Beware of KL City Rental Scam

Recently a friend looking to rent an apartment in the city found a very good deal via an online portal. Apparently, a British expat advertised his studio apartment at Casa Mutiara condominium in Bukit Bintang. He said he has gone back to the UK and would like to rent his apartment out for RM1,000 including utilities. This is of course, sounds too good to be true and whenever you have deals like this, you want to think twice.

The advertiser then said since he is in the UK, the interested party must deposit a sum of RM2000 as deposit to iproperty. Then iproperty would instruct him to ship the keys to the interested party for inspection of the property. Within 24 hours days if you are not interested with the property, you can get a full refund.

Obviously the advertiser thinks everyone trusts the name iproperty. However, in closer inspection, the money is not banked in to iproperty's account.

So, if one is not vigilant and checks the fact then it's bye bye to your money...

Confused on Effects of GST

More discussions on the GST effect on property prices here...

http://www.thestar.com.my/News/Nation/2015/02/01/Mixed-views-on-house-prices-GST-increase-minimal-and-developers-should-absorb-it-says-Subromaniam/

According to people in the know, the increase if any will be minimal. The customs department, in my opinion, knows shit about property business says prices will fall or remain the same because developers should absorb GST costs. Developers or any businessmen in Malaysia as we all know will increase prices. When oil price went up, although the effect on cost is less than 2%, we have seen prices of food, essentials and logistics increase 10% to 20%. Sugar price increased by 20sen, effect should be less than 0.05% and we saw our coffee and cakes prices go up 20%. So do you think developers will absorb costs?

One guy even says there is going to be oversupply of residential units and such property prices will fall. But such blanket statement borders on ignorance and shouldn't be taken seriously at all. Because every urban area in Malaysia, the government is under pressure to build homes because there is an undersupply. So, this chap is talking about over supply. I am sure later he will use examples of Rawang and Bukit Beruntung to show prices are stagnant or falling. But let's talk about KL, PJ, Subang Jaya etc. If this guy thinks the prices there will fall, I urge him to sell his properties to me at these falling prices.

Will GST cause property prices to increase?

In less than 3 months time, GST will be introduced. The government is trying to make us think residential property prices will not increase because of this. In fact, they said the supply and demand of residential properties will have more effect on the price rather than GST. That is, developers and sellers will not increase prices, or even reduce prices in order to attract buyers. The government is not wrong about this... except that they are only telling you what you want to hear.

Take for example, this FAQ section in the Ministry of Finance's website.   

A frequently asked question:

Residential house is an exempt supply. The price will increase when GST is implemented as input tax cannot be claimed by property developer. How is it possible to convince the rakyat that the price will not be increased substatially because of GST

And if you read the reply from the MOF, you'd probably feel they think you are stupid - because they are not answering the question. 

The treatment to exempt residential house is to reduce the burden of rakyat because house is a basic necessity to the rakyat. The treatment also complements the Government’s initiatives to build more affordable houses for those who qualify especially the lower income group. This will give a minimum effect  compared to a situation where GST is charged at a standard rate on the residential house. The price of the residential house especially in big cities is very high where among the reasons is due to limited supply. As such, GST should not be used as an excuse for the price increase.

1st of all, a 6% GST is now imposed on all construction materials and services. While in the case of commercial properties where GST is imposed and developers can claim back the 6% tax, this is not the case for residential properties. Developers will naturally pass on this cost to the end victim - the buyers. 

But the government wants us to think that developers will instead absorb this cost because if they don't they won't sell anything. If this is indeed true, what about supply and demand? Post GST, investors will naturally turn to residential properties since they are "GST free". This will cause demand to turn towards residential properties. Investors will refrain from commercial properties such as offices, shops or serviced apartments (commercial titled residential strata) and buy residential properties. So residential-titled properties, if supply is low will definitely increase. Especially those in high demand areas like Subang Jaya, PJ, Cheras etc.

In a normal demand & supply scenario, properties in good locations will always increase. GST will drive even more demand towards residential. So residential properties in good locations will see a steep climb. 

I know post-GST, the government will show examples of property prices stagnate or drop but these will probably be in low demand areas like Bukit Beruntung, Malay reserved land in Hulu Langat or Sungai Merab and so on. 

This blog is not interested in bad properties or low demand locations.

Unlocked the Secrets of Advertising Our Properties

December was looking like a challenging month for me. Suddenly, I received notices from 4 tenants in early November they were moving on. I started advertising everywhere but the initial response was really slow.  Up to now, the best results I ever got was from the newspaper classified ads. Those who called me are always property agents. I always wondered how they actually found the tenants.  

