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Saturday, 19 October 2013

Malaysia's Budget to increase real property gains tax (RPGT) will dampen market short term but rise up prices eventually

GEORGE TOWN: The Federal Government should leave real property gains tax (RPGT) alone in the 2014 Budget.

New Bob Group director Dr Lee Ville said that if the RPGT is increased, then it will dampen the property market, which has already started to cool.

Lee is also president of ERA Malaysia, which is the world’s leading real estate brand.

It is expected that the Federal Government will raise the RPGT rate to 30% from 15% for properties sold within two years, and 15% from 10% for properties sold within three to four years.

For properties sold in the fifth and sixth year, the RPGT is expected to remain unchanged at the current 10% and zero RPGT respectively.

“The anticipated RPGT will not deter foreigners from buying, as they are allowed to dispose their properties only after the third year,” he said.

Mont’Kiara and Sri Hartamas apartments Kuala Lumpur

Lee said the anticipated RPGT would work in the initial stages, curbing speculation in the short term.

“If implemented, developers will respond by reducing their delivery of residential housing projects.

“This will eventually lead to a shortage, triggering demand and causing property prices to rise up again in the long term,” he said.

Lee said the Federal Government should look into controlling price, other than cement, of essential building materials, as the rising price of raw materials was a reason for soaring property prices.

Meanwhile, Raine & Horne Malaysia director Michael Geh (pic) said the RPGT would hurt current speculators who had already bought properties, and not the future ones who had yet to buy properties.

“If the existing speculators are hurt, the banks will also be dragged down.

“The Federal Government should look at curbing speculation through other means such as providing middle-income homes with an effective delivery mechanism that ensures only the eligible income category benefits,” Geh said.

Contributed by  BY DAVID TAN The Star/Asia News Network

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