Savills Rahim & Co founder and executive chairman Datuk Abdul Rahim Rahman has refuted developers’ claims that the various measures proposed under Budget 2014 would “dampen” or “kill off” demand, proposing increasing the stamp duty on the purchase of third and subsequent properties instead.
“Additional measures should be imposed on the purchase of the third and subsequent properties by increasing the stamp duty if (the Government) wants to stop speculation, and perhaps, stop the increase in house prices. There is justification for this,” he said at a post-Budget press conference.
He said Singapore and Hong Kong had successfully used the stamp duty to curb speculation.
“The real property gains tax (RPGT) is a tax on profits. That 30% tax is justified, as there is still the remaining 70%,” he added.
Breaking down the sector into its four sub-segments coupled with the impact of the RPGT, Rahim said that while the residential and commercial sectors in the urban centres of Kuala Lumpur, Penang and Johor would be impacted by it, they would not be dampened by it. The new tax regime would have a minimal impact on the office and industrial properties.
He said that while he appreciated a certain healthy amount of speculation in the market, the quantum of increase in the last few years had been “too high and too fast” and this was due to the developers interest-bearing scheme (DIBS).
He said the DIBS had provided “a low barrier of entry” which encouraged speculators.
The scheme had created hyperactivity in the market, as it increased the frequency of transactions and resulted in prices going higher with the launch of each subsequent phase.
“We are trying to stop flippers who pay 10% but buy multiple properties. They are not investors but speculators,” he said.
On foreigners being allowed to purchase properties that cost a minimum of RM1mil – double the previous threshold – Rahim said “charity should begin at home”.
“While we want an ‘open’ economy and we do welcome foreigners, we must consider many among the low- and middle-income group who are unable to afford their own homes,” he pointed out.
On properties in Medini in Iskandar Malaysia being exempted from the new RPGT regime, he said this would allow prices to spiral up.
“The whole function of all these is to curb unsustainable price hikes. The only difference in Medini is that all the properties there can be sold to foreigners, which makes it attractive for developers and investors.
“It would not be good if Medini was exempted from the proposed measures,” he said.
Rahim considers Iskandar Malaysia “a hot spot” where prices continue to rise even as other urban centres like Penang, Kuala Lumpur and Selangor see significant drops in transactions in terms of both value and volume for the first half of this year compared with the same period last year.
“Last year, the overall property market continued its growing trend, although there was a small reduction of 0.7% in the total volume of transactions compared with the previous year. The total value of transactions grew at 3.6% (2011/2012).
“This year saw a more significant decline in activity,” he said.
The total volume of transactions was 185,709, a reduction of 14.4% from the first half of 2012. The value of transactions, meanwhile, also dropped by 2.8% from RM68.99bil in the first half of 2012 to RM67.06bil in the same period this year. - By Thean Lee Cheng (The Star)