As the property overhang issue in Malaysia is still very well existing in 2019, with an estimated amount of RM30bil of property overhang value with unsold units anywhere from RM50,000 or less to more than RM1mil. Even though it seems like the situation will never get better or at least for the time being, there are a couple of ways to solve or even take advantage of the current situation.
For people that have already been looking for a property to purchase for a while would probably know that on 29th of December 2018, the Ministry of Finance has announced that the government has come to a decision that for six months, from 1st of Jan 2019 until 30th of June 2019, the stamp duty rate will be maintained and the government had also agreed to grant a stamp duty exemption of a 100 per cent to first time home buyers for properties priced anywhere between RM300,000 to RM1 million. The Minister of Finance, Lim Guan Eng said that the goal for implementing this stamp duty exemption is to encourage first time home buyers to purchase their first property, whilst slowly solving the property overhang issue in Malaysia as well as heightening the property market. To further decrease the property overhang number, the government should also extend the current maximum loan tenure from 35 years to 40 years whilst also providing various types of loans such as flexi interest rates, flexi loans as well as step-up schemes. By having this extension of the loan tenure available, home buyers will be able to afford to pay lower monthly installments. This will definitely make it more flexible for homeowners to own properties, at the same time allow young home buyers to own a house once they join the workforce.
Even though the number of homeless people in Malaysia is low compared to countries like the United States of America or even Australia, the government could help them by purchasing overhang properties and turning them into shelters for the homeless. This will definitely help them get back on their feet, giving them a simple roof over their head will encourage them to get an honest job and work hard for the life they think they deserve. Since Malaysia does not have any official refugee camps, unsold properties can actually be converted into refugee camps for refugees who seek asylum in Malaysia. Also, the overhung units can still be converted to be an orphanage for orphans, an old folks home, or even a government funded kindergarten for children whom parents are not financially capable of sending them to a privately owned kindergarten.
Unsold residential units can also be turned into commercial units for small businesses to buy or rent. This will definitely help with the property overhang issue whilst helping small businesses with a head start will boost the economy and also the property market. At the same time, giving some rental rebates for such properties could attract foreign companies to set up businesses and expand their footprint into Malaysia. In the end, this will naturally help develop a stronger rental market for residential homes whilst overcoming the issue of property overhang. For overhang residential units that are in ungated areas, the government can buy a few houses side by side on two rows facing each other. Each of the units can be partitions into smaller “booths” to make a small permanent bazaar for small businesses to rent. Small businesses can rent these “booths” to sell local products such as batik, arts & craft, Chinese calligraphy, henna, or even home-cooked local food. By turning a few overhung residential units into a permanent cultural bazaar, it can help attract more tourists to pay a visit to Malaysia for their vacation.
There are many ways the government can help with the property overhang issue and this article just highlighted a few. If the government really wants to help decrease the number of unsold properties and also help young people get their first house without having to work many years to save up a large amount of money to pay their deposit for their first ever home.
Written by Hann Zern
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