The impact of the Movement Control Order (MCO) has led property players to step up the levelling field for new and seasoned home buyers. Understandably, housing affordability is the main concern for every buyer during this challenging period. In line with the Prime Minister’s initiative to support businesses and strengthen the nation’s economy, the National Economic Recovery Plan (PENJANA) was introduced in June 2020. As a result of the government’s initiatives, property developers are offering property incentives for first-time home buyers and individuals classified under certain income groups.
1. Home Ownership Campaign (HOC) 2020-2021
The reintroduction of Home Ownership Campaign (HOC) which took effect from June 2020 is the government’s initiative to provide financial relief to home buyers. It also tackles the issue of unsold properties in the country’s property sector.
Under this campaign, one of the advantages that home buyers would enjoy is the 10% discount for the HOC participating properties. They could also get the exemption of stamp duty on acquisition of residential properties. Stamp duty exemption is given based on:
(i) The instruments of transfer (up to RM1 million of residential property price)
(ii) Loan agreement (up to RM2.5 million of the loan amount)
To be eligible for the campaign, here are the following criteria:
(a) Purchasers and co-purchasers must be Malaysian citizens.
(b) Purchasers can only buy properties registered under the HOC scheme.
(c) Purchasers must be buying the property for residential purposes only.
Home buyers should also take note of the exemption conditions:
(a) Residential homes priced between RM300,000 to RM2.5 million.
(b) Sales and Purchase Agreements (SPA) must be signed between 1 June 2020 to 31 May 2021.
To see how HOC 2020-2021 can benefit in your home purchasing, here’s an illustrated breakdown:
Residential property value: RM500,000
|Down Payment (RM500,000 X 10% Discount)||RM50,000|
|Exemption on Stamp Duty Loan||RM2,250|
|Exemption on Stamp Duty MOT||RM9,000|
Based on the above example, HOC 2020-2021 eases home purchases for Malaysian citizens. HOC 2020-2021 applies only to new residential properties registered under the campaign from certain developers. Home buyers can buy multiple properties as there is no limit under the campaign.
2. Special Rates for B40 and M40
Homebuying doesn’t have to be unaffordable! There are property deals and incentives to assist with housing affordability for people belonging to lower-income groups. The classification of household groups is based on state location and the median monthly income. According to the Department of Statistics Malaysia, the highest median income in 2019 for Kuala Lumpur is RM10,549 whereas the median income was recorded the lowest in Sabah with RM4,235. What’s considered as B40 in one state might be different in another state.
With salary failing to keep up with current property values, it makes housing choices for B40 and M40 home buyers limited. Fortunately, there are other government housing schemes apart from HOC 2020-2021. These schemes are aimed to assist the B40 and M40 income groups. For instance, Bank Negara Malaysia’s (BNM) “RM1 billion Fund for Affordable Homes” is a first-time home buyer incentive aimed at home buyers from the lower-income group when purchasing their first homes. Stamp duty fees, down payment and financial application processing fees are exempted. The loan repayment period is up to 40 years or until the applicant reaches 70 years of age.
There is also the BSN MyHome (Youth Housing Scheme) to help single and married youths with lower income to own their very first home! The government has announced to extend the Youth Housing Scheme to 31 December 2021 in hopes of providing affordable home buying options to Malaysian youths. The scheme includes RM200 monthly instalment governmental assistance for the first two years limited to 10,000 home units. It also provides a 10 per cent loan guarantee through Cagamas to enable full financing for borrowers. This scheme is offered for financing the purchase of either completed, under construction or sub-sale properties.
While more affordable home loan options are being added or the duration of the schemes extended, many banks also see the need to ease home financing in this time of economic difficulty. As of 6 August 2020, the financing rate or interest rate offered by most banks is at 3.5% per annum or below. This means that home buyers during the pandemic are given more selections of affordable home loans compared with previous years.
If you’re uncertain about the financial breakdown of home buying, Agensi Kaunseling & Pengurusan Kredit (AKPK) is an agency set up by Bank Negara Malaysia that provides financial education and counselling.
3. Home Financing Initiatives by Banks
As a result of economic activity contraction due to the pandemic, the Monetary Policy Committee of Bank Negara Malaysia (BNM) has further lowered the Overnight Policy Rate (OPR) to 1.75 per cent, the lowest in the past 10 years. This is a blessing in disguise as home buyers can now purchase properties at lower loan interest rates.
In other words, the reduction in OPR leads to reduced interest payments for retail loans such as housing loans, investment loans and commercial loans taken by small and medium enterprises. This provides relief to borrowers. They can use the extra cash to spend on necessities while still being committed to their home loans.
In line with the Home Ownership Campaign 2020-2021, Gamuda Land is offering attractive online property deals to facilitate home ownership for selected properties. Seize our exclusive deals when you purchase your Gamuda Land home today!