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RPGT – 30% flat rate for properties sold within 10 years.

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Don’t sweat, yet. This was proposed by the National House Buyers’ Association. It’s honorary secretary-general Chang Kim Loong said that further tightening is necessary despite the falling transaction numbers. This is because there are still property speculation. His opines that if the buyers are really buying for own stay, none of them would sell within 10 years. This is because speculators normally hold it for 3 years (construction stage) or up to 6 years to escape RPGT. Thus, if RPGT is set at 30% for properties sold within 10 years from data of acquisition, this would deter speculators. He is proposing this for 3rd property onwards. genuine long-term investors who buy for their children  would not normally sell so soon; within 10 years. Thus, ONLY those who sells their properties after 10 years can be exempted from RPGT.

CB Richard Ellis Malaysia group executive director Paul Khong is however on the other end versus Chang. He hopes that there would be some relaxation of the property cooling measures since the tightening from 2012/2013. Instead of increasing the RPGT from currently, he suggested that RPGT be reduced instead. He said this will will enable the investment market to move up but still be healthy. Some suggestions included an easier financing to low to mid priced properties and reintroduction of DIBS for first time house buyers. I do agree on the last part. However, only for FIRST TIME home buyers.

rpgtPersonally, I do not think increasing the number of years from 5 to 10 would curb speculation. In fact I think this will mean that property investment would be less viable. As soon as this is implemented, the overall market would be dampened even further. Looking at the transactions today, do you think there’s no demand or people are still waiting for more affordable properties? I think it’s more of the latter. If RPGT is extended, the current buyers may choose to do two things. One, continue holding until the property itself becomes OLD. Second, sell it higher due to the RPGT. In both instances, the first time home buyers do not benefit. As for new properties, even first time home buyers would be thinking twice because as soon as they buy, they could not upgrade the property without paying a huge RPGT for ten years. From the day I graduated till today, I have worked over 16 years. During this period, I have moved homes 8 times. Not many of my friends have stayed in the same property that they bought for over 10 years yet. Majority of whom have upgraded after a few years.

I WANT RPGT to stay. I hate speculations. It destabilises the market and may cause bubble to build fast. However, I do not think 10 years is a wise suggestion for the overall market for the sellers, buyers and even developers. Perhaps even the government does not benefit from this.

written on 8 Oct 2014

Next suggested article: With RPGT, no more property investment

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