Before the COVID-19 pandemic struck, it was difficult enough trying to afford a property in Malaysia’s ever-growing property market with new – and oftentimes, pricey – projects mushrooming everywhere.To put things into perspective, by late 2019, Malaysia’s property overhang registered up to RM41.5 billion with residential properties contributing to 45% of the overhang!Now that the pandemic has kept people indoors and certain businesses have closed their shutters for good, the property market seems bleak due to poor consumer affordability and unfavourable property prices.However, all hopes are not lost as the Home Ownership Campaign (HOC) that was previously introduced in 2019 is now back (!) until May 2021, as part of the Short-Term Economic Recovery Plan (PENJANA) by the Malaysian government.
The Home Ownership Campaign 2020 is essentially the same as it was in 2019 – to stimulate property buying process, and the sale of unsold properties.
Buyers will be able to enjoy financial incentives by both the government and developers to make their property dreams come true!
What’s So Good About HOC 2020?
For starters, homebuyers will be able to enjoy full stamp duty exemption on the Instrument of Transfer for residential properties up to RM1 million, and a partial stamp duty exemption (3%) for those priced between RM1 million to RM2.5 million.
Not only that, but the stamp duty on the Instrument of Securing Loan will also be exempted for residential properties up to RM2.5 million. And best of all, every homebuyer will enjoy a minimum of 10% discount off the purchasing price!
As most down payments are 10% of the property’s asking price, this awesome perk means you can save a bit more of your hard-earned money for something else, like the furniture.
You might think, “Buying a property is a big step and I can’t quite afford it. Should I really take advantage of HOC 2020 and buy a home?” Luckily for potential homeowners, it’s every buyers’ dream market now.
As there are so many properties in excess, it might be easier to get extra freebies thrown in as part of the purchasing package.
Not only that, but the people you’ll deal with (agents, developers, owners) might also be more accommodating and willing to negotiate as they’re trying to close a sale, after all.
To nudge you in the right direction just a little bit more, the Overnight Policy Rate (OPR) has been slashed even further to 1.75% – the fourth time in 2020 alone!
What this essentially means is, if you take out a loan after the OPR decrease, your loan interest rate will cost less for the time being. Let’s take a look at a sample calculation below:
Do bear in mind that the OPR and interest rates are variable and can change (just look at its 2020 history!), so make sure you consider your financials thoroughly before embarking on such a financially heavy decision.
What Else Is There To Know About HOC 2020?
Owning a home in Malaysia has never been easier with the HOC 2020 as you can buy not just one property, but two or three… or more!
BUT, not all the projects under the HOC might be able to fulfil your criteria of a dream home. Why is this so? First off, the Home Ownership Campaign is only for newly launched projects.
If you’re looking for a subsale terraced home in a matured neighbourhood for the charm of something old school, you’ll definitely not be able to find what you’re looking for. In this case, the secondary market would suit you better.
However, if you prefer something fresh off the construction site, is convenient, and compact like a high-rise project instead, there are plenty to choose from.
For many aspiring first-time homeowners, the HOC is the perfect opportunity to own a property with plenty of choices of move-in-ready units available.
As the HOC was designed to promote residential home purchases, the properties bought cannot be used and/or converted into commercial activities.
Do note that while Serviced Apartments and SOHOs are typically commercial-titled, they are recognised as a residential property under the Federal Government Gazette, thus eligible for HOC.
Although the benefits of the HOC are oh-so-tempting, don’t forget to consider if it’s for your own dwelling or as an investment!
Buying a property in a matured location would be considered a quick investment as many would love to live near their work to reduce commute time, but a property on the outskirts will take time to rent or sell because the location hasn’t been fully developed yet.
The discounts might be the most appealing part, but if you’re considering buying a property as an investment, it’s best to evaluate its full potential and how long you’re willing to wait before you can fetch a good price.
In case you’d like a better overall look at the pros and cons of purchasing a property under the HOC, the table below should be of use to you:
Pros of buying a HOC project
Cons of buying a HOC project
|Full stamp duty exemption for Instruments of Transfer (up to RM1 million)||Only for newly launched projects|
|Partial stamp duty exemption for Instruments of Transfer (more than RM1 million up to RM2.5 million)||May not be able to enjoy the well-established facilities of a matured neighbourhood if new project is in up-and-coming area|
|Full stamp duty exemption on the Instrument of Securing Loan (up to RM2.5 million)||If buying for investment purposes, may need to wait a longer time for the area to be fully developed so that the price can appreciate|
|Minimum 10% discount off the development’s purchasing price||Properties bought under HOC for residential purposes only, no commercial activities allowed|
|Might be easier to get additional goodies from the developer|
|Overnight Policy Rate (OPR) is at its lowest level (1.75%), making it cheaper to borrow money|
Get Ready For HOC 2020!
Once you’ve found the property of your dreams and you’re ready to sign those papers, one last thing to do is to check if the project is registered under REHDA (Peninsular Malaysia), SHAREDA (Sarawak), or SHEDA (Sabah) as part of the campaign.
There might be unscrupulous developers looking to take advantage of eager buyers, claiming that the project is part of the HOC when it’s actually not! If the project is not registered under those 3 associations, it is not part of the HOC.
As we’ve said time and time again, purchasing a property is quite a life-changing decision and before jumping straight into it, take the time to sit down and plan things out with extra focus on your finances and long-term plans for the property.
The Home Ownership Campaign will run until 31st May 2021