The Malaysian Government, in a bid to stimulate the housing sector and help Malaysians purchase their own home initiated the Home Ownership Campaign (HOC) which provided an exemption on direct purchase of homes from Developers. This is a one year campaign (from 01.06.2020 – 31.05.2021) which is set to end next month.
What is the benefit of the HOC?
The HOC provides an exemption on stamp duty payable on homes whose price (before discount) is between RM300,000.00 to RM 1,000,000.00 and caps the duty payable for home between RM 1,000,000.01 to RM 2,500,000.00 to 3% (a 1% reduction on the usual tax rate).
What does that actually mean?
Well, prior to the campaign, a purchaser would be subject to 1% stamp duty on the first RM 100,000.00, 2% for the next RM400,000.00, 3% for the next RM500,000.00 and 4% for the balance thereof (Schedule 1, Paragraph 32 (a) Stamp Duty Act 1949).
For example, if your new home was valued at RM 1,000,000.00 then the stamp duty would be:
ANzzFor 1st RM100,000.00 x 1% = RM 1,000.00
fhzzFor next RM400,000.00 x 2% = RM 8,000.00
ANiFor next RM500,000.00 x 3% = RM 15,000.00
Therefore stamp duty payable is RM 24,000.00
Under the HOC, this RM 24,000.00 would be exempted.
The exemption further applies to loans obtained in relation to the purchase of the home. Where previously the loan agreement/ loan facility would be subject to a stamp duty, this duty is also waived.
How does a Purchaser become Eligible?
This exemption applies ONLY to residential property (including service apartments and SOHO), both built and under construction, which are governed by the Housing Development (Control and Licensing) Act 1966 and where the developer has a valid Advertising Permit and Developer’s License (APDL) and the Developer has obtained the approval for the project to be within the ambit of HOC from the Real Estate and Housing Developers’ Association (REHDA) Malaysia.
*PLEASE NOTE: The easiest way to check is to go onto REHDA’s website and check under the tab “Registered Project” to see if REHDA has published the Housing Project of the property you intend to buy as a project subject to the HOC.
With regards to the pricing, the HOC applies only where the Developer gives a minimum 10% discount and where the property’s price before discount is between RM 300,000.00 and RM 2,500,000.00
And finally, please ensure the Sales and Purchase Agreement, between the Developer and you as the Purchaser is SIGNED AND DATED within by or before 31.05.21.
Important Notes to Remember
This Campaign is an excellent incentive for potential home owners to enter or re-enter the property market. Please note that the Government has not placed any limitation on the number of units that can be purchased. This is a bigger incentive to those with capital to purchase more landed property during the current market.
In addition, if you have already paid your stamp duty on your recent property, if the property/purchase is eligible for the HOC, you can apply for a REFUND of the stamp duty paid after obtaining the HOC Certificate.
Finally, we wish to make aware that third parties are not exempted from stamp duty on obtaining a loan. It only applies to the purchaser. For example, if one partner in a marriage registered their name as the purchaser but both parties applied for a joint loan, the partner who registered as purchaser would be exempt from stamp duty. The other partner would have to pay stamp duty on the loan.
If you have any questions on the above, or would like to know more about the HOC, please do not hesitate to contact our conveyancing team at firstname.lastname@example.org or get in touch with us on 03-22834696.