2019 Budget: HBA slams move to revise rate on RPGT

KUALA LUMPUR: National House Buyers Association (HBA) has expressed unhappiness over the government’s announcement to revise the tax rate on profits in the sale of properties (Real Property Gain Tax) beyond five years.

Its secretary-general Datuk Chang Kim Loong said such move would reflect badly on the government as it was not imposed during the previous Barisan Nasional administration.

Finance Minister Lim Guan Eng, during tabling of 2019 Budget yesterday, said the government proposed that the RPGT rates will be revised for disposals of properties or shares in property holding companies; for companies and foreigners, the rate shall be increased from 5 per cent to 10 per cent; and for Malaysian individuals, the rate shall be increased from 0 per cent to 5 per cent.

However, low cost, low-medium cost and affordable housing priced below RM200,000 will be exempted from RPGT.

”With the announcement, this means Malaysian individuals will continue to bear the 5 per cent RPGT even though they have diligently ‘preserved beyond the 5 years or more.” Chang said.

He said HBA had in the past suggested that the government to maintain the RPGT rate for the first two properties and to increase the RPGT rate for the 3rd and subsequent property.

”This is because many people can only afford to buy two-properties; 1-for own stay and 1-for long term investment.

“By charging RPGT rate for people who had held properties for 5-years or more, the Pakatan Harapan government is effectively imposing tax on inflation,” he said.

Apart from that, he said two other announcements; to exempt stamp duty on unsold property costing between RM300,000 to RM1 million and the reference to crowdfunding as a potential peer-to-peer financing scheme to help people buy properties, were also disappointing.

Stamp duty exemption should only be given to Affordable Properties costing RM300,000 and below, said Chang.

”Extending stamp duty exemption for properties costing up to RM1 million is like extending subsidies to the wrong target group.

“According to Bank Negara Malaysia, the median property price in Malaysia is severely unaffordable and out of reach to the majority of the people. This can lead to an entire generation of the people, comprising the lower and up to middle income group and especially our younger generation being unable to buy their own properties,” he added.

He said the proposal to exempt stamp duties (government revenue) will also enrich the already “rich segment” of society and developers having such stocks.

”These are finished but unsold stocks that have been classified as ‘overhang properties’, high end properties which are definitely not within the reach of the majority of middle class population.”

Chang said HBA also disagreed with the government’s “crowd funding“ scheme.

”Malaysia is facing a housing crisis where the price of properties are too expensive in comparison to their incomes. The crux of the problem is “affordability” and not “lack of financing” as there is adequate liquidity in the banking sector,” he said.

”It is also unclear whether it is for properties under construction or completed units. Also, if a buyer is unable to obtain a loan from a financial institution due to poor credit records or “affordability issues“, giving the same buyer access to “easy credit” via a peer-to-peer lending scheme will encourage the growth of more property speculation and bad debts.

“What happens in the event of a default? Who will enforce the lending arrangements?”

HBA, Chang said, urged borrowers to carefully evaluate their repayment ability before accepting any “easy credit” from “crowd funding sources” and ensure that they understand all the terms of the loan agreement.

Source: NST