A general view of empty newly-built apartments at Setia Alam in Shah Alam November 1, 2018. — Picture by Yusof Mat Isa

KUALA LUMPUR, Nov 2 — The Home Buyers Association (HBA) today criticised Pakatan Harapan’s (PH) move to introduce what it calls a peer-to-peer (P2P) home financing crowdfunding scheme to help people buy properties.

In its statement, HBA said it “respectfully disagrees” with the initiative, pointing out that the real problem is the high price of houses, and not financing options.

“Once again, HBA respectfully disagrees with the PH government’s decision to launch a ‘crowdfunding’ or ‘peer-to peer’ financing scheme to ‘help people buy properties’.

“Malaysia is facing a housing crisis where the price of properties is too expensive in comparison to their incomes,” HBA said.

“The crux of the problem is ‘affordability’ and not ‘lack of financing’ as there is adequate liquidity in the banking sector,” the statement added.

HBA said that the government was also unclear as to whether the P2P scheme is for properties that are under construction or completed units.

It also expressed concern about growing property speculation, property scams and bad debts, as the government will be providing a buyer with a poor credit record access to “easy credits” with the P2P scheme.

It also equated the scheme with a “legalised money lending” system.

“Who is going to ensure the peer who invested will obtain a return? Who will enforce the lending arrangements? What happens in the event of default? Is the Securities Commission going to undertake additional duties? This is a legalisation of money lending without the need for a licence,” it added.

In tabling Budget 2019 today, Lim said Putrajaya would be approving a private sector-driven property crowdfunding platform as an alternative loan source for first-time home buyers, adding that the platform for the initiative would be regulated by the Securities Commission (SC).

“As an example, the buyer will be able to acquire a selected property for 20 per cent of the price of the property, while the balance 80 per cent will be fulfilled via potential investors who are interested to fund the acquisition in exchange for the potential appreciation in value of the property over a particular period of time,” Lim said, adding that the policy is also the first of its kind in the world.

“This financial innovation will be the first in the world, and if successful, will transform the affordability of homes for first-time home buyers in the country. The first exchange is expected to go live in the first quarter of 2019, after all necessary approvals are obtained from Securities Commission,” Lim added.

The HBA also disagreed with PH’s move to charge a 5 per cent rate for Real Property Gains Tax (RPGT), for properties that are disposed after the sixth year.

“With the Budget announcement, it means that Malaysian individuals will continue to bear the 5 per cent RPGT, even though they have diligently ‘preserved’ beyond the five years. This reflects badly on the PH government, as the previous RPGT regime was far superior where no RPGT was payable beyond the fifth year,” it said.

HBA added that it had also in the past lobbied the government to not change the RPGT rate for the first two properties, and to only increase the rate for the third property onwards.

“This is because most people can only afford to buy two properties: One to reside in and another for long-term investment. By charging a RPGT rate for people who have held properties for six years or more, the PH government is effectively imposing tax on inflation, and this will be punishing genuine long-term investors,” it added.

In his speech, Lim announced that the RPGT rate will be revised for the disposal of properties or shares in property-holding companies after the fifth year.

Companies and foreigners will now be subjected to an increased RPGT rate from 5 to 10 per cent, and 5 per cent for locals.

Low-medium cost and affordable homes priced below RM200,000, however, will be exempted.

Lim also announced that the stamp duty on the transfer of properties worth over RM1 million will also be increased from 3 to 4 per cent.

The Real Estate and Housing Developers’ Association Malaysia (Rehda) also shared HBA’s sentiment, lamenting that the move will affect the industry, given the volatile economy currently.

Rehda, however, welcomed the P2P scheme.

“Rehda lauds the government’s initiative in introducing a new technology-based mechanism, named Property Crowdfunding.

“However, Rehda notes with concern the new impositions, namely the 5 per cent to 10 per cent of Real Property Gains Tax (RPGT), as well as the increase on stamp duty for houses priced above RM1 million from 3 per cent to 4 per cent. These measures will definitely impact the industry, especially in these trying times,” its president Datuk Soam Heng Choon said.