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EXTENSION OF LEASEHOLD IN SELANGOR

HOW TO EXTEND YOUR LEASE FOR LEASEHOLD PROPERTIES IN SELANGOR

NEW Selangor guidelines on Property purchases by Foreigners Effective September 2014

SELANGOR imposes restrictions on foreigners buying properties in some districts

Developers and property agents were thrown into a flux last week over a new set of guidelines on property purchases in Selangor by foreigners, permanent residents (PR) and foreign companies.

Generally, the new guidelines restrict foreigners from buying all types of properties costing less than RM2mil in most of the districts inthestate.

Previously,the cap was set at RM1mil,as announced during last October’s budget. Some property developers are still in the dark over the matter while others are coming to grips with the significance of the move’s effectin an already slowing market.

The measures, outlined in a circular dated Aug 28, were effective from Sept 1 this year. The circular was signed by Department of Lands and Mines Selangor director Datuk Kamarulzaman Jamil.

According to the new guideines, residential, commercial and industrial properties are divided into three zones.

The minimum price for purchases by foreigners is based on the zones.

Foreigners, PR holders and foreign companies are only permitted to buy residential properties that are priced at a minimum RM2mil for Zone 1 and 2, and a minimum threshold of RM1mil for those located in zone 3, according to the circular.
Zone one encompasses the districts of Petaling, Gombak, Hulu Langat, Sepang and Klang.

Zone two are Kuala Selangor and Kuala Langat while the districts under zone three are Hulu Selangor and Sabak Bernam.

Besides increasing the minimum threshold, the land office permits foreigners, PR holders and foreign companies to buy strata and landed strata properties only.

“The new guidelines have raised the threshold price considerably besides putting up new barriers on the type of properties they can buy,” a developer said

New Selangor guidelines on property purchases by foreigners

In the commercial and industrial sub-segments,they are only permitted to buy propertiespricedRM3mil andabove locatedinallthe three zones.

They are barred from buying properties set aside for bumiputras. As for non-bumiputra units, they can buy not more than 10% of those units.

Agricultural land, Malay reserve land, non-strata landed residentials and auction properties are off limits.

The new guidelines also govern participants of Malaysia My Second Home programme.

They are to buy directly from the developers and not from the secondary market and are eligible to buy one residential unit only per family.

“This means the state of Selangor is going the way of Johor. Land is a state matter. While the Federal Government may propose its policies – unveiled during each budget – the individual states can go along with the measures proposed, or they can propose their own measures,” a source said.

“We saw the state authorities in Johor proposing their own rules with regard to land issues a few months after Budget 2014. We now see Selangor doing the same,” the source added.

The property source said that the Aug 28 circular seemed to be “a preemptive measure” to prevent foreign developers from entering the state in a big way.

Source: The Star online

OPR & BLR Increase from 10th July 2014

Source from www.malaysiahousingloan.com

This OPR hike may translate to an increase in the pricing of loans for consumers.

Banks had started to announce their increase in Base Lending Rate (BLR). Public Bank are one of the banks that had confirm their new BLR is 6.85% effective 10th July 2014.

Most analysts are expecting a high probability of a rate hike in 2014, which it is true. While less a handful opined that it could go up to 50bps by end of 2014. If there is a 50bps hike, one can generally expect that BLR will increase to 7.10%.

The OPR is an overnight interest rate set by BNM. It is interest rate at which a bank lends to another bank.The OPR, in turn, has an effect on employment, economic growth and inflation. It is an indicator of the health of a country’s overall economy and banking system.

If you’re a borrower, when the interest rate goes up, you need to pay more in terms of instalment. Alternatively, your term of loan (loan tenure) increases if you don’t want to change your instalment payment.

But, if you are a depositor, for example you have fixed deposit or saving account with the banks, this mean your fixed deposit and saving account dividend will be increase too.

OPR, BLR & deposit interest rate are co-related. Once OPR increase, BLR and deposit interest rates will be follow suit too.

