Is 2021 a good time to buy property in Malaysia? Yes, it is. The
2021 budget is expected to give the property and real estate sector a big push.
It is laden with incentives for property buyers in the industry. In late 2020, the Finance Minister, Tengku Datuk Seri Zafrul Tengku Abdul Aziz, rolled out the 2021 budget highlighting the proposals it has for the real estate industry.
What are the initiatives that the 2021 budget has for a property developer in Malaysia? Below, we highlight the top initiatives the 2021 budget has for the real estate industry.
1. Stamp Duty Exemption
For memorandum of transfer documents (MOT) and loan agreements, the federal government has come up with stamp duty exemptions for first-time buyers of a
residential property. This initiative is available for house buyers who purchase residential property from 1 January 2021 to 31 December 2025. Offering a discount of up to RM500,000 makes it such a generous time for Malaysians to own residential properties.
According to Geh, who is also a senior partner of
Raine & Horne, on the MOT, “The strong emphasis on affordability by home buyers (as stipulated in budget 2021) will decrease the price of Malaysian homes to levels that are affordable to most Malaysians. The next 5 years would be the best time for Malaysians to buy their first home.”
This initiative is different from the HOC 2020 (
Home Ownership Campaign) that will run until May 2021 and that offers stamp duty exemption only on new launch properties.
Standing to benefit from free MOT - and the prospect of not having to pay for stamp duties - makes it easier for real estate investors to find their way into the market and make the most that it has to offer.
2. Rent-to-Own Scheme (RTO)
The Rent-to-Own Scheme (RTO) for
PR1MA homes is another initiative included in the 2021 budget. This scheme is worth up to RM 1 billion. Involving 5,000 PR1MA properties, this program is designed to run until 2022 for first-time Malaysian property buyers.
The rent-to-own scheme works in such a way that buyers will be able to secure properties via
renting them with an option to pay at the end of the contract. It gives the homebuyer the rare opportunity to try out the house before paying for it.
Buyers enter into an agreement with a developer, upon which a time of the rent contract is stipulated. The duration varies according to the developers and buyers and could range from 5 to 30 years. The property owner will be required to pay a 5% fee of the property’s selling price.
3. Stamp Duty Exemptions for Abandoned House Projects
Uncompleted house projects are a troubling issue the Malaysian government is grappling with. Rescue contractors (buyers of abandoned property projects) are going to smile, as the stamp duty exemption on loan agreements and transfer instruments has been extended for 5 years.
This exemption applies only to loans and MOT secured for abandoned house projects from January 2021 to December 2025. Only uncompleted housing projects certified by the Ministry of Housing and Local Government (
KPKT) are bound to benefit from this exemption.
This exemption is meant to entice property investors to take on abandoned projects and accelerate their completion. This is an opportunity for investors who are not having a field day in the industry to take on projects and get back on track.
If you are looking to buy a new launch property, this could be the time for you.
4. Homeownership Among the Low-income Group (B40)
One of the 2021 targets of the Malaysian government is to ensure that homeownership trickles down to the low-income group. This is evident in the 2021 budget allocation to build housing units for them.
RM500 million allocations were made to build 14,000 housing units under the People's Housing Program, RM315 million allocations made to build housing units of
Rumah Mesra Rakyat and RM 1.2 billion to build houses for low-income earners (and more).
This initiative is going to be promising for the low-income group this year.
In a Nutshell
It is evident that the Malaysian 2021 budget is one that is going to spur growth for the housing market. Homeownership in Malaysia is going to become more realizable, and housing development will be easier for first-time buyers in this time that the pandemic is ravaging the economy.
