No RM1 million price floor for foreign buyers in Iskandar, says report
January 20, 2014
Foreigners planning to purchase property in Johor's Iskandar region will soon be exempted from the minimum purchase rule of RM1 million, Singapore's Straits Times reported today.
Quoting an industry source, the daily said that projects approved by Johor authorities before May 1 this year would be exempted from the ruling, first announced by Prime Minister Datuk Seri Najib Razak when tabling the Budget 2014 last Octover.
Under the new rule, the minimum value of properties that foreigners could buy is doubled to RM1 million, from RM500,000, as a measure to address rising property prices.
Najib had also announced that Real Property Gain Tax, or RPGT for non-Malaysians, is imposed at 30% on the gains from properties disposed within 5 years, while for disposals in the sixth and subsequent years, RPGT is imposed at 5%.
The deferment of the ruling will come as a relief to property developers in Malaysia who have already started on their projects, reported The Straits Times.
"They (Johor's state authorities) understand that the market is a bit shaken by these measures, particularly the projects that have gone quite far ahead," the paper quoted a source as saying.
"There's a tendency now to let them go through and extend the cut-off point to May 1. So developers that have submitted and received approval before that should be safe."
The exemption is expected to be announced in a few weeks.
According to The Straits Times, the minimum price announcement had "sparked frustration" among developers, upset that they would be forced to amend their projects, and leaving them no choice but to build bigger units to price the property at RM1 million.
Smaller property developers could be the hardest hit as they have limited land space.
"(These developers) have smaller parcels of land with limited capital. Although their traditional market is local buyers, foreigners could still be potential buyers," the daily quoted an executive from a property firm in Malaysia.
"But now they have to make the hard choice between making bigger units which could erode margins to woo foreigners or completely lose out on the foreign buyer segment. They are in a dilemma.
The paper also reported of speculations that RPGT could also be adjusted as developers worry about property market affected by the new measures announced by Putrajaya.
"The main thing here is that the policy makers need to make sure they don't kill the market by making potential investors nervous about Iskandar," a senior executive from an Iskandar told The Straits Times.
"We are comforted that, to some extent, they are being considerate to the businesses by making these adjustments." – January 20, 2014
