M40 needs housing assistance, please.

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Where household incomes are concerned, there are three groups known as the T20 (top 20%), the M40 (middle 40%) and B40 (bottom 40%). Sometimes, we may have been focusing on the B40 households so much that we have forgotten that some of the M40 households would also need assistance from the government too. This is especially the ones in the edge of the M40 income and right next to the B40 households. The monthly income of the T20, M40 and B40 are at least RM13,148, RM6,275 and RM3,000 respectively. Earlier article on B40, M40 and T20.

Article in theborneopost.com Ernst & Young Tax Consultants Sdn Bhd has urged the government to provide further housing assistance to the young Middle 40 household income group (M40). One form of assistance could be to extend the period of stamp duty exemption on the purchase of a residential property under the National Home Ownership Campaign (HOC) without a cap on property price. This should help the property market in terms of transactions.

“Secondly, the government could re-introduce personal relief on housing loan interest for a period of three consecutive years starting from the year of assessment 2020 to encourage the younger generation to own a house in Malaysia.

“While thirdly, it could provide double tax deduction on housing loan interest subsidised by employers to encourage private sector participation and increase property demand.” Please do read more about their suggestions in the Article in theborneopost.com

I personally feel that any housing assistance must ONLY be for first-time home buyers. If we look at the salary of the M40 households for example, then we should still limit the mortgage amount to 40% of the household income. For example, if the household income is RM8,000 then the maximum mortgage they should take up should just be RM3,200 per month. Thus, the cap for the home they will receive stamp duty exemption is only up till RM700,000. Image as below.

The reason this cap is needed is because I do not wish for many M40 households to buy something they may struggle to keep paying for. They may want to know that they should buy within what they could afford and if there’s a need, then upgrade in the future. In fact the so-called perfect property for them today is unlikely to be good enough in future when they transition from the M40 into the T20 for example. Happy understanding and waiting for the Budget 2020 announcement.

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