HBA worries that the charge will push up the cost of new launches while a researcher alerts that homeowners may end up bearing the expense.
PETALING JAYA, 9 August 2023 – In Malaysia, the implementation of a vacancy tax is more likely to negatively impact homebuyers and homeowners instead of alleviating the property oversupply issue. This perspective has been put forth by both the National House Buyers Association (HBA) and an independent researcher in response to a proposal for introducing a fee on properties that remain unoccupied for extended periods.
Chang Kim Loong, the secretary-general of HBA, expressed that developers would probably be compelled to increase the prices of new property launches to offset the additional costs incurred by the tax. Meanwhile, Aziff Azuddin, a researcher, stated that this tax would create a burden for individual property owners.
The proposal, suggested by Suraya Ismail, the research director of Khazanah Research Institute, aims to rectify the current imbalances in property and rental markets through the imposition of a vacancy tax. She argued that such a tax could motivate developers and property owners with vacant units to either sell or rent them out, thereby increasing the supply and causing prices to decrease. She believed it would also discourage speculative practices focused on quick profits.
The National Property Information Centre (Napic) reported that there were still 27,746 unsold residential units in 2022, collectively valued at RM18.41 billion. Chang Kim Loong the secretary-general of the National House Buyers Association( HBA) contested the notion that local developers intentionally stockpile completed units to inflate prices, emphasizing that their inability to sell them was the issue. He further noted that while a vacancy tax might work in other countries, it might not be suitable for Malaysia.
Chang dismissed the idea that the HBA empathizes with developers due to the overhang issue, attributing the problem to them for constructing properties unaffordable for the public. However, he contended that a vacancy tax on unoccupied completed properties wouldn’t contribute to resolving the crisis, as developers would likely adjust prices for future launches, driving up costs for new properties. He advocated allowing market forces to address the property overhang problem naturally.
Chang also expressed skepticism about the applicability of a vacancy tax in Malaysia, citing that such a measure could prove effective in countries where hoarding and speculation were widespread. In such instances, developers and investors purposely avoid selling completed units to fabricate demand and capitalize on rising prices.
Aziff concurred that a vacancy tax might prompt developers to decrease prices to reduce their unsold inventory. However, he disapproved of imposing this tax on individual homeowners, as it could disproportionately affect low-income households who own property. He acknowledged the issue of developers setting unaffordable property prices as the core problem.Both Chang and Aziff proposed comprehensive strategies for addressing the property overhang issue. Chang highlighted the multifaceted nature of overhang problems, influenced by economic conditions, preferences, market sentiment, affordability, credit availability, and demographic changes. He also suggested that financial institutions conduct a full-market survey and feasibility study before giving out loans for property development, and that an integrated housing database be set up to help industry players gauge current market trends and needs.