(source picture : btimes )

RPGT has been introduced in Malaysia at multi-tier rates since year 1995 up to 2007. It was suspended from 1st April 2007 to 31st December 2009 in a move to shore up the sluggish Malaysia property sector affected by the world financial crisis.  In January 1, 2010, RPGT was reinstated at a single rate of 5% for all taxable gains (for all disposal within five years). 

Effective  January 1, 2012, property owners and investors who dispose off their property in Malaysia within five years will be subject to the revised RPGT rate on taxable capital gains for sale and purchase agreements signed on or after that date. For disposal of property whereby state consent is required, the date of disposal shall be the date when such conditions have been complied with but not the date of SPA. However, genuine property owner who disposes their property can apply for exemption of RPGT under the following circumstances ie. a) one-in-a-lifetime exemption for malaysian individuals, b) disposal by way of gift ie between parent and child, husband and wife etc.     

Briefly, the computation of RPGT in Malaysia is as follows:-

A)     Disposal  Price ( LESS allowable expenditure ie. upgrading and improvement costs to maintain or enhance the value of the property  and incidental expenditure such as legal fees and stamp duty, agent fees, administration charges etc)   

B)      Acquisition Price ( ADD incidental costs legal fees, agent fees, administration charges etc)

Taxable capital gains = A-B less RM10,000.00 exemption or 10% of the net gains, whichever is higher for an individual. 

 If there is capital gains arising from the disposal of a property after deducting allowance for capital gains exemption up to RM10,000.00 or 10% of the net gains, whichever is higher for an individual, the RPGT rate  shall be 10% on taxable capital gains for disposal within two years and 5% on taxable capital gains for disposal exceeding second years but within fifth years.

In standard practice, A 2% retention sum of the disposal price will be retained by acquirer’s solicitor for RPGT purpose and filing of notification of disposal to Board of Inland Revenue of Malaysia  is required within 60 days. Picture below shows a sample format of the RPGT also known as CKHT form issued by Board of Inland Revenue of Malaysia for your easy reference.

The revision of RPGT rate under the Budget  2012 is considered moderate and  expected to have gradual impact on the property market in key urban areas in KL/Klang Valley, Penang Island and JB where bulk of the property investments and market activities are actively taking place. More  here .

However, first time home buyers can still look for affordable Penang Apartments in the secondary market of Penang Island as there are many choices of medium range apartments priced from RM130,000 to RM220,000 per unit.

Incentive for first time home buyers under Budget 2011

Following the recent budget announcement on 15th October 2010, the government will introduce the “Skim Rumah Pertamaku” or “My First Home Scheme” through Cagamas Berhad to assist the newly-employed younger group earning less than RM3,000 per month to buy a house costing less than RM220,000.00.

First time home buyers will be eligible for 100% FINANCING. First-time house buyers will also be given stamp duty exemption of 50 per cent on instruments of transfer on a house price not exceeding RM350,000 as well as stamp duty waiver of up to 50 per cent on loan agreement instruments to finance such first-time purchase of houses. With the exemption in stamp duty, first time home buyers stand to SAVE UP TO RM2,250.00.

Read more :-Full loan for first-time house buyers and Pinjaman rumah 100 % untuk golongan muda.

Perks for first-time house buyers

a)Savings on 50% waiver of stamp duty on transfer instrument:-
House Price say RM220,000.00
1% on first RM100,000.00 – RM1,000.00
2% on balance RM120,000.00 – RM2,400.00
Total RM3,400.00
50% waiver RM 1,700.00

b)Savings on 50% waiver of stamp duty on loan instrument :-
0.5% on full loan say RM220,000.00- RM1,100.00
50% waiver RM 550.00

First time purchaser needs to pay RM2,250.00 only instead of RM4,500.00. Hence, effective savings is RM1,700.00 + RM550.00 = RM2,250.00.

Where to find Penang Apartments ?
Below is our compilation of apartment schemes in selected areas of Penang Island which are within the affordable pricing bracket for first time home seekers where we can help you to locate and own a Penang Apartment at affordable repayments from as low as RM500.00- RM1,000.00 a month. Our company, Izrin & Tan Properties Sdn Bhd is ever ready to assist you to own a Penang Apartment in a hassle-free (no headache to find where to buy), easy and convenience way.

