Buyers of property in Malaysia urged to take long term view

People buying investment property in Malaysia should take a long term view and avoid ‘flipping’ homes for the good of the country’s property market. That’s the view of the Real Estate and Housing Developers Association of Malaysia (REHDA) who believe that too much speculation is damaging the country’s property market.

The comments come after widespread complaints that speculators or ‘flippers’ have been responsible for pushing up property prices in urban areas, crowding out genuine homeowners and investors. Keep reading to find out more.

Property is ‘a long term investment’

Datuk Ng Seing Liong, REHDA’s past president, said: “We, as developers, we also don’t want them (speculators) to come and buy to flip. Too much speculation is no good. We want a long-term and sustainable market.”

“Don’t rush into property,” he said. “It is a long-term investment.”

Recent government intervention has attempted to discourage the ‘flipping’ of property. Real property gains tax (PRGT) has been raised twice in the last two budgets after having previously been abolished in 2007.

This year, the RPGT was raised from 10 to 15 per cent for properties sold within two years and from five to 10 per cent for properties sold between two and five years from time of purchase. There is no RPGT levied on properties that are sold after five years.

REHDA treasurer N.K. Tong said he did not expect a severe impact from the RGPT increase as it would not affect long-term investors.

“We want people to take a long-term view of property investment,” he said.

However, The Malaysian Insider called the recent RPGT rise ‘feeble’ and believes it will not deter property speculators. This is mainly because investors buy new properties off plan and sell them after construction is completed two years later – thus avoiding the highest RPGT tax rate.

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