Deloitte’s business tax partner has provided suggestions on how the Budget 2017 can tackle the home ownership issue. The current level of house building in the affordable segment is insufficient to meet demand. Apart from that, developers are finding it difficult to build affordable homes due to increasing land, construction and compliance costs.

To contain the rising costs, the Government could consider alienating and selling state land at lower prices for the developers to develop affordable homes. Apart from that, it could also consider adopting the Industrialised Building System (IBS) for affordable housing programmes. It could provide bigger contractors with access to the IBS Promotion Fund to kickstart larger projects and also provide enhanced tax incentives

The Government should also make it easier for house-owning aspirants to purchase a house by reviewing incentives to encourage house purchase. For example, the housing loan interest relief of RM10,000 per annum for three years that was introduced in 2010 and the 50% stamp duty exemption on loan agreements for residential properties valued up to RM500,000.

The Government should also consider reintroducing the Developer Interest Bearing Scheme (DIBS) to temper the escalating real property prices in Malaysia. To prevent speculators from taking advantage, DIBS should be targeted to first-time home buyers for properties capped at RM500,000. Apart from that, the Government should consider implementing schemes similar to the First Home Deposit Scheme (MyDeposit).

The Government should also consider expanding the rent to own (RTO) scheme to other affordable housing programmes. Currently, the RTO scheme allows buyers who cannot obtain a housing loan to buy a house under PR1MA.

The proposal to increase withdrawal from the Employees Provident Fund (EPF) account to fund the purchase of a house should be considered with caution as it will reduce the buyers’ future retirement savings. It should only be allowed for first-time buyers of affordable homes and to curb any abuse, part of the proceeds should be redeposited to their EPF account based on the additional amount withdrawn, if the house is sold by the owners later.

Source: The Star Online, 11 October 2016