E&O plans Klang Valley township

26 September 2013

Eastern & Oriental Bhd (E&O) is looking at a vital new growth engine by building its first township in the Klang Valley.

The Penang-based developer is in talks with its major shareholder, Sime Darby Bhd, to buy 55ha of land in Sungai Buloh, Selangor.

The latter owns 32 per cent of E&O. The plot is part of the larger 341ha under Sime Darby’s Elmina West estate off the Guthrie Corridor Expressway.

Both parties yesterday sealed a memorandum of agreement to facilitate discussions and valuation on the land acquisition.

A firm sale and purchase agreement is expected by March next year, E&O told Bursa Malaysia yesterday.

The company has been busier in Penang with key projects such as Seri Tanjung Pinang, although it also owns tracts of land with smallscale projects in the Klang Valley.

It is also developing 85ha of land at Medini Central in Iskandar Malaysia, with an estimated gross development value of RM3.5 billion.

E&O is reportedly targeting to launch RM1.5 billion to RM2 billion of property projects a year from financial year ending March 31 2014 to 2016.

This will be increased to RM3 billion to RM4 billion worth of launches to achieve sustainable net profits of RM270 million to RM300 million from 2017 onwards.

If it materialises, the freehold Sungai Buloh land will be its maiden township project in the Klang Valley, the company said.

The project will be based entirely on a wellness theme, comprising both commercial real estate and lifestyle residential development.

“The development will offer E&O ample opportunity to deliver unique wellness products that meet the aspirational lifestyle needs of an increasingly discerning market,” it said.

BT

Full article: http://www.malaysia-chronicle.com/index.php?option=com_k2&view=item&id=166291:eo-plans-klang-valley-township&Itemid=3#ixzz2fxlxfiE8
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Tips on buying your first property

September 23, 2013

The first property purchased may be the largest purchase made in a lifetime and getting the process right will be the best way to save money.

by Shaun Lee

PETALING JAYA: In this two-part series, we want to discuss the Top Five Tips that you ABSOLUTELY need to be aware of when buying your first property.

Buying your first property be it for own stay or for investment can be very intimidating yet exciting at the same time.

This is not unusual for most of us as buying a house will probably be one of the single largest purchases you would make in your lifetime, and along with the mortgage required for it, getting the whole process right will be one of the biggest ways to save money.

Tip 1: Defining Objectives One must be crystal clear about one’s objectives when buying your property. The two main objectives are:

(a) For own stay

When it comes to buying your first home, it’s very easy to get carried away with finding the perfect home. Sorry to burst your bubble, but perfection does not exist. So be prepared to compromise. You need to be realistic with what you can afford given your budget.

(b) For investment

If you are buying for investment, you then need to be clear if you are investing for Capital Appreciation (rising price of property) or for Rental Returns.

As a general rule of thumb, if you are still young with high future earnings potential, you should focus on properties which are likely to provide the highest Capital Appreciation. But if you are approaching retirement, you should be looking at properties which will preserve its value yet give good Rental Returns to fund your retirement.

If you are buying for Capital Appreciation, one would usually go for off-plan properties (properties which are sold before they are complete).

However, things have changed in the past few years especially in the Klang Valley where there is currently an oversupply situation therefore making it very tricky to “flip” properties (flipping is a common term used to describe buying a property on a short-term speculative basis) immediately on completion.

An advantage of buying properties off-plan is that developers usually have very attractive Developer Interest Bearing Schemes (DIBS), making it very affordable for buyers.

Under the DIBS, the buyer only has to pay the 10% down payment on signing the sale and purchase agreement (SPA) (or 30% if you already have two outstanding loans), and nothing else until you get the keys to your unit. So you don’t have to make any progressive payments during the construction period (progressive payments are payments made to finance a housing loan during the course of construction.

Typically, you only pay the interest element of your loan during the construction period).

The public should be aware that although this scheme seems to be very attractive, never forget that the developer would have factored in their finance cost during the construction period into the pricing of the property. Other advantages of buying off-plan is that developers will usually give a lot of “freebies” such as free legal costs for your SPA and sometimes even for your loan agreements too. This will help reduce your initial capital outlay.

Tip 2: Loan Application Most people will look for property first, then seek financing.

This is a major NO! NO! One should always find out how much you are able to borrow from the bank FIRST before going out to look for property. If you don’t know what you can afford, you are more likely to screw up.