Penang Island Apartment Information
Tanjung Tokong/Tanjung Bungah/Batu Feringgi – Aquarius , Azuria, Bayu Emas, Delima Condo, Ferringhi Delima, Ferringhi Mutiara, Permai Ria, Taman Krsytal, Taman Tegoh
Jelutong – Simphony Park, Mutiara Heights, Mutiara Idaman, Serina Bay, Desa Selatan, Menara Riverview, Taman Jelutong, Taman Cemerlang
Bukit Dumbar – Sinar Bukit Dumbar
Bandar Baru Air Itam – Seri Semarak, Desa Intan, Desa Baiduri, Fortune Court, Sri Impian, Sri Ivory, Sri Krystal, Tanjung Court, Asia Height, BL Garden, Treasure Ville
Padang Tembak - Boundary Court
Paya Terubong – Desa Permata, GL Garden
Perak Road – Casa Impian, Tmn Sri Perak, Tmn Kheng Tian, Kota Emas, Suteramas, Seruan Emas
Gelugor/Bukit Gambier – U Garden, Jade View, Gambier Heights, N-Park, Taman Batu Uban, Villa Sri Kenaga
Bukit Jambul – Taman Bukit Jambul, BJ Court, Desa Daya, Jambul View, Sri Nibong Apt
Batu Lancang/Greenlane – Mewah Court, Desa Green, Kota Emas, Desa Penaga, Eastern Court, Greenlane Heights, Medan Penaga, Taman Sri Damai
Georgetown –Taman Pelangi, Macallum St Ghaut flat, Sri Kota, Medan Samak, Desa Singora
Relau/Sungai Ara – Marina Tower, Taman Desa Relau, Acres Villa, Ara Mas, Desa Alor Vista, Desa Bayan, Relau Vista, Sri Abadi, Sunshine Garden, Villa Kejora, Vista Condo
Sungai Dua- Taman Pekaka, Taman Jubilee, Nipah Emas, Taman Lip Sin
Sungai Nibong/ Bayan Baru – Century Park, Desa Bistari, Gedung Hts, Halaman Cendana, Mahsuri Apartments, Nibong Indah, Taman Jubilee
Bayan Lepas – Saujana Damai, Bayan Permai

Mainland Penang- Seberang Perai Apartment Information
Butterworth – Park View, SeaView (studio unit), Pangsapuri Cantik, Pangsapuri Ria, Vista Perdana, Pantai Apartments, Pangsapuri Sena
Bagan Lallang/ Raja Uda area- Seri Cemerlang, Taman Mesra Indah, Taman Pandan, Pangsapuri Mawar, Pangsapuri Seri Mekar
Bukit Mertajam- Kondo Mutiara, Pangsapuri Seri Pelangi
Prai–Pangsapuri Aman(Prima Prai), Pangsapuri Pesona

Contact us now at +604-6588333 or SMS to 0124072329 to find out how we can assist you to own an affordable Penang Apartment for less than RM1,000.00 a month.

Acres Villa in Sungai Ara, Penang

Asia Height Apartments in Air Item

N-Park in Batu Uban

Jade View Apartments in Gelugor

Park View Tower @Harbour Place in Butterworth

Cassia Resort Condo@ Raja Uda, Butterworth

3. Rebound in market demand -The rebound in market demand experienced by the Penang Property sector in the first half of this year is mainly attributable to the pent-up demand after a period of subdue market activities brought about by the impact of the world financial crisis.

Recent reports of higher take up and improving sales performances experienced by Penang’s established housing developers indicates that the market demand has indeed picked up and the demand trend is likely to remain firm in the short term as property investors are flocking back into the property market in anticipation of buoyant economic outlook as well as further price increase following the recent government’s move to implement gradual removal of subsidy on energy and raw materials.

Another factor that could fuel the buoyancy of the property market is the recent strong performance of the Bursa Malaysia KL Composite Index which have recovered over 1,400 points. The stock market has made substantial gains this year and this could boost the property sector.

