KUALA LUMPUR: The Real Estate and Housing Developers’ Association (Rehda) is concerned over the impact that the implementation of the goods and services tax (GST) will have on the affordability of housing here.
Hence, it has submitted a list of proposals to the finance ministry on possible ways to minimise the impact of the GST so as not to put “property developers and ultimately housebuyers at a major disadvantage”, said its immediate past president and patron, Datuk Ng Seing Liong.
He revealed this during a session titled “Impact of GST on Property-related Industries” at the National GST Conference 2014, yesterday.
While Rehda remains supportive of the government’s initiative, he said there are a number of issues that the industry is facing, especially on keeping affordable housing “affordably priced”.
Affordable housing refers to residential properties with a selling price of not more than RM400,000.
Some of the proposals Rehda has submitted are: the provision of a fixed allocation for residential input tax credits for mixed developments, a GST zero-rating to major cost components, the rationalisation of stamp duty on the transfer of real properties, and a GST relief order for affordable housing.
Ng said if the relief order was applied, developers can then claim full tax input credits. Presently, it is not allowed as residential property is considered tax-exempt.
“This will mitigate the increased cost for affordable housing and provide status quo opportunities to target groups to buy properties which are comparable [to those] in the pre-GST regime.
“It is better to make it zero-rated so that we, developers, don’t have to pass back the cost burden to consumers,” he added.
Currently, 55% property development costs are classified as construction costs which include construction components such as concrete and bricks.
This article first appeared in The Edge Financial Daily, on July 11, 2014.
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