EPU to issue new guidelines on RM1m price floor in March or April

KUALA LUMPUR: The Economic Planning Unit (EPU) is expected to issue new guidelines that will require foreigners to buy properties here that are priced at RM1 million or above in March or April this year, said National Housing Department deputy director-general Datuk Mohamad Yusoff Ghazali.

The revision to the Guideline On The Acquisition Of Properties will put into effect plans by the federal government to increase the minimum floor price of properties foreigners are allowed to buy from the current RM500,000 to RM1 million.

“The EPU will release the new guidelines as early as March or April this year,” Mohamad Yusoff told The Edge Financial Daily yesterday.

However, Mohamad Yusoff said the various state governments can still voice their objections to the new guidelines to the EPU.

He was commenting on news reports that Johor could opt out of a new ruling, announced last year by Prime Minister Datuk Seri Najib Abdul Razak in Budget 2014, that the minimum value of properties that foreigners can buy will double to RM1 million as a measure to address rising property prices.

When contacted by The Edge Financial Daily, Iskandar Regional Development Authority (IRDA), the federal government statutory body tasked with regulating Iskandar Malaysia in Johor, said it has not been informed by the Johor government about exempting projects approved by the authorities before May 1 this year from the minimum RM1 million purchase price ruling.

“This is a state matter, [but] we have not heard anything from the state [government] and we should not speculate,” said the IRDA spokesman, adding that IRDA will be informed if there are such plans.

However, real estate agents revealed that the state government may be mulling such plans to boost sales of Iskandar properties.

“The delay in implementing the new minimum price of RM1 million for foreign property buyers could be seen as unfriendly and may affect their confidence in their investments,” said Malaysia Institute of Estate Agents president Siva Shanker.

“Total foreign property purchases [in Malaysia] are estimated at about 4% to 7%, which is comparatively a small figure,” he added.

A real estate agent who declined to be named said most foreign buyers are now adopting a “wait and see” approach following the announcements by the government on the proposed new price limit. 

Currently, Medini Iskandar is the only area in the US$30 billion (RM99.3 billion) Iskandar Malaysia in Johor that enjoys an exemption from the 30% real property gains tax, announced in October to cool soaring property prices.

Land is considered a state matter and states like Penang and Johor have come up with additional guidelines.

For instance, Penang has set the floor price for foreign buyers at RM2 million for residential landed properties and RM1 million for high-rise units on the island, and RM1 million and RM500,000 respectively for the mainland, where land is much cheaper.

Penang and Johor also currently charge foreign purchasers a RM10,000 state consent application fee. Penang will replace the charge with a 3% levy on the transacted price in the sale and purchase agreement signed on or after Feb 1, 2014, and Johor with a 2% levy beginning May this year.

This article first appeared in The Edge Financial Daily, on January 21, 2014.