You can do this simply by walking in to most banks (we recommend you walk in to a few to build the relationship with several loan officers as they will come in handy when you need to check the valuation of your property. Also, spread the risk (in case one bank rejects your application), applying to many banks will help you get a more competitive rate.

Don’t be afraid to let your loan officers know what rates the other banks are offering you, because this keeps them competitive too.

Some banks are known to undercut others but this has to be done before the formal offer letter is issued.

Stay tuned next week for the rest of our top tips!

This content is provided by FMT content provider The Malaysian Reserve

http://www.freemalaysiatoday.com/category/business/2013/09/23/tips-on-buying-your-first-property/

Size Matters – Beware of Property Square Feet Mismatches (Agents/Negotiators, please take note....)

Published: 22nd May, 2012 

Updated: 7th Aug, 2013

Imagine this, it’s a Saturday afternoon and you have arranged for a viewing of a condo unit in a development that you have had your eyes (and heart) on for a while. The development has good security, lush mature gardens, with gorgeous water features along with tranquil plants to match.

This particular unit that you have arranged to view was advertised in The Star Classifieds as a 2,000sf duplex unit for sale at RM650k negotiable. Even before you step foot into the unit, you know the feeling is right. And lo and behold after viewing the inside of the unit, you decide to make an offer for the place.

The agent was quick to reduce to price to RM600k but the figure you had in mind was closer to RM580k so you negotiated further, but after rounds of lengthy negotiations the final price was agreed at RM590k (though you did ask for ALL the furniture in the house, white goods and LCD TV! at that price).

Now you proceeded to request for a copy of the original Sale & Purchase Agreement from the seller to confirm the square footage of the unit (It’s best practice to do so before paying the 2% earnest/booking deposit as it safeguards you from potential disputes with the seller. Alternatively, you can do a manual insertion on the booking receipt that the offer is subject to confirmation of the actual square footage of the unit).When you finally get hold of the original Sale & Purchase Agreement, it came to your attention that the unit is only 1,926sf in size! So you asked the agent, “What happened to the other 74sf?”

Size Matters

74sf does not sound like a lot. But here is the math behind it:

• At RM590,000 for 2,000sf, the price per sq foot is RM295.00
• At RM590,000 for 1,926sf, the price per sq foot is RM306.33
• Difference in price per sq foot is RM11.33
• At the original agreed price of RM295 psf, you should only be paying RM568,170 (RM295 x 1,926sf) for the unit i.e. RM21,830 less than the agreed price.

The sale falls through as both parties could not agree on the price. You were left high and dry. So was the agent who failed to seal the deal.

So when making an offer for a place, confirm all that you need to know with the seller before paying your earnest/booking deposit. It’s only right (and fair) to know what you are actually getting before you could begin negotiations. Otherwise, it will end up being a guessing game that is to your clear disadvantage!

Real estate agents, if you are reading this, please ensure you confirm the unit size of the properties that you are marketing so you are not left high and dry when you are so close to closing a sale. It’s only in everybody’s interest for you to do so!

Bank Negara Malaysia’s 5th July 2013 Announcement Explained – Tightening Lending Conditions

Published: 15th Jul, 2013 
Updated: 7th Aug, 2013

On Friday the 5th of July 2013, Bank Negara Malaysia (BNM or Malaysia’s Central Bank) announced the following measures ‘to reinforce responsible lending practices by key credit providers’, essentially tightening up regulations for banks and co-ops (ie. koperasi-es) lending money to consumers, effective immediately.
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Why tighten lending conditions?

The role of the central bank in Malaysia is to ensure stability of the financial system (banks, co-ops, credit institutions, agencies, insurers, and us the consumers) so that Malaysia’s economy is not harmed by shocks to the system. One of the largest possible shocks to the system is a wide-scale inability of consumers to repay their household debts due to being too highly leveraged (that is, disposable income becomes insufficient to cover debt servicing installments).

If a large number of households are unable to service their debt, banks and credit institutions will have to suffer losses due to debt write-offs, and then have insufficient capital to lend money to creditworthy households and businesses, hurting the economy.

According to BNM, household debts have been increasing at an annual rate of 12% over the last five years, well over the corresponding national GDP (or other economic indicator) increases, in part due to the offering of financial products with excessive tenures of 45 years for house financing and 25 years for personal financing, as well as the growth of pre-approved loans.

