By Sharen Kaur - June 13, 2025
KUALA LUMPUR: The Real Estate and Housing Developers' Association (REHDA) Malaysia has cautioned that the newly imposed 6 per cent Sales and Service Tax (SST) on construction services will increase operational costs for developers and ultimately drive up home prices.
While acknowledging the Ministry of Finance's recent announcement on the revised SST structure aimed at boosting government revenue, REHDA expressed concern over the unintended consequences this tax could have on the property sector.
"We have yet to determine the exact impact, but we expect the move will lead to a slowdown in the market as developers make adjustments to their plans," said president of the association, Datuk Ir Ho Hon Sang.
He noted that the Association had previously engaged in consultations with the government to seek clarification and to highlight the tax's possible repercussions on the industry.
"The industry is already bearing indirect taxes on construction-related items such as building materials and labour. The addition of the SST will only add to our burden. To maintain fairness, we sincerely hope that the SST will not be applied retrospectively.
"Any price hike adjusted to contracts signed prior to the effective date could result in cost overruns which left developers with no choice but to absorb the additional cost," he said.
While the exemption for residential buildings and public housing-related amenities offers partial relief, REHDA remains concerned about developments built on commercial land, particularly serviced apartments in mixed-use projects.
"In today's urban landscape, especially in city centres, where residential units are often part of mixed developments due to land scarcity, subjecting these units to SST will inevitably lead to increased housing prices, ultimately impacting homebuyers who will have to bear the brunt," Ho said.
Ho warned that low-income buyers, including those who purchase affordable homes under programs like Rumah Madani, Rumah Selangorku, and Rumah Mesra Rakyat, will also be adversely affected if their homes are located on commercial land.
Additionally, several local authorities require commercial components such as shop lots within strata residential schemes. These units, along with internal infrastructure built within the development, will also be subjected to the SST, further inflating costs, he said in a statement.
REHDA is appealing to the government to delay the implementation, currently scheduled in about two weeks, and proposes a grace period until 2026.
"We respectfully request the government to consider postponing the implementation date, currently set for approximately two weeks from now. Many of our SME members have yet to register with the Inland Revenue Board and a grace period until 2026 would provide sufficient time for them to make the necessary preparations."
Source: https://www.nst.com.my/property/2025/06/1229859/rehda-6pct-sst-push-home-prices-slow-market-expected
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