Budget 2022: What's In It For The Real Estate Sector and Property Buyers?

CompareHero.my Team

CompareHero.my Team

Last updated 09 February, 2022

The recent Budget 2021 proposes a number of initiatives for the real estate industry and home buyers. Read this article to find out the key highlights and benefits that home buyers can expect to receive from the latest national budget. 

The Parliament has finally passed Budget 2021 at the policy level after 12 days of heated debate in the Dewan Rakyat. The bill will continue to be debated on the committee level on 30 November.

But even before new and improved measures were announced, Budget 2021 had already included an exhaustive list of goodies, many of which are much-needed catalysts to boost the country’s economy and help sustain the livelihood of many Malaysians. 

With a record of RM322.5 billion expenditure, Budget 2021 is the largest budget in Malaysian history. In our previous take, we concluded that Budget 2021 is an inclusive bill that offers a little bit of something - if not a lot - for everyone: the Bottom 40, Middle 40 and Top 20, small and medium enterprises (SMEs) and multinational companies.

But does the budget offer a laundry list of benefits for the real estate sector and Malaysian home buyers? Well, it’s certainly a boon for first-time home buyers; with that said, let’s take a closer look at these property-focused initiatives for more insights.

1. Are you a first-time home buyer? We’ve got some good news for you!

Buying your first house is a daunting task. The amount of lengthy paperwork, research and money involved throughout the process can seriously take a toll on someone. To top it off - there’s something innately significant about buying your first house that contributes to this added pressure when compared to other investments in life. Don’t get us wrong, your first car or first mutual fund investment could be equally important but it doesn’t carry the same emotional connection as your first house.  

But, no worries, in an effort to encourage homeownership, the Malaysian government recently announced a new benefit for first-time home buyers!

If your selected first home is below RM500,000, you are eligible for a full stamp duty exemption for memorandum of transfer documents (MOT) and loan agreements for purchase agreements starting from 1 January 2021 to 31 December 2025. 

The government is already running the Home Ownership Campaign (HOC) until May 2021, which provides a similar stamp duty exemption but limited to new launch properties. 

First introduced in 2019, the HOC initiative aims to support home seekers secure houses, as well as encourage the sales of unsold properties in Malaysia’s housing market. The HOC extension was announced during the short-term economic recovery plan, PENJANA in June after numerous industries, real estate particularly, took a heavy beating during the Movement Control Order (MCO) period. 

For more context, the HOC was initially introduced to help aspiring homeowners get a leg up in the real estate game as well as to mitigate the ongoing glut of unsold properties or overhand properties in the Malaysian market - a long-standing issue in the country. 

Here are more details of the HOC campaign: 

  • Stamp duty exemption on the instruments of transfer and loan agreement for the purchase of residential homes priced between RM300,000 to RM2.5 million (but subject to at least 10% discounts by the developer).
  • The exemption on the instrument of transfer is limited to the first RM1 million of the home price, while full stamp duty exemption is given to loan agreements effective for Sales and Purchase Agreements signed between 1 June 2020 to 31 May 2021.

Related: #NewNormal: 7 Tips To Buy A House In Malaysia During COVID-19 Pandemic

Under Budget 2021, however, the government has also extended the stamp duty exemptions to the secondary market - unlike the HOC extension which was limited to new launch properties, and this gives home buyers the opportunity to explore the subsale market.

2. Abandoned housing projects will get stamp duty extensions too

Abandoned house projects are a real serious concern in our country. According to a report by the Sun Daily, a total of 281 private housing projects comprising 73,959 housing units and involving 48,810 buyers, were confirmed to have been abandoned in Peninsular Malaysia from 2009 to June 30, 2020. That figure doesn't even include Sabah and Sarawak yet. 

To mitigate this issue, the government is extending the stamp duty exemption on loan agreements and MOT for rescue contractors (essentially new contractors who take on abandoned projects) and original buyers of abandoned houses for another five years (January 2021-2025). 

But this exemption is only applicable for abandoned housing projects certified by the Ministry of Housing and Local Government (KPKT). 

This move aims to incentivise new developers to take on half-completed property projects and accelerate the completion of said projects. It’s an obvious win for property developers, many of whom are struggling to keep their heads above water, and have seen reductions in the average sales of their businesses. For consumers or home buyers, the plus is being guaranteed a financial incentive up to 2025. 

Related: Budget 2021: What's in it for SMEs, Startups, E-commerce

3. Rent-to-Own Scheme (RTO) for PR1MA homes

Though not much information has been disclosed about this initiative, the government will work closely with selected financial institutions to provide a Rent-to-Own Scheme (RTO) worth RM1 billion. Another initiative directed at first-time home buyers, it will run until 2022 and will involve 5,000 PR1MA houses

It’s a relatively new concept in Malaysia, but the scheme was introduced in the country a few years ago to make owning a property more affordable for more Malaysians. 

Through this scheme, Malaysians can own property by first renting it, with the option to end it with a sale, giving the home seeker the rare opportunity to try the house first before deciding whether to buy it. Of course, there are pros and cons to this as well. 

This scheme also doesn’t require the initial payment of 10% downpayment associated with buying a house out. How this scheme works is that those interested in buying a property enter into a lease, a contract between the developer and the potential buyer, that dictates a certain length of time he or she will first rent the home for. The lease duration varies according to people, but some might rent it for five years, and others for longer, like 20 years. At the end of the contract, you can exercise the option to purchase the property, giving the scheme its name:rent-to-own. 

4. More housing options for the lower-income group

It’s also very encouraging to see that the government recognises the need to allocate funds to spur homeownership among the lower-income group (B40). 

Among these initiatives include:

A total of RM1.2 billion provision for the construction of comfortable and quality housing for low-income earners:

  • RM500 million to build 14,000 housing units under the People's Housing Project (PPR). 
  • RM315 million to construct 3,000 units of Rumah Mesra Rakyat built by Syarikat Perumahan Negara Bhd (SPNB).
  • RM125 million for maintenance of low and medium-low cost strata-housing and also for upgrading and repairing old houses, including those damaged by natural disasters.
  • RM310 million for Malaysia Civil Servants Housing Programme (PPAM).

The benefits and initiatives are not as exhaustive, but it’s a definite boon for first-time home seekers

We have to admit that we feel the initiatives in Budget 2021 are not as comprehensive for the housing market. The proposed benefits will help spur the growth of the real estate sector, but we still feel it falls a little short of being ‘all-encompassing’ like the actual budget. 

Either way, it’s still encouraging to see that there are initiatives aimed at incentivising homeownership among Malaysians, especially first time home buyers in these difficult times as the country continues to battle the effects of the pandemic.

For our full take on the key highlights of Budget 2021, check out our article. For more information on Budget 2021, check out our series of articles under the #Budget2021 tag series.

The CompareHero.my team is comprised of many talented individuals, sharing their knowledge, experiences and research to help others make better financial decisions.


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