Foreigners looking to buy a home in Johor will face significantly higher charges from next year when the current RM10,000 (S$3,900) charge is replaced with a processing fee based on a percentage of the property’s value.
State Executive Councillor for Housing and Local Government Datuk Abdul Latiff Bandi said the move had been made to protect the interest of Johoreans and the processing fee would apply to all foreigners wanting to acquire properties in the state.
He noted that the new processing fee, which would range between four and five percent of the property value acquired, would indirectly enable the state government to regulate the sale of properties to foreigners.
“For instance, foreigners buying a property worth RM5 million (S$1.95m), they have to pay only RM10,000 (S$3,900) as processing fee currently. From next year, they have to pay based on the property value,” said Latiff after opening a seminar on Green Industry 2013 yesterday.
Proceeds from the fee will be used by the state government for programmes and projects aimed at people’s development.
“We will table the new condition in the budget sitting of the state legislative assembly, which will sit soon, for approval,” he revealed.
Khalil Adis, Associate Research Director (Iskandar Malaysia) for Ascendant Assets, said: “The new levy of between 4 to 5 per cent will have a significant impact on Singapore-based investors as it will translate to almost double of what they have to pay now. For example, for a RM500, 000 property buyers will need to pay up to RM20,000 in levy as opposed to the flat rate of RM10,000 currently.
“We expect some Singaporeans currently sitting on the sidelines to expedite the signing of their sales and purchase agreements so as to save on the new levy. Going forward, it may affect sales volume in the red hot property sector of Iskandar Malaysia during 2014, particularly in Nusajaya which is primarily driven by foreign purchasers.”
However Gerard Kho, Country Manager for PropertyGuru Malaysia, felt the new foreign property purchase tax will likely have little impact on the number of Singaporeans buying in Johor.
He said: “This move has been in the pipeline for a while. Long term property investors will not be impacted by these additional costs.”
Source – PG
Food for thought: The introduction of cooling measures in Singapore over the last few years have proven to be effective in achieving the desired market condition it intended to have. Thus, with the ever escalating prices of property prices in Singapore, it is natural for Singaporeans and many other foreign investors to turn their attention to Malaysia, particularly Johore, or the more home brand name, Iskandar.
One can see a parallel in the moves of implementing measures somehow like Singapore when they decided to implement this new change. While it may be true according to the few property experts’ opinions, it is still key to have the necessary financial education and an increased financial IQ. We can expect more of such measures coming our way if sales continue to move upwards. What would be the next move for Singaporeans and other foreigners? If there is no fundamentals in property investment then what would your next decision be? I think you know the answer. Awesome!