Once the tax is approved by Cabinet, KPKT will look at implementation as early as next year

by AFIQ AZIZ/ pic by RAZAK GHAZALI

THE Housing and Local Government Ministry (KPKT) is formulating a tax that could be imposed on developers who fail to sell their properties, in an effort to reduce the huge overhang of residential units in the country.

Minister Zuraida Kamaruddin (picture) said the introduction of the tax could also induce developers to be more sensible and responsible in the projection of their projects, particularly high-rise developments.

According to the National Property Information Centre (Napic) data, there were 2,260 unsold condominium units within the Klang Valley, of which 498 comprised luxury units worth RM1 million and above, as of the second quarter of 2018 (2Q18).

Napic also stated that there were condominiums and apartments worth RM8.3 billion that had remained unsold at the end of 2Q19.

“When these units are left empty, it triggers a lot of problems including vandalism, which affects the quality of the house due to the defects.

“So, developers must ensure that the houses are taken up as soon as possible,” she told reporters after receiving four tonnes of patchwork from Jakel group of companies to be sewn as recyclable face masks in Ampang yesterday.

Zuraida said the introduction of the vacancy tax does not require Parliament’s approval as no amendment to the existing Act is needed.

She said once the tax is approved by the Cabinet, KPKT will look at implementing the tax as early as next year.

KPKT will also table all the recommendations and the formula of the tax to the National Economic Council today, so that a suitable mechanism of the implementation could be incorporated.

“We are looking at about six months to nine months of lead time for houses to be filled when they are completed. The mechanism will be discussed and determined accordingly by this year,” Zuraida added.

She said the move is necessary as many housing units had taken more than one year to be filled due to various reasons, whether the developers are unable to sell or buyers fail to move in.

“So, as long as the units obtain the Certificate of Completion and Compliance (CCC), and yet they are unable to sell the units or the units failed to be filled, the developers will have to pay.

“In the future, they will do better projections when they develop houses, while ensuring the projects’ viability and developments that could attract buyers, and not just develop as they wish. With this preventive measure, they can plan better.”

Last week, Deputy Federal Territories Minister Datuk Seri Edmund Santhara Kumar told Parliament that Putrajaya will study the suggestion to introduce a vacancy tax to be imposed on properties that are unoccupied or unsold for a specified time.

This is similar to the model practiced in developed countries such as Canada and Australia.

However, the proposal was criticised by market analysts who stated that the government must allow the property market to automatically correct itself instead of direct interference via such tax.

Institute for Democracy and Economic Affairs senior fellow Dr Carmelo Ferlito said such a tax should be avoided, as oversupply is a dynamic of the market process which proceeds through business fluctuations.

“It is a violation of property rights. Developers or individual owners should be free to dispose of their property in the way they think is best: Hoard, use, rent or sell.

“A vacancy tax would set a dangerous precedent, suggesting that the government has the authority to interfere with the disposal of property rights when it thinks such disposal is not going in a ‘socially’ desirable direction,” he told The Malaysian Reserve in an earlier report.

Ferlito said market correction would be a good indicator for entrepreneurs in doing business, and any wrong decision should be dealt by them accordingly.

Meanwhile, Zuraida said KPKT and its subsidiary, Solid Waste Management and Public Cleansing Corp (SWCorp), plan to distribute up to five million masks to all students in the country.

The Ampang lawmaker said the ministry is working on the production of special recycled fabric face masks by collecting patchworks from textile companies and incentivising housewives in the country to re-sew the fabrics for mask production.

She said the ministry aims to engage some 200 housewives in the Ampang area to undertake the sustainable project and produce about 50,000 face masks within the next one month, before distribution to more than 20,000 students in 16 schools in the constituency.

“Through this initiative, we can reduce the government’s expenditure on disposable face masks which clearly carries the risk of (harming) environmental ecosystems.

“It is also in line with the mandatory use of face masks since Aug 1.”