Focus MALAYSIA
THE WEEK OF MARCH 1, 2014 – MARCH
7, 2014
assets
Buyers database to capture tax evaders and multiple-home owners enjoying higher loan-to-value ratio
WHILE the jury is still out on
the effectiveness of the four-unit limit on the purchase of property to curb
excessive speculation, the National Housing Department (NHD) reveals this
directive is part of a bigger plan to create a mechanism to monitor future
dealings in the industry to cultivate a more sustainable housing sector.
Its director-general
Datuk Mohamad Yusoff Ghazali tells FocusM the measures will enable
the ministry to build a database of buyers which will be shared with the Inland
Revenue Board and banks in a move to capture tax evaders and multiple-home
owners who have been enjoying higher (LTV) ratio than they should.
“At present, many are
making huge profits flipping property and not paying any tax on income earned
from it. Also, many third or more home
loan applications have been processed at a higher LTV based on the credit
analysis of the applicant instead of the number of homes owned,’ claims Yusoff.
He explains that the
developer will now be required to make an application t the Ministry of Urban
Wellbeing, Housing and Local Government’s (MHLG) Controller of Housing seeking
approval for sales of property to an individual exceeding four units. The conditions of approval are pending a
check on the purchaser’s previous track record and the ability to prove the
purchase is for long-term investment.
“For now, it will take up
to a maximum of seven days for approval, but as we build up our database,
approval will be faster, maybe even an instant online check in the future,”
says the recently-appointed director-general.
He adds that based on
Section 12, Act 118 of the Housing Development (Control and Licensing) Act
1966, pertaining to the powers of the minister, the ministry has the discretion
to reject an application for purchase of over four units, if it is deemed to be for
speculative purposes.
Safeguarding
the people’s interest
Yusoff stresses that this
move is to provide first-time house buyers a better chance to purchase property
at a reasonable price, as the ministry has received feedback from the public on
the “ridiculous upsurge” of house prices.
He adds it is the government’s duty to safeguard the interest of the
people, especially on issues of basic necessities such as housing needs.
“We acknowledge that
property investment clubs are largely the cause of such excessive
speculation. While our investigations
can find nothing illegal with respect to their activities, we have the support of
Rehda (Real Estate and Housing Developers’ Association of Malaysia) and Shareda
(Sabah Housing and Real Estate Developers Association) in implementing this
move,” he explains.
FocusM recently highlighted the
activities of property investment clubs and how their modus operandi is a
contributing factor to the rising prices of property locally.
Aimed at curbing the
speculative activities of property investment clubs, the four-unit limit move
was announced by its minister Datuk Abdul Rahman Dahlan who revealed the MHLG
was still in talks with Rehda and was expected announce the measure in a month.
Yusoff confirms that the
Companies Commission of Malaysia is spearheading a committee comprising (BNM)
and the commercial crime investigation department of the Royal Malaysian Police
to scrutinise the activities of these investment clubs and seek avenue to clamp
down on them.
No dampener
However, Yusoff refutes
claims that the directive could further dampen the property market, which has
already slowed down due to the cooling measures put in place via Budget
2014. Adding that the process takes a
mere seven days or less, therefore, any genuine institutional buyer, based on
the country’s economic fundamentals and the viability of the development, would
still pursue the purchase.
“If these allegations of
dampening the market are true, it means there are many such speculators and
investor clubs operating in our property market, which are extremely unhealthy,”
he points out.
At present, under Section 7 (f) (Form 7F) of Act
118, of the Housing Development (Control and Licensing) Act 1966,
MHLG requires the submission of a list of buyers to up uploaded in a specified
format four times a year from the previous twice a year.
Other new information
required include the
financial details of the project comprising the account number of the Housing
Development Account (HDA), HAD balances, bank name and brance, scheduled
payment certificate by architect and other expenses, and the details of the
home sales which include the latest total value.
These mechanisms have
been put in place as part of the government’s efforts with developers to
eradicate abandoned housing projects.
Yusoff explains that this directive brought about a situation whereby
certain developers would submit lists with random names, and sometimes
comprising details of staff and family members ina bid to hasten the release of
the bridging loan.
He says the setting up of
a database for purchasers will eradicate this situation as well, as duplicate
names would be investigated.
Yusoff warns those aiming
to circumvent the system by making repeat purchases of four units or fewer a
day, they will be brought to book once the system is in place.
“We intend to work with
the respective state governments to capture sales data as well. Those who circumvented the initial
weeding-out stage will be caught when they try to sell their houses during the
title transfer stage,” he warns.
Transparency
key to healthier market
Allstones Group Asia
chairmen and group CEO KH Sim calls on the government to include the cost of
homes in its proposed database of housebuyers.
He tells FocusM
that the authorities can cultivate a healthier property market by implementing
sustainable methods such as the creation of the database of purchasers, which
should include details of transacted property prices, to be released in a timely manner to
ensure there is transparency to all parties, including property
buyers, of what are currently offered in the market.
He says this information
should also be shared with analysts covering listed property developers and
banks so that they will be in a better position to monitor the loan
portfolios. On the developers’ front, he
explains that such data will enable them to be further informed of market
performance, and thus be able to better gauge the supply / demand situation
when pricing their products.
“On the whole, by
ensuring this database is up-to-date, we believe that it will eventually lead
to fewer abandoned projects that have poor sales and wrong product mix,” he
says.
Lauding the move to
monitor bulk purchasers, Sim suggests the government also enforce the timely
submission of bulk sales by developers to property investment clubs and
discounts given.
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