Budget 2019: A big boost for affordable homes

Budget 2019 on Affordable Homes
The affordable housing market is clearly a winner in Budget 2019. The government announced several measures to encourage buyers to acquire homes priced at RM500,000 and below.

Here, are the latest changes to the property market that agents need to know:

Stamp duty exemptions

Two types of stamp duty exemptions make it cheaper to buy homes. First exemption is for homes priced below RM500,000. This exemption, valid till end-2020, is only applicable for the first RM300,000 of the home value but it definitely translates to significant “savings”

Here’s an example. A home transacted at RM300,000 would have incurred total stamp duty payable of RM5,000 (use the calculator at www.jpph.gov.my). With this stamp duty exemption, the new home owner ‘saves’ this amount.

The second stamp duty exemption is solely for first-time homebuyers. Here, they get a stamp duty exemption for houses priced between RM300,000 and RM1 million. This particular exemption is only valid for six-months so it should encourage prospective homebuyers that are currently sitting on the fence to decide soon.

House prices to come down

There seems to be a real possibility that house prices will finally come down. The Real Estate and Housing Developer’s Association Malaysia (Rehda) has agreed to reduce house prices as much as 10% for new projects that are not subject to price control. Consider this, a home that was set to be priced around RM300,000 would be reduced to the RM270,000 range.

Low interest rate for financing of properties valued at RM150,000 or below

This stimulus is only for home buyers earning a household income of less than RM2,300 a month. Bank Negara Malaysia will establish a fund to assist this group by financing their property with an interest rate that does not exceed 3.5r% per annum.

Financing support for first-time home buyers

First-time home buyers earning up to a monthly household income of RM5,000 will also receive financial assistance. The National Mortgage Corporate of Malaysia or Cagamas Bhd can help them pay their deposit or support their mortgage. This move is said to generate cost savings of between 7% and 11% for the home buyer.

A property crowdfunding platform?

This initiative was certainly unexpected. In a nutshell, this is a home ownership programme to enable home buyers that do not qualify for a conventional bank loan to buy a property. The home buyer only needs to pay 20% of the price of the home, the remainder of 80% is paid by investors.

This government-backed peer-to-peer financing scheme, known as Fund My Home, is said to kick-off in the first quarter of next year. We will take closer look at how it works and what it means at that point. For now, views on this first-in-the-world property crowdfunding platform are mixed: some say it’s good for homeowners while others say it isn’t. Let’s wait and see.