Penang’s new housing rules to prevent property bubble, CM says

Penang Chief Minister Lim Guan Engsays that the new move to put a moratorium on first-time house buyers selling their properties is to help curb property speculation..— Picture by K.E. Ooi
Penang Chief Minister Lim Guan Engsays that the new move to put a moratorium on first-time house buyers selling their properties is to help curb property speculation..— Picture by K.E. Ooi

KUALA LUMPUR, Dec 8 — First-time house buyers in Penang will need to get state approval if they intend to sell their properties within a specified time frame, under new housing rules that will take effect from February 1 next year.

Chief Minister Lim Guan Eng said the new rules - created to clamp down on property speculation - will impose a moratorium of up to 10 years on the sale of houses by first-time homeowners.

The moratorium applies to low-cost homes costing up to RM42,000 and low-medium cost homes worth up to RM72,500 and covers all past and future purchases.

Even if a sale is approved, Lim said, it can only be sold to “listed buyers” who have registered with the state’s housing department and certified to fall under the low income group.

“As a responsible government seeking sustainable economic growth and development, the Penang state government is careful to avoid the pitfalls of any property bubble that will bring hardship to the rakyat and damage the economy,” the Bagan MP explained in a statement here.

Penang will arguably be the first state government that will on its own impose strict rules on home ownership when the new regulations come into effect early next year, as Malaysians struggle to keep up with rapid inflation in house prices, especially in urban centres.

News reports have cited property analysts as claiming that property prices in urban centres had shot up by between 20 and 30 per cent per annum from the mid-2000s until now.

To curb property speculation, the federal government under Budget 2014 will charge real property gains tax (RPGT) of 30 per cent on properties that are offloaded within the first three years of purchase.

Putrajaya also decided to stop the practice of the developer interest-bearing scheme (DIBS) - which allows buyers to just pay the downpayment and only start servicing their mortgages once a project is completed - to prevent bulk buying and normalise the property market.

Lim today said that a moratorium of five years will also be imposed on the sale of affordable housing, which covers houses worth no more than RM400,000 on the island and a maximum of RM250,000 on the mainland.

Similar to the rules for low-cost and medium-low cost housing, homeowners who wish to sell their property before the end of the moratorium will need to get state approval and can only sell to listed buyers, who in this case would be those proven to be under the middle income group.

Penang will also raise the minimum value of property that can be purchased by foreigners, allowing them to only purchase properties worth more than RM1 million, while they will only be allowed to buy landed property on the island if the value exceeds RM2 million.

Non-residents will also be subject to a 3 per cent levy on the property price from February 1, but exemptions would be given for purchases for industry or for a purpose “that promotes employment, education, human talent or promoting Penang as an international and intelligent city”.

Lim added that the state’s new housing rules will also impose a levy of 2 per cent on property sold within three years from the date of the sale and purchase agreement (SPA) signed from February 1, though noting that it is not retrospective and does not apply to affordable housing.

“Preliminary discussions were held between some property players and housebuyers but the state government is prepared for further discussions with all stakeholders,” he said.

Related Articles