Blog 2020

Banks are looking to assist home loan borrowers during the Coronavirus outbreak

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With a sudden decline in the economy due to this outbreak, financial institutions are doing their part in helping the rakyat with their debt.

SOPA Images / Contributor | Getty Images

As you may already know, the COVID-19 (coronavirus) has been spreading throughout the world like wildfire. People are scared, while face masks and hand sanitisers are high in demand – to the point where a massive shortage of supply is observed not just in Kuala Lumpur, but in other urban areas as well.

The situation is much dire in Singapore where panic buying is leaving most with empty shelves in the supermarkets. Even cruise ships unaffected by the virus are not allowed to dock, despite stopping in 3 different countries.

When will this stop? Nobody knows. There is no known vaccine as of yet, and the virus can be transmitted easily amongst humans.

In a recent article, an economist mentioned that Japan, South Korea, Taiwan, Hong Kong, Philippines, Singapore, Malaysia and Thailand’s economy will be badly affected if the outbreak is prolonged for more than 3 months. Logically, when consumers’ spending is low, with restrictions on imported goods, travel restrictions and many more – how can this NOT impact the economy?

We have no choice but to brave the storm. In light of this, some banks are announcing a temporary loan instalment deferment to their loan borrowers, as a way to help them during this difficult time.  According to a banker friend, loan borrowers will need to submit a request letter in order to allow the deferment. This is much better than letting the loan go into default and keeps people from losing their homes.

When there is a high chance of default, it is also not great for banks as the number of non-performing loans (NPL) will increase and thus, the loan loss provision will be higher – which can affect a bank’s bottom line. Therefore, a temporary deferment would have only a limited impact on banks.  However, not all banks are offering this yet, but it is likely that they will soon follow suit.

Blog 2019

4 Budget 2020 initiatives home buyers can take advantage of

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Written for iProperty

Let’s take a closer look at the key housing-related proposals announced under the latest Malaysian government’s budget. 

© Tsung-Lin Wu | 123rf

Whenever the annual budget announcement is around the corner, you will see plenty of speculation, opinions and projections from various parties. Of course, everyone will hope for a better budget than the former. With the recent Budget 2020 that was announced on 11th October 2019 by our finance minister YB Lim Guan Eng, let’s look into what the impact on the property sector would be like:

1. Rent-to-Own Scheme (RTO)

  • Financial Institutions will provide RM10 billion financing, in which 30% of RM3 billion is guaranteed by the government.
  • Applicable only for properties up to RM500,000
  • Applicants can rent up to 5 years, before deciding whether to purchase at an agreed price.
  • Exemption on stamp duty for SPA and loan agreement.

RTO caters to aspiring homeowners who find it difficult to come up with the initial 10% downpayment. The scheme is also good for young, working professionals and couples as it gives them some financial cushioning and allows them ample time to save, for 5 years. They can then decide whether to buy or not in the sixth year.

The rent to own scheme biggest selling point is that buyers will be able to lock in the property purchase price based on the current selling price. This means when they do purchase the home after 5 years, the sale price remains unchanged even though the who wish to lock in the purchase price based on the current property value so that when they decide to finally make the purchase, the sale price remains the same even though the property’s current market value is higher due to capital appreciation over the years.

If the property price at that time goes down, they can decide not to buy; but if the price goes up, it’s a win for the buyer.

It is always crucial for homebuyers to do proper financial planning before they commit to buying a property. Some suggestions would be to work part-time jobs in addition to one’s main job to supplement their income – take advantage of the many opportunities like e-hailing cars or food delivery. I spoke to a GRAB driver recently who told me she is driving part-time to earn extra money to buy a house. This is a good example of using resources that you already have to your advantage – in the long run, it would help alleviate financial burdens and help you save more, faster.


2. Lowering foreigner’s minimum property purchase price from RM1 million to RM600,000


© Getty Images

There are many comments on this new law. Some states it is a good thing while others say it is open for abuse. What do you think? Indefinitely, it is good news for developers. There are still a staggering RM8.3 billion of supply overhang in the property market. It is also great news for foreigners – I recall someone who came up to me at a seminar last year, lamenting that RM1 million is too high for his budget. Now he’s able to grab the lower deal.


According to the government, this only applies for existing, unsold units and not for new projects and will only last for a period of 1 year, from 1st January 2020 to 31st December 2020. Additionally, foreigners who will buy these properties will not be given automatic citizenship. The government hopes to reduce the number of overhang units within this period.

One thing to also note is that the government announced the minimum threshold on a national level. So it would depend on each state to implement this as a state prerogative – based on the guideline, RM600,000 is the lowest they can go.

3. Real Property Gains Tax (RPGT) has been revised

© Andriy Popov | 123rf

Everyone was hoping that the RPGT of 5% ruling for genuine homeowners to be abolished in Budget 2020, as it was said to be actually a tax on inflation. I think the government heard us loud and clear, but unfortunately, it is not abolished.

Instead, the government made a change to the date of the 5% calculation from 1st January 2000 to 1st January 2013. That’s a 13-year revision, and it can be construed as good news. In a Facebook Live commentary on Budget 2020 with WK Ng, a full-time investor, he mentioned that 2013 is a period where we have already surpassed the high increase in property prices.

So the 5% tax is now much lower. But of course, the new law will only come into effect on 1st January 2020, so until then, property sellers may want to hold off any sales for the remaining year.

4. Youth Housing Scheme under BSN


© HAFZI MOHAMED / Bernama Images

This is another good initiative in helping youths to earn their first home. The scheme which is also widely known as Skim Perumahan Belia (SPB) was extended by BSN to 31st December 2020. It is limited to 10,000 houses and homebuyers will have the luxury to borrow up to 100% of the purchase price and 10% is guaranteed by Cagamas.

I support this initiative, but homebuyers will need to do proper financial planning. The first rule is to buy only what you can afford – so if you can only afford RM200,000, you cannot be buying a RM400,000 property. Grow slowly within your means, you do want to end up bankrupt.

Just to add on, the recent Homeownership Campaign has been extended to 31st December 2019. Take this opportunity as it comes with free stamping fees on SPA and loan. However, not all developers are in the scheme, only those registered with REHDA, SHAREDA and SHEDA qualifies. The campaign has already surpassed its objective of RM3 billion, achieving a whopping RM13.44 billion, which is four times higher. Therefore, it is very unlikely that the scheme will be extended any further.

I hope this will give you a better insight into Budget 2020 and its impact on the property market. Again, let me stress that it is crucial to have proper financial planning before you start your property journey. Best of luck in buying your first property.