A local research fund house predicted that Malaysia’s property sector is set to see its biggest residential boom in a decade. The property sector was already entering the early stage of a property “super cycle”. More at OSK bets on Malaysian Property boom.

The Economic Clock - Malaysia’s property sector is currently at the stage of 9 - 12

4. Rising home prices - There is a growing concern that home prices are getting costlier due to the cost push factor as most of the newly launched projects appeared to be in the category of upmarket segment offering luxury housing units.

Penang Island is facing very limited land bank for housing development particularly medium cost housing units and landed homes. With limited supply in land bank, land costs on the Penang Island keep rising and inevitably push up home prices to unprecedented range that go beyond the affordable levels of the majority of the island’s population. A Penang politician MP has recently voiced his concern on rising home prices and has urged the housing ministry to relook into the present housing policy. In the meantime, more parties are urging the state government to review and address the housing issues in Penang which may have an impact on brain drain of Penang employment. The rising prices of homes, if left unchecked, may result in gentrification. Urban gentrification is a phenomenon on socio-cultural changes in an area resulting from wealthier people buying up the housing units in a less prosperous community area.

Brief info on Plaza Utama

Brief info on City Parade

These two assets are possibly the last tranche of residual recovery asset of Danaharta. www.intproperties.com conducted a research on the background of these two assets and its indicative values ..

a) PLAZA UTAMA, BUKIT MERTAJAM, PENANG

Plaza Utama development commenced in Nov 1995 and completed in 1997. The 5-storey departmental store of Plaza Utama was opened for business in early 1997 together with many other smaller retail lots (sold to individual buyers). The Hotel block of Plaza Utama commenced business on January 23, 2008 and the development value of the entire Plaza Utama is RM230 Million according to an article published by The Sun as follows:-

Owing to the onslaught of the 1997-1998 financial crisis, Plaza Utama ceased business operation after a short stint of about 1-2 years and subsequently, the bad loan of Plaza Utama was acquired by Danaharta. More related info at my earlier blog - Impacts of Global Financial Crisis vis-a-vis Asian Financial Crisis on Penang property sector.

This completed skyscraper formed by a nine-level retail podium and 14-level office cum hotel tower capped off by a helipad sits on 2.88 acres of freehold land. Within Plaza Utama are 661 car-parking bays; 286,000sq ft of retail space made up of 23 shoplots, three areas previously designated for supermarket use and three whole floors; 112,500sq ft of office space consisting of 19 suites and nine whole floors; and 188 business-class hotel rooms at the top-most floors of the tower.

It was reported that when Plaza Utama first put up for sale in year 2000, the indicative value was more than RM50 Million. In year 2004, its indicative value was revised to RM42.1 Million. There is no taker despite being put up for sale in the market (By Danaharta until 31/12/2005) and Prokhas for a period of about 10 years. And to-date, Prokhas Sdn Bhd, in its quest to dispose off the asset, has make substantial hair cut and fixed the minimum price at only RM15,913,800.00.( Analysed to RM39.90 per square foot).

b) CITY PARADE, BUKIT MERTAJAM, PENANG

City Parade is another completed commercial building which is similarly affected by the 1997-1998 financial crisis and ceased operation after opened for business for a short period and have remain vacant until the present time. It has a total of 135 retail lots with a combined floor area of 224,773 sq ft.

The reported indicative value of City Parade was RM28.3 Million in Danaharta’s 5th Property Tender document from 5th June 2001 till 4th July 2001. In 2003, the indicative value was revised to RM19.546 Million as per Danaharta’s 8th Property Tender Advertisement below.

Similarly, there is no taker despite being put up for sale in the market for more than a decade. And to-date, Prokhas has also make substantial hair cut and fixed a minimum price at RM5,488,100.00.( Analysed to RM24.40 per square foot).

With such attractive fire sale prices at deep discount from its indicative values, it is now opportunity at the right entry level for investors to explore the investment viability as well as its restoration or refurbishing costs of turnaround it into viable and usable building.  Act now and contact us at Izrin & Tan Properties Sdn Bhd ( A panel real estate agent of Prokhas Sdn Bhd) for further information and FREE investment advisory and factors that investors should look into before making investment decisions. Email me at tan@intproperties.com, or SMS/CALL  +6012 4285453.

