HOC provides more opportunities for the locals

Malaysia reintroduces HOC, provides more opportunities for the locals

Kuala Lumpur- To bolster the economy badly hit by the COVID-19 pandemic, Prime Minister Tan Sri Muhyiddin Yassin announced that the government would start reintroducing the homeownership campaign (HOC) this month. The initial goal of HOC is to augment Malaysians’ homeownership count the whole of 2019. However, due to the onslaught of the pandemic, the Malaysian government decided to reimplement the said program this year. 

HOC provides more opportunities for the locals

According to NST sources PM Muhyiddin, the reintroduction of HOC will begin this June as the country is taking a lighter grip on movement control order (MCO). The prime minister highlighted that reintroduction of HOC is crucial to support businesses and strengthen the nation’s economy.

Included in the HOC are significant financial relief and subsidies for home buyers. PM Muhyiddin disclosed that the government is willing to weave stamp duty fees as prescribed by instruments of transfer as well as the loan agreement as long as the price of the to-be-sold residential home is between RM300, 000- RM2.5 million.

PM Muhyiddin, however, noted that the payment exemption for the instrument of transfer is limited to RM1 million only, while the full stamp exemption is only suitable for those loan agreements approved on June 01, 2020, until May 31, 2021. Aside from this, the PM also informed that all Malaysian citizens who will dispose of or sell their residential homes from June 1- December 31 of this year are exempted from paying for the Real Property Gains Tax (RPGT). The government also instructed real property developers to provide a 10% discount for all the housing units qualified in the criteria cited in the HOC’s implementing rules and regulations.

The prime minister also clarified that there is no limit in the number of properties to avail of the HOC benefits. As long as the person who will acquire a particular property is a Malaysian citizen, he is qualified for the tax exemptions, even if he will purchase multiple properties. The computation of the exemptions will apply individually in each of the properties bought.

Another salient component of the HOC is the lifting of the 70 percent financing margin limit of the third housing loan onwards for properties worth RM600, 000 and up. But PM Muhyiddin stressed that the lifting of the mentioned financing margin limit must be accorded by the internal risk management measures imposed by the different financial institutions operating in Malaysia.

The official press release of the government informed the public that the HOC would not only support local real property buyers but also significantly cut the piling backlog of unsold housing properties in the country. Based on the data released by the consulting firm Nawawi Tie Leung Property Consultants Sdn Bhd, in the second quarter of 2019 alone, more than 52,666 real properties in the country are not occupied. This figure accounts for more or less 32, 810 residential units, 1,670 SoHo (small office home office), and 18,186 serviced apartment units.

The revival of HOC is included in the Pelan Jana Semula Ekonomi Negara (PENJANA) Short-term Economic Recovery Plan crafted by the government to mitigate the impact of COVID-19. PENJANA’s short- term economic recovery is mainly laid on the 6R parameters, namely Resolve, Resilience, Restart, Recovery, Revitalize, and Reform. The stamp duty and other real tax exemptions cited in the HOC are part of PENJANA’s fourth phase mitigation effort, which is the Recovery.

Meanwhile, PM Muhyiddin stressed that aside from reaching the threshold value of RM300, 000- RM2.5 million, all real properties must also be registered first in the identified real estate authorities to qualify for the HOC. In Sabah, the manning association is the Sabah Housing and Real Estate Developers Association (SHAREDA), for Sarawak estate is the Sarawak Housing and Real Estate Developer’s Association (SHEDA), while for the properties located in the other areas in peninsular Malaysia, they must be officially registered at the Real Estate & Housing Developers’ Association Malaysia (REHDA).

After announcing the reimplementation of the HOC, PM Muhyiddin kept lull as to when the more relaxed conditional MCO will be fully lifted. A lot of people asked about the status of the country’s restriction measures as there is already a significant decline in the number of people tested positive of COVID-19 in the country. As per the government’s initial plan, the conditional MCO will run from March 18- June 09, 2020.

With the reimplementation of HOC, the government is hoping for a faster economic recovery. It is also deemed that more Malaysians will be provided with the opportunity to own affordable yet high-quality housing units this time compared to the initial implementation of the HOC last 2019.

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