Here is the example of how it would affect you:

Based on the example above, the 25bps hike will not be severely affect. However, over the loan period, it comes up to a substantial amount.

Green Building Index (GBI)

2014 ~ More Malaysian developers are supporting green building initiatives. Right now, we have the #GreenBuildingIndex or #GBI to evaluate the sustainability of buildings in Malaysia. The Diamond Building in Putrajaya is certified green. Here's how you can make it to the certified list, too.

How GST Will Impact Home Prices & The Property Market

With the coming implementation of Goods & Service Tax (GST) in April 2015, many Malaysians are concerned with what this bodes for prices in general. It is inevitable that home prices will also be affected. In this article, we explain how home and property prices will be affected moving forward.

To properly appreciate how GST will affect home prices, it is necessary to first understand how GST works.  Aside from GST, one must also have an understanding of the Sales Tax, which is the existing tax scheme affecting the property sector. GST will supplant the Sales Tax come April 2015.

Tax Scheme on Residential Property – The Similarities

In comparing both tax schemes, we have to first identify their similarities.

One similarity between GST and the existing Sales Tax scheme is that no taxes are charged or will be charged to the consumer on the purchase of a home / residential property. For GST, residential properties fall under the “Exempt Rated” basket of goods. (But do take note that GST will be charged to the consumer for commercial) 

However, during the creation of the final product (also known as the input stage in tax parlance), under both tax schemes, developers would incur taxes during procurement of their inputs and materials. And this is where the differences start to become apparent between both tax schemes. The tax rate for inputs and materials vary between GST and Sales Tax.

Sales Tax VS GST for Residential Properties – The Differences

Based on the Sales Tax Act of 1972, basic building materials such as bricks, cement and floor tiles fall inside First Schedule Goods, in which all the goods in this category will not be subjected to sales tax. Meanwhile, other building materials fall inside Second Schedule Goods, in which all the goods in this category will only be charged sales tax of 5%.

Under the new GST implementation, all building materials and services (E.g. Contractors, engineers) will be subject to GST with a standard rate of 6%. This will invariably raise the production cost for developers.

If you understand how GST works, you will notice that in most cases, the additional tax cost is simply passed on to the final consumer (Standard-Rated goods), or is claimed back from the government (Zero-Rated goods). But in this case (Exempt-Rated), the additional tax cost is borne by the party before the final consumer – The developer.
The developer does not have a next “victim” in the supply chain.

This seems like good news for home buyers as they do not have to pay GST when purchasing a home. However, one should not be too happy about this. It is no stretch of the imagination to think that developers would try to build in the additional tax costs into the final sale price implicitly.

Before & After GST – A Comparison

The tables below show a comparison between the cost of a new property before and after GST. Certain taxes and costs leading up to the sale to the final consumer have been simplified for this purpose.

Also, an assumption is made that developers are able to transfer 100% of all incurred tax costs over to the consumer via the sale price.

The example above shows a price increase of 3.41% for new residential properties post-GST implementation. But there is a plus point to this.

Overall, new residential properties may register a lower overall increase in tax burden compared to Commercial Properties that are Standard-Rated. This is because there still is the chance that developers may only transfer some and not all of their tax cost increases into the final retail price.

The downside to this is that where pricing for new commercial properties will be cleaner (Sales Price + GST), pricing for new residential homes would look inflated. This, in turn, will undoubtedly have a knock on effect on prices in the secondary house market.

Conclusion

As a home buyer, it pays to know what the implementation of GST might bode for home prices moving forward. If you skipped the entire article, here are all the key insights in a nutshell:

1. With GST, there should be a once-off increase in property prices across the board
2. While developers may not bill home buyers for GST, they could transfer the costs implicitly via the sale price
3. The overall price increase for new residential properties could be marginally lower than that for new commercial properties
4. The secondary home market should see a knock on effect in prices

Armed with this knowledge, you can make a better decision on when to purchase your home.

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