While long tenure loans actually imply lower monthly installment amounts (supposedly making it easier to service), the increased overall household indebtedness from these products comes from a parallel shift upwards in the ability of a household to take on more debt.

To put it simply, with a longer tenure loan, households can take on a larger debt burden than they could with a shorter tenure loan with the same installment amount.

Example:

Assume the maximum tenure for personal financing is 25 years set by banks and personal financing interest rates are 10% p.a. flat (for the sake of easy calculations).

If a bank or credit institution assesses my current financial situation (ie Income – Commitments and Expected Expenses) to only be able to support a maximum of RM500 installment a month, I can borrow as much as RM66,666. If the banks’ maximum allowable tenure for personal financing was lowered to 10 years, I can only borrow a maximum of RM40,000, reducing my net indebtedness. (We’ve included a personal loan calculator below, feel free to check our calculations).

1. Maximum Personal Loan / Financing Tenure set at 10 years

With Personal Financing reduced from the 25 year tenure available from some banks to a maximum of 10 years, consumers will now either have to increase their monthly installment to get the same amount of financing, or settle for a lower amount of financing.

2. Maximum Property Loan / Mortgage Tenure set at 35 years

Gone are the 40 year tenures for home financing, making home loans between 15 – 35 year tenures.

3. Prohibition on the offering of pre-approved personal financing

Banks and lenders will now have to request for your personal details and consent in order to get a credit assessment and approval for lending, versus the previous practice of pre-approved loans.

http://savemoney.my/bank-negara-malaysia-5th-july-2013-announcement-explained/

Malaysia is pro-tenant in practice

Jun 22, 2006

 Malaysian rental market practice is PRO-TENANT, even if the law is pro-landlord, the court system is inefficient and slow.

Rents: Can landlord and tenant freely agree rents in Malaysia?

With the passage of the Control of Rent (Repeal) Act of 1997, rent control was totally abolished in 2000. Although the law states that rents should be freely negotiated, rent increases can be appealed to courts if the tenant feels it is too much.

Deposits

Tenants usually pay a security deposit of two to three months’ gross rental and another ½ month of rent as utility deposit. Rent is usually paid one month in advance.

What rights do landlords and tenants have in Malaysia, especially as to duration of contract, and eviction?

Tenancy agreements usually last for a year. Renewal with a possible rent adjustment must be mutually agreed upon. A notice to vacate must be given to the tenant three months before the expiration of the contract. The landlord has the right to vacant possession of the premises from the tenant without payment of any compensation.

Tenancies are exempt from government registration. But detailed written contracts are encouraged to protect the landlord.

EVICTION FOR NON-PAYMENT OF RENT
Duration until completion of service of process	60
Duration of trial	90
Duration of enforcement	120
Total Days to Evict Tenant	270
Courts: The Lex Mundi Project

How effective is the Malaysian legal system?

Landlord and tenant issues and distress are handled by Sessions Courts. The court system is inefficient and is very costly compared to the amount to be recovered.

Even if it seems that landlords do not have a problem in evicting non-paying tenants, recovering unpaid rents is a major problem.

In 1997, a Control of Rent (Repeal) Act was passed aiming to help landlords to recover possession of the property and curb abuses by the tenants. The law has done very little to address both.

Legislation

There is no specific landlord and tenant law in Malaysia. Certain provisions of the National Land Code 1965 contain provisions on leases and tenancies. Tenancy agreements are covered by the Contract Act 1950; eviction of tenants is covered in a couple sections in the Specific Relief Act. These laws are vague and toothless, usually to the advantage of the tenant.


http://www.globalpropertyguide.com/Asia/malaysia/Landlord-and-Tenant

Measures to COOL M'sia property market may spur people to buy overseas - Henry Butcher Full article: http://www.malaysia-chronicle.com/index.php?option=com_k2&view=item&id=162251:measures-to-cool-msia-property-market-may-spur-people-to-buy-overseas-henry-butcher&Itemid=3#ixzz2fGVuKig7 Follow us: @MsiaChronicle on Twitter

18 September 2013

STRICTER policies by the government to cool the hot property market will spur buying interest overseas, says Henry Butcher Malaysia chief.

This is because more locals would likely to channel their funds overseas and invest in properties.

