pic by HUSSEIN SHAHARUDDIN

FINANCE Minister Lim Guan Eng has clarified that the reduction in minimum property prices for foreign ownership from RM1 million to RM600,000 next year will be applied for unsold units and not new projects.

He said the proposal, which is expected to address the issue of oversupply of high-rise units in the country, would not limit the locals’ right to own a house.

“These (offers) do not include any new projects which are yet to be launched.

They are the units that have not been able to attract Malaysian buyers,” Lim said in a statement yesterday.

Bernama reported Prime Minister Tun Dr Mahathir Mohamad as saying the decision is meant to reduce supply overhang of condominiums and apartments.

He stressed that it does not mean that foreigners who bought the property would be given Malaysian citizenship.

“We want to get rid of this property overhang…so that we can raise the price back to RM800,000, RM1 million or RM2 million. This is a way to encourage the sale.

“But if foreigners bought the property, we will not give them Malaysian citizenship. They can only use it as their holiday home,” Dr Mahathir said in Langkawi yesterday.

Industry experts have told The Malaysian Reserve (TMR) that the lowering of the threshold price be restricted to overhang units only.

CBRE-WTW (CBRE Group Inc and CH Williams Talhar & Wong Sdn Bhd) MD Foo Gee Jen believes the government must be cautious with the move.

“The new rule should be allowed only for completed but unsold units, rather than new launches — or else the local buyers will have to compete with foreigners.

“It is okay to lower the threshold, but the price range for the properties should remain the same,” he told TMR.

In the Budget 2020 announcement last week, Finance Minister Lim Guan Eng said the government will lower the threshold on highrise property prices in urban areas for foreign ownership from RM1 million to RM600,000 in 2020, to reduce supply overhang of condominiums and apartments amounting to RM8.3 billion in the second quarter of 2019 (2Q19).

Asiacap Valuer & Property Consultants Sdn Bhd property valuer Kit Au Yong said there might be some form of control on percentage of foreign ownership for within the development scheme as the entry price is low due to the weak ringgit.

“It is a good thing the government only applies this to high-rise as currently the overhang situation is only limited to those type of

products. Therefore, we shall see a lot more developers promoting local properties to foreigners especially in urbanised area,” he said, adding that the government’s control on foreign ownership is still needed to monitor the situation.

The government also announced that it will collaborate with financial institution in introducing rent-to-own (RTO) financing scheme to address financing issues in home purchase.

Through the scheme, financing of up to RM10 billion will be provided by the financial institutions with the support from the government via a 30% or RM3 billion guarantee.

The RTO scheme is for the purchase of first home up to RM500,000.

Lim said under this scheme, the applicant will rent the property for up to five years and after the first year, the tenant will have the option to purchase the house based on the price fixed at the time the tenancy agreement is signed.

VPC Alliance (KL) Sdn Bhd MD James Wong said the government’s involvement will encourage more first-time buyers to enter the market.

“Without this fund, a lot of first-time buyers will not be able to pay the 10% deposit.

“This budget allocation will enable house buyers to opt for this RTO scheme,” he said.