I have also tried online. These are the few websites I used:

expatriates.com and expat-blog - expats tend to troll these websites. I used to find tenants here but always the low quality ones. I had a Canadian guy who stayed less than 3 months when he was supposed to be on a 12 month contract and when he moved out, my apartment was worse than a pig-sty. He even left rotting meat in the sink. But lately, these sites are now flooded with advertisments from property agents who posted "blank-ads". What I mean by "blank-ads" is they do not really represent any properties. The property descriptions are imaginary and the photographs are of other units. I think their strategy is to attract potential clients to call them and then the clients will be told the advertised units are already taken so they can propose something else to them. 

I know property agents need to make a living. And it is always a chicken and egg situation for them. Without the clients, they got nothing to offer the owners for an inventory, and without any inventory, they got nothing to offer the clients and so on... but I think the "blank-ads" are flooding or rather spamming these 2 websites. As a result, genuine ads often drown in them and become non-visible.

lowyat forum, mudah.my and iBilik - these are popular local websites. While I've been successful finding tenants for my student rooms, there are no expats here. They are local sites, so expect local tenants and most of my properties target the expat market and budget. I have advertised some of my properties here but the response I got are from property agents and also local people asking for rediculously low rental.

airbnb - works for short term stays only and beware! most people who use airbnb want to pay cheap prices but they expect 5 star service. So don't touch it unless you are willing to kow-tow to them.

If you are happy to deal through property agents, do use the newspaper classifieds. While I found many property agents don't really add much value to the transaction, I have found a few good ones. And those properties I rent out through them are always to good quality tenants.

This time, I have tried something new and the success rate is fantastic. I just put up my banners on trees and lamp posts in the area of my properties. Within hours, I have calls from direct tenants. I managed to directly rent out all my 4 vacant properties within days. I think typically people who want to live around the area will look around the area. It is less troublesome to try and convince people why they should be renting in Bukit Ceylon or Bangsar or wherever. So it makes sense to advertise through banners in the area of the property. The only problem is the mess this creates to the environment. It is also not so legal... the city hall or utility company may trace my number and issue me a fine. But I still find this is the most successful way and my only regret is, I put up too many ads and can't remember where I put them so it is actually quite tedious to find and take them down now. 

Proposed : A Landlord - Tenant Directory

As I have been both a landlord and tenant, since I sub-let a lot, I have my fair share of tenants and landlords antics.

Generally I find there are a lot of investors out there who don't really look after their properties. They are the arms-length investor. When you rent their apartments, there are many teething problems which you have to solve yourself. And those who do look after their properties can be very petty. I rented 2 apartments from this guy and paid him tens of thousands. At the end of it, he was calculating how much to deduct from me for burnt light bulbs. He said they were brand new so should not be covered by wear and tear. When I asked him for the receipts, since they were less than 1 year old, I'd claim warranty from the shop he bought them from, he kept quiet.

I have one landlord who until today, after one year, has not refunded my deposit. He kept on delaying with all sorts of excuses like being overseas etc. I sent a debt collector to his office and his secretary keeps telling the collector to come back every week.

There are many more horror stories, too many to list. There is one who hangs up when he hears me complaining that his air-cond is leaking or washing machine not working.

What we need is a Landlord and Tenant Directory. Similar to the hotel booking sites where Tenants can give feedback about the property and the owner. Sites such as Airbnb also allows the Landlords to comment about the tenants. This will force everyone to behave if they want to continue to rent or let apartments.

The Bully Tenants Part 2...

If my first story hasn't put you off the renting business, you might consider this one.

Normally I find students more respectful. Typically 90% of them are and then you get that 1 out of 10 who is a real prick. Then they involved their parents and that's when you start to understand where they got it from.

My biggest problem with students is they treat the deposit as rent. So 2 months before they move out they stop paying rent and if you haven't been checking you will find out that they are moving out tomorrow and you are left with a pig dump and a huge electricity bill.

But I am more vigilant, and I sought to educate my student tenants about deposits. Because I know some of them will continue their study overseas where they deal with landlords and the law which gives no leeway. So be lenient with them today and they will get into trouble tomorrow.

