On 11th of October 2019, Malaysia’s Finance Minister Lim Guan Eng announced the Budget 2020.
The budget clearly outlines the government’s strategy on elevating the rakyat’s employability and financial well-being with initiatives focusing on continued investment in education, encouraging job creation and providing incentives for training, development and upskilling of the current Malaysian workforce.
However, for the people and companies behind the property market, here are the 7 key highlights to help elevate the playing field:
1. Rent-To-Own Scheme
To assist those who are unable to pay a 10% deposit and to secure the access of home purchase financing, the government will be working with financial institutions to introduce a Rent-To-Own (RTO) scheme.
- RM10 billion financings will be provided by financial institutions with the government’s support through a guarantee provision of 30% or RM3 billion.
- Open to the purchase of a first home worth up to RM500,000.
Under this program, the applicant will rent a house for a period of up to five years and after a year, he/she will be given the option to purchase the relevant residential house at a fixed price when the rental agreement is signed.
The government will also provide the full exemption of stamp duty on transfer instruments between developers and financial institutions, as well as between financial institutions and prospective buyers.
2. Youth Housing Scheme
Assisting the youth to own their first home, Putrajaya will extend the youth housing scheme conducted by BSN from 1 January 2020 until 31 December 2021.
The scheme offers a 10% loan guarantee through Cagamas to enable the borrower to obtain full financing and assistance of a monthly installment of RM200 per month for the first two years, limited to 10,000 units of houses.
3. Home Ownership Campaign / Bank Negara Affordable Housing Fund
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4. RGPT updated policies
In response to the public’s views on the Real Property Gain Tax (RPGT) imposed on disposal of properties after five years, RPGT treatment will be enhanced by revising the base year for asset acquisition at 1 January 2013 for assets acquired before 1 January 2013 as compared to the previous base year of 1 January 2000.
5. Lower foreign buying threshold in urban areas
To reduce the high number of unsold condominiums and apartments amounting to RM8.3 billion in the second quarter of 2019, the government will lower the foreign buying threshold for condominiums and apartments in urban areas from RM1 million to RM 600,000 in 2020.
6. Bandar Malaysia to commence
The government has decided to continue the Bandar Malaysia project which spans 486 acres in Sungai Besi, Kuala Lumpur after negotiating to obtain better terms for the government. The project will include a people’s park, an increase of 5,000 units of affordable houses and an increase in the involvement of Bumiputera contractors in the project. The proceeds from this project will be evaluated and announced later and will be used to reduce 1MDB debts.
7. Developing Carey Island
The government is implementing feasibility studies for the development of Carey Island for its next growth phase to make Port Klang the Regional Maritime Center and cargo logistics hub. The government expects to spend RM8 billion to improve port infrastructure and turn Port Klang and Pulau Carey into regional maritime centers and logistics hubs.
Did you watch the whole three hours of the Budget 2020? Or just waited for a summary during the weekend? What do you think about it? Leave us a name and let’s discuss!