In the lead up to the upcoming Budget 2022, we at iProperty.com.my are looking forward to this year’s announcement. We are confident that the budget announcement will introduce more forward-thinking policies that will further strengthen our country’s economy and help the Rakyat.
With Malaysia being one of the leading countries with a high vaccination rate, we foresee that the property sector will further recover with improving consumer confidence. Nevertheless, more work needs to be done for the property sector to return to normalcy.
Therefore, iProperty.com.my has several suggestions that may help the government make better policies on revitalising the property market.
Bolster Foreign Home Buyer Confidence through Easing of Malaysia My Second Home (MM2H) Programme Restrictions
We commend the government for relaxing its rules for existing Malaysia My Second Home (MM2H) programme participants. As a result, they now have to fulfil only two of 10 new criteria under the revamped programme: the increase in annual fee from RM90 to RM500 and the requirement to stay in the country for a minimum of 90 days each year. Such a move will help reduce short-term pain points and outflow of MM2H holders currently within the country.
However, the government must remain consistent when announcing a revision to the MM2H policy. This will safeguard Malaysia’s reputation as a viable second home to foreign homebuyers and bolster foreign homebuyer interest in the Malaysian property market in the long run. Furthermore, as we transition to an endemic phase by the end of October, the MM2H programme will play a significant role in enabling a better economy after two years of the impact of the global COVID-19 pandemic.
As such, we propose that the government continue looking into improving the MM2H programme to make it more attractive in terms of eligibility and home buying criteria for future participants and it should be done progressively over a period of time. The current requirements include having a minimum of RM1 million in fixed deposit, compared to the much lower RM150,000 previously, and proof of liquid assets of a minimum of RM1.5 million, compared to at least RM350,000 previously.
This may dampen foreign interest in coming to Malaysia. By revising the eligibility criteria progressively, we hope to see revived foreign interest in the Malaysian property market.
We also urge the streamline of the MM2H application process to make it more convenient and accessible to potential participants. Addressing any application pain points will encourage genuine participants to see through with their application process and secure foreign homebuyer confidence in Malaysia. Even though the programme only encompasses a relatively small segment of total homebuyers in Malaysia, it remains an essential driver for foreign buyer demand. Additionally, a more significant inflow of foreign direct investments into the Malaysian economy can trickle down and help support local businesses affected by COVID-19.
Promoting Suburbanisation through Better Infrastructure Systems
In a bid to decongest central business districts (CBDs) within the Klang Valley and other states’ city centres, we propose that the government promote suburbanisation. Seeing how the work-from-home (WFH) or hybrid work trend may likely be here to stay for a while even when we transition to endemic, individuals would have less reason to reside close to their place of work and can seek out bigger living spaces in the suburbs instead.
We have already observed this suburban migration trend occurring through the latest iProperty.com.my H1 2021 Portal Demand Analytics (Residential Subsale Market). In particular, Selangor’s suburban areas such as Puncak Alam, Dengkil, and Semenyih, gained +5%, +2%, and +4% Year-on-Year (YoY) demand growth respectively, thanks to the availability of affordable and spacious terrace houses in those areas.
As such, we hope the government will increase efforts in promoting suburban areas and housing as an attractive alternative to dense urban settlements. Once consumer demand for suburban areas increases, the government could then introduce key infrastructure development projects to sustain long-term interest in these areas. By making amenities more accessible within these areas – such as better roads, hospitals, educational institutions, lifestyle amenities and public transportation services – the government would reduce urban pull factors and, in turn, decongest CBDs. Additionally, the persistence of the WFH trend post-pandemic would see individuals continue to work from home; thus, better internet infrastructure can reduce the need for workers to reside or commute to the city for work.
Facilitating a Conducive Environment for First-time Home Buyers
A targeted first-time home buyer initiative for affordable homeownership needs to be introduced to address the current financial issues faced by various demographics within this buyer group. For example, the self-employed might find it difficult to have the proper documents to apply for a home loan and they may not be able to take advantage of existing schemes like the HOC. A facilitative financing scheme for this group might help in getting them loan approval and achieving their first home.
We propose the government streamline the application process for home financing facilities – such as the Rent-to-Own Scheme (RTO), Youth Housing Scheme, Fund for Affordable Homes, and First House Deposit Financing Scheme (MyDeposit) – to further lower the barrier of entry for first-time home buyers. Various schemes have been introduced in the past few years but some of the websites have outdated or confusing information; some schemes even have a few different sites each. Placing these schemes under one roof will encourage consumers to select the best scheme that will fit their needs and requirements; smoothening the application and approval process.
Many renters choose to rent as it makes more financial sense in an environment of high property prices. Hence, to encourage these renters who wish to transition to being homeowners, we suggest that the government introduce a framework that will allow financial institutions to recognise rental history as a supplementary reference when reviewing an applicant’s loan. Implementing this framework will give applicants an extra boost to increase their chances of securing home loan approvals.
Increase Governance within Rental Property Market
We believe the government must enhance governance within the rental market as many Malaysians participate in renting property, at least until they have accumulated the necessary funds to purchase their own home. Furthermore, as more people grow accustomed to the WFH trend, renting could be seen as an attractive option for individuals to save on accommodation costs in the short term.
To enhance governance within the rental market, we propose the government set up a digital framework for PropTech firms to develop a comprehensive online system that can help modernise the rental application, management, and payment processes. For example, a Tenancy Agreement that can be executed and stamped online will reduce common pain points associated with renting property and reduce landlord-tenant disputes.
Establish a Committee to Assess Efficacy of Commission-Based Jobs such as Property Agents
It is not an understatement to say that the pandemic has dampened consumer confidence within the country. The repercussions led to consumer-facing jobs taking the brunt of the impact; commission-based jobs were significantly affected as workers depended on sales to safeguard their livelihoods. As such, we propose the government set up a committee to look into the efficacy of commission-based jobs within the past two years and develop ways to mitigate potential issues in the future.
Tying back to the property market, commission-based jobs also comprise real estate agents. According to the Malaysian Institute of Estate Agents (MIEA), roughly 25,000 licensed property agents were affected during the start of the Movement Control Order (MCO). Therefore, we will welcome any effort by the government towards assisting property agents as they will play an essential role in spurring economic recovery when consumer spending revives.
The annual budget announcement plays a significant role in strengthening the country’s economy and, by extension, the property market as we move forward to a hopeful 2022 with a brighter landscape. To that end, we are open to collaborating with the government and providing valuable property market data, including consumer demand for the subsale and rental markets. We believe our resources can assist the government in making more well-informed decisions and policies to enhance our local property market.