Budget 2021 was tabled last week, with little of the anticipated resistance that some expected. Perhaps the secret sauce was the fact that it addressed some key commercial issues as well as job security, a key component to shoring up consumer confidence as the future continues to look uncertain.
For the housing industry, Budget 2021 outlined a handful of measures that promote home ownership, despite an overall bleak economic outlook for the region.
There was good news for first-home buyers in the form of stamp duty exemptions, updated allocations for public housing as well as a rent-to-own (RTO) scheme.
Stamp duty exemptions on instruments of transfer and loan agreements for first-time buyers are already in place to cope with the health and economic crisis. Finance Minister Datuk Seri Tengku Zafrul Abdul Aziz said the exemptions would continue until Dec 31, 2025, for homes priced up to RM500,000.
This will be applicable for sale and purchase agreements executed between Jan 1, 2021, and Dec 31, 2025.
Additionally, the government proposed to extend stamp duty exemptions on loan agreements and instruments of transfer granted to home purchasers.
Stamp duty exemption is now also applicable to “rescue contractors”, which are contractors who take over abandoned projects. This exemption will be applicable for loan agreements and instruments of transfer executed from Jan 1, 2021, to Dec 31, 2025, for abandoned housing projects certified by the Ministry of Housing and Local Government.
A provision of RM1.2 billion will be allocated for comfortable and quality housing for the low-income group, including RM500 million for the construction of 14,000 low-cost housing units under the People’s Housing Programme and RM315 million for the construction of 3,000 units of Rumah Mesra Rakyat by Syarikat Perumahan Nasional Bhd.
Another RM125 million will be spent on the maintenance of low-cost and medium-low stratified housing, repair work on dilapidated houses and homes damaged by natural disasters. The Malaysia Civil Servants Housing Programme will get an injection RM310 million.
Finally, the government said it will be collaborating with select financial institutions to provide an RTO scheme, effective until 2022.
Full details on this possible scheme has yet to be announced, but the finance minister said it would involve 5,000 units under the existing 1Malaysia People’s Housing Scheme (PR1MA) with a total value of more than RM1 billion. These units will be reserved for first-home buyers only, he said.
Meanwhile, the Penang state government has expressed appreciation for federal government’s initiative in introducing the RTO scheme.
State Housing, Local Government and Town and Country Planning Committee chairman Jagdeep Singh Deo welcomed the move as a step in the right direction, while at the same time pointing out Penang’s own success with the scheme.
He said that Penang had introduced the RTO scheme in 2014 to enable more people to own their first home, and it has helped put many Penangites on the path to home ownership, with zero interest rate, which will be realised in the next 10 to 20 years.
To date, there are 2,474 RTO housing units throughout Penang, which is almost half of the number of RTO housing units proposed during the Budget 2021 announcement, Jagdeep said.
Another big piece of news is the revival of the High Speed Rail (HSR) project between Kuala Lumpur and Singapore, which is expected to have a substantial multiplier effect on development and urban growth for many new areas in the country.
In a scenario where house prices are starting to depress from prolonged economic and social strife, the return of the HSR project to the table could provide a welcomed shot in the arm for the property market.