiring a much needed boost, Budget 2021 came through promising to uplift the industry with further incentives following up on the earlier perks mentioned in PENJANA.
Knight Frank Malaysia views the announced full stamp duty exemption on both instrument of transfer and loan agreement for first home purchase as a positive thrust in moving the needle on the stagnated property market. This exemption will now be applicable for the sale and purchase agreement on purchases that are completed from 1 January 2021 until 31 December 2025. Incidentally stamp duty exemptions on loan agreements and the transfer instrument for abandoned housing projects will also be extended for another five years.
Sarkunan Subramaniam, Managing Director of Knight Frank Malaysia says, “This is a great move as eliminating stamp duty will lower upfront cash payments and encourage home ownership among the first-timers. As this enhanced exemption is not limited to the primary market, first-time homebuyers will have wider choices to explore listings in the secondary market.
The current proposed full stamp duty waiver will complement the real property gains tax exemption unveiled under the country’s Short-Term Economic Recovery Plan (PENJANA) in June whereby gains arising from disposing of residential property by Malaysians (limited to three units per individual), between 1 June 2020 and 31 December 2021 are exempted from RPGT. Collectively, these incentives are expected to spur more activities in the primary and secondary residential markets, which are further supported by the current low interest rate environment.
Sarkunan explains, “As of October 2020, there are 30 abandoned housing projects nationwide under the recovery plan. These 30 abandoned projects made-up 10,804 housing units of which 4,962 units are sold. The stamp duty exemption for the abandoned projects will encourage more white knights to complete the abandoned units and help the 4,962 homebuyers to have their dream homes after the long delay.”
The government will also be collaborating with select financial institutions to provide an RTO scheme, which will be effective until 2022, involving 5,000 units under the 1Malaysia People’s Housing Scheme (PR1MA) with a total value of more than RM1 billion. These units will be reserved for first-time home buyers.
Budget 2021 is made to realign the supply and demand of the housing market in Malaysia, industry players are pleased that the government has the ear on the ground and ensuring a robust property market is necessary to spur the economy.
Article is partly attributed to Knight Frank