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Budget 2024: Real Estate Highlights

Introduction
Inside the Budget
In the latest development from Malaysia, Prime Minister Dato’ Seri Anwar Ibrahim presented the nation’s most expansive budget to date on Friday, October 13. This budget reflects a significant departure from the prevailing policy of universal subsidies, with a renewed focus on targeted assistance to those most in need.

Key measures unveiled in the budget encompass an adjustment in the Sales and Services Tax (SST), increasing it from six percent to eight percent. It is noteworthy that this change will exclude essential items such as food and beverages, as well as telecommunications services.

The much-anticipated 2024 budget, notable as the inaugural budget under Prime Minister Anwar’s administration since he assumed office in November the previous year, signifies a return to the traditional year-end budget release schedule.

Prime Minister Dato’ Seri Anwar, who also holds the position of the country’s finance minister, disclosed the allocation of RM303.8 billion, constituting approximately 77 percent of the RM393.8 billion budget designated for the coming year, for operating expenses. An additional RM90 billion is allocated for developmental expenditure.

This financial blueprint for 2024 not only emphasizes prudent fiscal planning but also reflects a paradigm shift from universal subsidies to a more targeted framework primarily designed to support lower-income segments of the population.

Our lawyers have compiled the key Real Estate related highlights for your easy reference.

Please do not hesitate to contact us at hhqkl@hhq.com.my for any enquiries, feedback or comments, we look forward to the year ahead with great anticipation!


Budget Highlight
Real Estate

MM2H

  • • To attract more foreign investors and tourists to Malaysia, the government has agreed to relax the existing requirements for Malaysia My Second Home (MM2H) applications.

Islamic Finance

  • • The Labuan International Business and Financial Centre (Labuan IBFC) will be transformed into a Shariah-compliant Islamic financial hub. The government is proposing a five-year tax exemption for Labuan-based entities engaged in Islamic financial activities, including digital Islamic banking, Ummah related companies and issuers of Islamic digital token, commencing in the assessment year 2024.

Delayed, “Sick” and Abandoned Private Housing Projects

  • • The recurrent issue of delayed, “sick” and abandoned private housing projects has been affecting the homebuyers until today. This year, the government has formed a special team under the Ministry of Local Government Development (KPKT) to address the above mentioned issue. As of August, they have revitalized 256 projects with over 28,000 housing units, totaling RM 23.37 billion in value.

Housing Projects

a. Generally, RM 2.47 billion is allocated for Program Perumahan Rakyat (PPR) in the year 2024. Other initiatives allocated in the Budget 2024 are outlined as follow:
ii. A special guarantee fund amounting to RM1 billion to encourage competent developers to revive the identified abandoned projects;

iii. RM 546 million is provided to continue 36 Program Perumahan Rakyat (PPR) that includes a new project in Kluang, Johor. 15 PPRs are expected to be completed next year for the benefit of 5,100 new potential residents;
iv. A total of 14 Program Rumah Mesra Rakyat will be continued, to build 3,500 housing units with an allocation of RM 358 million.

iv. The government has allocated RM 460 million to provide assistance to approximately 65,000 people with low income in the countryside particularly for repairing or building new houses; and
v. RM 100 million is allocated to maintain low and medium cost stratified public and private housing units throughout the country that includes repairing water tanks, roofs, and wiring systems as well as installing closed-circuit cameras.

b. The government will increase the Skim Jaminan Kredit Perumahan (SJKP) by RM 10 billion to benefit 40,000 borrowers.
c. The threshold for residents’ consent to en-bloc sales will be reduced from 100% to a consistent level based on international practice such as in Singapore. This initiative will encourage urban renewal and promote development in the city.
d. Under the Unity Government, the government has taken over the development of Bandar Malaysia based on MADANI values. This includes providing affordable housing projects for veterans, considering the interests of Bumiputera in the Federal Territories as well the provision of green environments that can be utilised by all Klang Valley residents.
e. The government will allocate RM 100 million to Chinese New Villages for the provision of basic infrastructure and social facilities.

Stamp Duty for Instrument of Transfer for Foreigner

a. Currently, Item 32(a) of the First Schedule to the Stamp Act 1949 delineated the stamp duty rates applicable to instruments of property transfer as follows:
ii. 1% for the first RM100,000.
iii. 2% for any amount exceeding RM100,000 but not exceeding RM500,000.
iv. 3% for any amount exceeding RM500,000 but not exceeding RM1,000,000.
v. 4% for any amount exceeding RM1,000,000, based on the consideration or market value of the property, whichever is greater.

b. As a measure to control the property prices, the government has proposed a fixed 4% stamp duty rate for property transfer instruments for all foreign individuals and foreign companies, except permanent residents.

Instruments of Transfer for the Renunciation of Beneficial Entitlements in a Deceased Estate to Other Eligible Beneficiaries Under the Will, Faraid, or the Distribution Act 1958, Subject to Nominal Stamp Duty

a. Currently, when beneficiaries renounce their rights in a testate estate in favour of another beneficiary entitled under the will, Faraid, or the Distribution Act 1958, the instruments of transfer are subject to ad-valorem stamp duty.

b. However, in the Budget 2024, the government has proposed that the transfer of property ownership from beneficiaries who renounce their rights, regardless of
whether it is a testate (under a will) or intestate (without a will) estate, to the other eligible beneficiary under the will, Faraid, or the Distribution Act 1958, will now be subject to a nominal stamp duty of RM10.00 only.


Prepared by:

Goh Li Fei
Partner
Real Estate and Banking & Finance
lfgoh@hhq.com.my

Clara Chu Yen Yong
Associate
Real Estate and Banking & Finance
clara.chu@hhq.com.my

Ainie Ajiera binti Rosman
Associate
Real Estate and Banking & Finance
ainie@hhq.com.my

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