Property sector sees real gains in tax review

By Sharen Kaur - Published in NST, 25 Dec 2009

The property sector has received a much needed shot in the arm with the government's decision to review the real property gains tax (RPGT).

Property players and analysts said the new rule would spur property deals and, at the same time, prevent speculative buying.

On Wednesday, Prime Minister Datuk Seri Najib Razak said those who sold properties within five years of their purchase would pay the five per cent RPGT.

This would amend what the government announced under the 2010 Budget in October. Under that announcement, the RPGT would be imposed for all properties sold from Jan 1, regardless of the year of purchase.

It was wrongly reported in the New Straits Times yesterday that the RPGT would be imposed on properties sold after five years of ownership.

Mah Sing Group Bhd group managing director Tan Sri Leong Hoy Kum said the news was positive for the industry and it would be a sentiment booster for both domestic and foreign investors.

"Demand for property here is driven by fundamentals and we have seen good sales. With this measure, it will be more attractive and viable for property owners to sell their houses as they upgrade," he said.

Glomac Bhd group executive vice-chairman Datuk Richard Fong agreed.

Fong, who is also president of Fiabci, an international real estate federation, said he expected property transactions to improve next year.

"This is good news. It shows the government has heeded our call. I think it's a fair move to prevent speculative buying," Fong said.

Najib on Wednesday said the decision was made following requests from the business sector and Federation of Chinese Associations of Malaysia.

The policy was also reviewed as the government wants stronger growth in the sector next year.

ECM Libra Investment Bank said in a research report that the revised property tax regime would dampen speculative activities.

Over the past few weeks, there has been strong demand for landed residential properties, especially terrace, semi-detached homes and bungalows.

It thinks that this was due to the low interest rate and improving sentiment on brighter economic outlook.

"With the relaxation of the RPGT regime, we believe buying interest will pick up pace, especially among upgraders, who need to sell their existing properties first," it said.

Leong said owners would also not be in a hurry to sell and avoid the tax with the review.

"The clarification of RPGT will provide some leeway for property owners and they no longer have to be in such a rush now to sell. This will allow the property market to reach a better equilibrium as the deadline has been removed to some extent."

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