Some other anti-speculation measures introduced by the government:
Fly-by-night developers targeted. Housing license project deposits of 3% of total estimated project cost were recently introduced. A MYR 500,000 fine, plus maximum of three-year jail term for developers who abandon projects, have been proposed by the Housing and Local Government Ministry.
Capital gains tax rises. On January 1, 2014, the Real Property Gains Tax (RPGT) rose from 15% to 30% on properties sold within three years from purchase.
Taxes on gains on properties sold after four to five years rose to 20% and 15%, respectively. No RPGT will be imposed on citizens for properties sold after six or more years, while companies will be taxed at 5%.
For non-citizens, RPGT on properties sold within a holding period of up to five years is 30%, while RPGT on properties sold within six years or more from purchase is 5%.
The end of the Developer’s Interest Bearing Scheme (DIBS). The government has forbidden banks from offering financing via the DIBS, introduced in 2009 to boost condominium sales, where the developer paid the interest on buyers’ loans during construction of a project. DIBS-financed projects have tended to be significantly more expensive than others, as their prices include financing costs and reflect future property values. According to some, the schemes distorted the market, and in any case, they certainly added to buyers´ liquidity.
Bulk sales. The Malaysian government will soon require property developers to obtain permission before making bulk sales of more than four units. The move is aimed at curbing rising property speculation, and to give ordinary individuals an equal opportunity to buy houses.
The introduction of the new cooling measures is expected to tone down transactions in the property market. This also extends to the leasing market, especially in the prime locations, which, according to Knight Frank, “is also expected to continue facing challenges as an estimated 6,277 units are scheduled for completion by end-2014”.
Tougher restrictions on foreign buyers
The Malaysian government has partly retreated from its December 2006 liberalization of foreign property purchases. In January 2010, the price floor below which foreign buyers cannot buy was hiked to MYR 500,000, twice the previous level. From January 2014 it was hiked again to MYR 1 million (US$ 302,892). Foreign purchases above the threshold are placed under the “purview of the State Authorities” under the regulations, with approval expected to take one to two months.
According to Knight Frank Malaysia, the increase in floor price is not likely to slow the increasing demand for Malaysian property.
Aside from this pricing threshold, there are no other restrictions that hinder non-resident foreign buyers in Malaysia. Malaysia along with Hong Kong and Singapore is one of the Asia-Pacific countries that imposes minimal restrictions on foreign property buyers (see Knight Frank´s July 2013 Asia-Pacific Residential Review).
There has been an upward trend in “Malaysia My Second Home” (MM2H) applications in recent years. The number of application approvals increased to 3,227 in 2012, from 2,387 in 2011, 1,499 in 2010. From 2002 to 2012, the “Malaysia My Second Home” (MM2H) programme attracted 19,488 foreign buyers.
As of November 2013, around 22,320 foreigners were given long-stay approvals under the MM2H program. Most foreign buyers (out of the 122 countries) came from China (4,187 participants), Japan (2,880), Bangladesh (2,603), United Kingdom (2,016) and Iran (1,266).
