10% RPGT imposed on properties sold within 2 years of S&P date is pretty much useless in curbing speculative activity in the market for two reasons:
1. It takes at least two years for a project to be completed by a certain developer anyway.
2. And most, if not all speculative buyers buy from developers due to lower initial capital outlay.
Case study:
I recently saw a semi-d selling at RM2.2 million. All fees associated with the purchase are absorbed by the developer. Other than the 10% downpayment, I don’t have to pay for anything else until after the unit is handed over, i.e. completed, which will be in about 2 years time.
10% downpayment equals to RM220k, but there is a 7% discount for bumiputra, hence the downpayment is now reduced to just 3% or RM66k.
RM66k to commit yourself to a RM2.2m house. Do you think this is crazy? Hold your horses… it gets better.
To book for the house, they asked me to only pay RM20k. The rest can be paid upon approval of my loan. After they said this, I fidgeted, bobbed, twitched, wiggled, and stuttered, with the intention to test if they would be willing to accept a lesser amount.
I was right… they kept lowering it down until the final number was just RM5k! (after I told them I did not bring my checkbook but I did have my ATM card).
So ladies and gentlemen, tukang kayu dan tukang simen, you can practically “buy” a RM2.2m house with just RM5k and delay all other payments. You can play hide and seek (or tug o’ war, your choice) with the bank… so that the loan application process will take as long as possible. Or you can be in cohort with the loan officer and the selling agent to delay the approval process so that the house remains “yours” and not sold to other party during its construction, although you can “sell” it for a quick buck (under the table) to another willing buyer at any time. The “profit” will then be shared amongst your partners-in-crime.
And that my friend, is how bubbles are made.
