‘New’ RPGT to ‘assist’ unsold units reduction?

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I received messages from a few friends as soon the below measure were announced: RPGT on gains from disposals of properties and shares in property holding companies (5% for individual and 10% for companies) even for 6th year onwards starting Jan 1 2019. “Is the government really that desperate for money?” Well, some say that it’s a “Robin Hood” budget too. There is now an additional exemption. Malaysian property owners who dispose of their residential properties priced below RM200,000 will not get any RPGT charged, as long as it’s 6th year onwards. As for the ‘historical’ properties, the valuation in year 2000 will be used. Earlier article here. RPGT based on year 2000 as valuation Perhaps we look at some industry leaders’ views.

Article in Edgeprop.my here. Malaysian Institute of Estate Agents (MIEA) President-elect Lim Boon Ping said, “Imposing RPGT for sales beyond the fifth year of acquisition will definitely discourage people to sell their properties especially in a soft market but it could help to cool housing price growth which has exceeded the majority wage earners’ affordability.”

Chur Associates founder and managing partner Chris Tan concurred, saying that it will now be more difficult for property owners to decide whether to sell or not and to determine the asking price as they will need to take the 5% RPGT (10% for company owners) into consideration.

Malaysian Institute of Professional Estate Agents and Consultants (MIPEAC) deputy president See Kok Loong said that eventually, property owners with holding power will choose not to sell their properties or may want a higher price to cover the tax. However, the market is expected to adjust itself in the long run. For a full list of all other comments, do refer to Article in Edgeprop.my

I think one main thing stands out from all these comments. It’s generally going to stop people who may have wanted to sell but is not looking at selling below market price. This meant that the supply of properties in the market will be reduced very slightly. It meant that people looking for property to buy will be ‘pushed’ towards the available supply instead. Perhaps the government’s main aim was the reduction of the unsold inventory which is at a record high (earlier article here) and not the RPGT gains. One thing’s for sure. If the existing stock in the market is not what the buyers want, then the wealthier ones will be willing to pay higher for a property they want. Transactions wise, it may still show an increasing property price trend. The less wealthier ones may just keep waiting. This is why it’s important for the government to quickly outline its plans for the affordable homes too. Happy understanding.

written on 3 Jan 2019

Next suggested article: Worrying overhang but should clear over next two years

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