"New cooling measures will only encourage people to start buying overseas, especially in London where the economy is improving. When Hong Kong and Singapore introduced cooling measures to curb speculation, people started to buy in foreign markets," Lim Eng Chong said.

He was speaking at a briefing yesterday to introduce a new project in London, called City Island, by UK developer Ballymore Group.

Maybank Investment Bank (IB) Research recently downgraded its outlook for the domestic property sector amid uncertainties posed by the cooling measures.

The research house is predicting another round of government's policy tightening to rein in household debt, despite Bank Negara Malaysia insisting that its measures initiated in July have started to work.

Maybank IB warned of further measures to cool down the property market amid concerns of a bubble, including a rise in real property gains tax and stamp duties, which is most likely to be announced in 2014 Budget.

Lim also said that the weakening of the ringgit against the US dollar will encourage Malaysians to buy properties overseas.

"We expect the pound and Australian dollar to strengthen and this will create a stimulus for people to invest in foreign properties. Investors will make more money when they buy foreign properties because of property value appreciation and forex (foreign currency) gain," he said.

The ringgit hit a fresh three-year low on August 14, loosing as much as 0.4 per cent to 3.272 per US dollar, amid broad weakness in emerging Asian currencies.

Analysts expect the local currency to weaken to 3.30 in the next six months.

BT

Full article: http://www.malaysia-chronicle.com/index.php?option=com_k2&view=item&id=162251:measures-to-cool-msia-property-market-may-spur-people-to-buy-overseas-henry-butcher&Itemid=3#ixzz2fGWPGftp
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Property gains tax in M’sia

September 18, 2013

Owning property can be either a liability or a great investment; either way, if you are planning to dispose of your property, you might be wondering if you will get taxed on the disposal of a property.

By Hann Liew

Owning property can be either a liability or a great investment; either way, if you are planning to dispose of your property (whether it is to cut your losses or to make a profit), you might be wondering if you will get taxed on the disposal of a property. To answer this, SaveMoney.my explains Real Property Gains Tax in Malaysia in this week’s guide.

What is Real Property Gains Tax (RPGT)?
Real Property Gains Tax is a form of tax levied by the Inland Revenue Board of Malaysia (Lembaga Hasil Dalam Negeri) on net capital gains derived from the disposal of real property (which generally means any land and/or building).

What is your net capital gain? To calculate this, you are allowed to subtract certain expenses from the gross capital gain (don’t forget to keep the bills!) such as:

• Legal fees;

• Real estate fees (i.e. sales commission) incurred to sell the property (typically between 2% – 3% of the selling price);

• Administrative fees; and

• Expenditure incurred to maintain / upgrade the property. This can include upgrade works done to the property such as renovations and interior design works.

After this point, the maximum allowable deduction here is the larger of RM10,000 or 10% of the net capital gain.

Why do we have RPGT in Malaysia?
There are many reasons why RPGT is imposed. One of the more significant reasons why the government imposes this tax is to curb property speculation, and in turn to avoid property bubbles forming. However from time to time, the government may decide to increase or decrease RPGT to suit their agenda, e.g. they could reduce RPGT to encourage investments (this actually happened for a period of time between 1 April 2007 – 31 December 2009, wherein property transactions during this period were exempted from RPGT to spur investments), which is likely to happen if the economy needs stimulation.

Another obvious reason is that RPGT is a source of revenue for the government.

When and where do you pay RPGT?
Given the nature of RPGT, i.e. it is a tax on capital gains from disposal of property, it can obviously only be paid after you have sold off the property. You are allowed a 60-day grace period, within this time you must settle the tax that you are meant to pay from your sale of property.

Your conveyancing lawyer or tax agent should be able to submit the relevant CHKTK form on your behalf and pay any dues to Lembaga Hasil Dalam Negeri (LHDN) from the proceeds of your property sale. However, it is always best to make sure, so do check with your lawyers or tax agents on this matter, rather than assuming and then getting into trouble!

Now if you are wondering just how RPGT is calculated, and how much you’ll have to pay, stay tuned for the next instalment of SaveMoney.my’s guide where we will show you just how to figure that out!

Hann Liew is the Founder and Editor-in-Chief of SaveMoney.my, an online consumer advice portal which aims to help Malaysians save money through smart (and most of the time painless) savings in their daily banking, technology, and lifestyle spending habits.

http://www.freemalaysiatoday.com/category/leisure/2013/09/18/property-gains-tax-in-msia/