DIBS removal to curb speculation

By FOONG PEK YEE and LOSHANA K. SHAGAR newsdesk@thestar.com.my
The Star Malaysia
28 October 2013

KUALA LUMPUR: The doing away of Developer Interest Bearing Scheme (DIBS) for properties will help curb speculation, said MCA Young Professionals Bureau chief Datuk Chua Tee Yong.
Chua said developers offering DIBS had actually marked prices up by about 5% to cover the interest they paid when the properties were under construction.

However, speculators were attracted to the scheme because of the “interest-free” period.
“Thus, doing away with DIBS and increasing real property gains tax (RPGT) will help curb speculation and inflated pricing,” said Chua, adding that non-speculators would not be affected.

However, he suggested that the DIBS may be considered for firsttime house buyers.
Meanwhile, the National Housebuyers Association (HBA) wants stamp duty for the third property and onwards to be raised substantially to reflect market value of the property in order to give anti-speculative moves more bite.

“We propose that the current stamp duty remains the same for the first two properties bought, and then increased to a flat rate based on property price for third and subsequent properties,” said HBA secretary-general Chang Kim Loong.

“The Government’s low stamp duty regime is being misused by speculators to accumulate multiple properties, driving up prices by creating false demand and denying genuine buyers the opportunity to buy such properties.”
At the moment, stamp duty chargeable on the Sale and Purchase Agreement is RM10 each.
In addition, the stamp duty chargeable on a memorandum of transfer is based on property value, with stamp duty of 1% for the first RM100,000, 2% for the next RM400,000 and 3% for amounts exceeding RM500,000.

However, this does not deter speculators as the stamp duty payable is the same regardless of the number of properties held or bought.

Chang noted that speculation could be curbed with increase in both entry and exit cost, saying that while the recent rise in RPGT increased exit cost, a rise in stamp duty would also increase the entry cost.

RPGT rate is now 30% for gains on properties disposed within the first three years, while disposals in the fourth and fifth years are increased to 20% and 15% each, respectively.
NoRPGT is imposed on Malaysians selling their properties in the sixth year, though companies will be taxed at 5%.

For foreigners, RPGT would be imposed at 30% on the gains from properties disposed within five years, and 5% for disposals in the sixth and subsequent years.

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