UPDATE (4/9/2010) - According to the tender results and information provided by Prokhas, Plaza UTAMA has been SOLD …

UPDATE (19/10/2010) - City Parade is currently put up for sale again by public auction scheduled on 26th October 2010. The reserve price is further revised to RM4,939,000.00 (RM22 per square foot) compared to last reserve price’s at RM5,488,100.00.( RM24.40 per square foot).

Advantages of home ownership

i) Provide stability and certainty of stay for your family;
ii) Benefit of security and pride of home ownership;
iii) Freedom on choices of usage ie. for self-occupation or weekend second home or rent out;
iv) Built equity of your own home. Instead of paying rental monthly, you make repayments to the banks and gradually building up your home equity and ultimately owning the property after you redeem the property.
v) Hedge against inflation. Owing to the scarcity of landbank earmarked for new developments and growing population, demand for quality and affordable housing in established areas in Penang remains high which leads to higher home prices. In addition, the cost to build new housing stock continues to rise due to inflationary factor.
vi) Tax relief. Malaysians are eligible for tax relief of up to RM10,000.00 a year on loan interest payment to finance the purchase of property for three consecutive years subject to conditions that it is limited to one residential home for own occupation( not for rental) and the sale and purchase agreement is signed between March 10 2009 and December 31 2010. Besides, the government has further relaxed the EPF housing withdrawal guidelines beginning of January this year to encourage more Malaysians home seekers to own houses.

Advantages of renting

i)a cheaper and affordable way (less upfront costs) as you only need to come out with deposit payments equivalent to 3 months rental of which the security and utility deposits are refundable;
ii) Faster move in time unlike property purchase which takes 3-4 months to complete the deal and hand over the property.
iii) option of choosing length of stay according to tenant’s need ie. monthly or yearly tenancy ;
iv) No need to bear documentation costs such as legal fees for preparation of sale and purchase agreement and loan documents and stamping charges in connection with home ownership transfer and yearly taxes like assessment rates and quit rent.
v) No need to bear maintenance charges and structural repair costs either as these costs are also to be borne by the landlord.
vi) flexible of being relocated without having to worry about the empty home!

Recommended blogs on the advantages and disadvantages of Buying versus Renting, go to Renting vs Buying a home or Buying vs. Renting.

Whether renting is better than buying depends on many factors, including how fast prices rise and how long you will stay in your home. And now there is a new method rent-buy interactive calculator to compare the costs of buying and renting equivalent homes.

The methodology of the calculator keeps a running tally of the most common expenses of owning and renting. It also takes into account something known as lost opportunity costs — for example, the return you could have earned by investing your money instead of spending it on a down payment. The calculator assumes that the profit you would have made in your investments would be taxed as long-term capital gains and adjusts the bottom line accordingly. The calculator tabulates lost opportunity costs for all parts of the buying and renting scenarios.

This rent-buy interactive calculator allows home seekers to do their own comparisons on renting versus buying whereby you can i)  adjust the annual home price change and annual rental rates according to local market conditions  and ii) change inputs or variables such as your rate of return on investments, condo/common fees and your tax bracket to find out whether the buying is better than renting or otherwise!

Whilst no one can accurately predict the future pricing/rental trend of the houses in a particular area, however, analysis to find out average house price index or its trends based on the past historical housing data of say past 10 years or 15 years or 20 years of a similar class of property in a specific housing area can be quantified.

In Malaysia, information on property pricing trends and rental movements, current and future supply and take up rates of various sub-sector of Malaysia property market can be obtained from the annual publication of Malaysia Property Market Report published by Department of Valuation and Property Services (JPPH) and NAPIC quarterly reports. Find out more at 6 websites that property investors need to know in Malaysia. It would be good that a similar calculator can be generated in Malaysia using our very own housing data.

Views of new completed housing schemes in mainland Penang

Villa Cendana 2 ( Cendana Permai) at Juru

Dedaun - another housing scheme by PDC at Batu Kawan