KUALA LUMPUR, Oct 24 — To moderate skyrocketing house prices, Pakatan Rakyat (PR) suggested today that the Real Property Gains Tax (RPGT) be returned to pre-2007 levels and tighter restrictions from Bank Negara Malaysia (BNM).

In its alternative Budget 2014 released here, PR suggested that RPGT on net gains from house sales to return to 30 per cent if sold within two years after purchase, up from the current rate of 15 per cent.

The RPGT proposed by PR decreases by every year after the house’s purchase, with houses sold five years after purchase not liable to any tax.

“Pakatan Rakyat recommends the following “cooling” measures to contain spiralling house prices by curbing excessive property speculation activity, in the short-term with a focus on urban areas such as Greater KL, Johor Bahru and Penang, to prevent the overheated housing market from ramping up overall inflation that may trigger sooner-than-expected monetary tightening,” said the budget here.

PR also wanted banks to increase the minimum down payment requirements in house loans, or reduce the maximum loan-to-value (LTV) ratio on new launches.

Borrowers should also be restricted from taking home loans valued higher than 60 per cent of their total debt responsibilities, PR said.

In addition, monthly mortgage payments should not be higher than 30 per cent of a borrower’s gross monthly income.

“These macroprudential measures by Bank Negara Malaysia should help temper loan growth for property purchases and pare down the build-up of systemic risks in the financial system, reducing the scope of huge interest rate increases in the near to medium term,” it added.

PR also called for a higher floor price in allowing foreigners to buy houses, which are RM1 million for apartments and RM3 million for landed properties.

Property developers will also be tied to a stricter requirement of affordable housing quotas, and making it mandatory for them to build affordable housing within a 5km radius of their development areas.

In August, the Ministry of Urban Well-being, Housing and Local Government suggested that it is studying the possibility of increasing the RPGT to stabilise the prices of houses in the country.

Minister Datuk Abdul Rahman Dahlan said the current low RPGT has not been effective in stabilising house prices and it may need to be increased to curb unhealthy speculation in the housing market.

In response, the Real Estate and Housing Developers’ Association Malaysia (Rehda) predicted uncertainty among foreign investors, leading to a wait-and-see attitude.

“The curbing of speculative buying should be approached with care and sensitivity. There are better mechanisms to curb speculation than just imposing higher RPGT throughout the country,” Rehda president Datuk Seri Michael Yam told reporters.

Rahman had also previously questioned the effectiveness of the RPGT to curb housing speculation, despite a hike from 10 per cent in 2011 to 15 per cent in 2012 for property sold within two years.

The House Price Index by National Property Information Centre showed that in 2011 and 2012 the house price index recorded the highest increase for the last five years especially in Selangor, Kuala Lumpur, Penang, Pahang, Sabah, Perak and Terengganu.