“Extend RPGT, expand scope of HOC to include secondary home market”

THE Government is expected to extend the real property gain tax (RPGT) exemption under Budget 2021 (to be tabled on Oct 29) on residential properties next year, without which would mean an additional burden on families forced to sell their homes to survive.

Stressing that this can also benefit the housing market by increasing home sales, TA Securities Research is also of the view that the 5% RPGT on property disposal by Malaysians after the fifth year of ownership should be abolished.

“Lastly, we hope that the RPGT exemption will be extended across all sectors (to include commercial and industrial) or at least a reduction of the current RPGT rates to spur more market activity,” justified analyst Thiam Chiann Wen in a property sector update.

Under the National Economic Recovery Plan (PENJANA) unveiled in June last year, Malaysians will be exempted from paying RPGT for the disposal of residential property from June 1, 2020 to Dec 31, 2021.

However, such exemption is limited to the disposal of three units of residential homes per individual.

In a related development, TA Securities Research is also hopeful that the Government will not only extend the Home Ownership Campaign (HOC) 2020-2021 for another year but will also broaden the scope of the campaign’s incentives to include the secondary home market.

To recap, stamp duty on the memorandum of transfer (MOT) and loan agreement (LA) for the purchase of residential homes priced between RM300,000 and RM2.5 mil will be exempted under the HOC subject to a minimum 10% discount provided by the developer.

This exemption on MOT is limited to the first RM1 mil of the home price whereas full stamp duty exemption on LA is available for sales and purchase agreements (SPA) signed between June 1, 2020 and Dec 31, 2021.

“The HOC has assisted numerous first-time homeowners in the previous few years and has been successful in stimulating activity in a slowing housing market,” observed TA Securities Research.

“Notably, the average monthly residential loan application during HOC 2020-2021 (up to August) was 27% higher than HOC 2019’s average.”

In essence, the research house expects the upcoming Budget 2022 to be primarily helpful to low-to-middle-income earners as well as to first-time home owners.

Aside from RPGT, it also anticipates friendlier measures for property developers and foreign buyers to spur market activities. “We do not anticipate any new dramatic tightening policies, as this would derail the recovery of the property sector,” noted TA Securities Research.

The research house has “buy” calls for all the developers under its coverage with the exception of SP Setia Bhd which it has downgraded to “hold” (from “buy” previously) due to the recent run up in share price (+18% in three months).

Maintaining its “overweight” stance on the property sector, TA Securities Research pointed to unexpected tightening in monetary policies and prolonged weakness in consumer confidence are the key downside risks to its outlook. – Oct 13, 2021

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