I have a meter installed in every room to calculate the air-cond electricity usage so that it's fair for all the tenants. I had this tenant who rented a single room from me for just over a year. After six months, he seems to be not using his air-cond at all. Then one day when my contractor serviced all the air-conds, he told me the meter was broken. When I confronted him, he said he was not aware it was broken because he hardly turned on the air-cond. But what his housemates told me were different. His air-cond was indeed turned on every night. So it is obvious he has not been honest and the fact that every month he reported only a minor shift of his meter despite the meter not moving at all confirms that he has been trying to hide the fact his meter was broken.

So I had the enviable role of having to recalculate all the share of the electric bills again backdating 6 months. It's impossible to do it accurately and to be fair I discussed with him the methodology. But he tried to impose his method instead which was clearly in his favour, peppered with insults and rude words on me when I refused to accept them. I had no choice but to told him to leave. Then I had phone calls from his father, which was initially very cordial. However he started to impose his conditions and what he termed as win-win situation, actually is win for him only. I have to calculate his bills before I refund his deposit and to be nice, I actually refunded half of it so he can pay his new landlord. To chase and pressure me to release the other half, every single day both father or son will sms or call me, called me a liar, money sucker, uneducated, mother fucker and everything they were brought up with. They even claimed they have consulted a lawyer and have a strong case to sue me for the balance RM550 (RM370 after bills deducted)!

It's not always you come across such people but you'll definitely come across them if you are in the business of renting. I myself have had a fair share of these characters but to be fair, I've seen some very unreasonable landlords as well... more on that later...

The Bully Tenants

Many people want to get into the property market buying up luxurious apartments and renting them out to make money. But it is not always pleasant as you will also need to deal with tenants, humans... so they come in all types of characters. You may build in all kinds of terms and conditions into your tenancy agreement to protect yourself, but at the end of the day, removing your defaulting tenant is one thing... finding a new tenant is another.

I've had many law respecting and good tenants but I've also had my fair share of lousy tenants. I think respect is the most important thing. You need to respect your tenants, respect their privacy, their rights to have a peaceful stay... this includes making sure your property is fit for their stay. But the problem is, some tenants don't respect the landlord and the property. They think they are paying rent so they are the boss, you are the servant!

In one of the milder experiences, I had up until recently a Singaporean tenant. Same as dealing with some of my colleagues at work, some Singaporeans tend to think Malaysians are less superior than them so they can bully us. Especially this young chap who has a NUS degree and a cushy job at a consulting firm in KL. My rent has been paid whenever he likes... sometimes at the beginning of the month, sometimes at the end of the month, sometimes in the middle of the month and sometimes not at all. So it was hard to trace when he actually paid, it's for which month. So, at the end of the year in December when I only received 7 months of rent, I have to ask for the 4 unpaid months and December's rent to be paid before the 3rd. Luckily Singaporean with a cushy consulting job is rich, so he has no problems paying the 4 months overdue rent but the December one was late. And when I chased for the rent, he said he never agreed to pay by the 3rd so I wonder what the tenancy agreement is actually for... Probably feeling fed up with my persistent demand for my rent, he issued a 1 month notice and moved out.

There is no deposit to refund this guy. He had problems with the internet and after unsuccessfully calling the service provider's technical support he just gave up and left the bill unpaid. I was fortunate as I used to work for this service provider so I knew people. He blamed the service provider so my friend arranged for me to listen to his recorded conversation and I heard how he abused and shouted at the call center. So of course it's his fault because he never gave them a chance to fix the problem and I had to pay the bill.

After that I was kind enough, since he had an old sofa, I got him a new one. I did ask him first but he did not like the new sofa and he demanded for the old one back. Since it was a trade in, I said he could buy a new sofa and claim the cost from me. He did buy a sofa, threw my new sofa away and when he moved out, he took his sofa with him! Needless to say too, the apartment was dirty and he even broke a window.

I can go on and on with other experiences but that will make this article too long so I'll continue again next time...

The Iskandar Prophecy

Less than 6 months into my rant about Iskandar, the property market there seems to be heading that way...


http://themalaysianreserve.com/main/news/corporate-malaysia/6680-properties-in-iskandar-malaysia-facing-oversupply

Properties in Iskandar Malaysia ‘facing oversupply’

Monday, 29 September 2014 14:55 Kavithah Rakwan 0 Comments

Iskandar Malaysia, the main southern development corridor in Johor, is seeing the formation of a housing bubble as a result of Chinese developers that have been flooding the property market with masses of projects.

Kenanga Research property analyst, who refused to be named, said things are moving very slow at the corridor especially with houses which are selling above RM600,000.

“Things are moving rather slow, especially with those that are launched at higher prices. There is still demand for landed property and those priced within the range of RM400,000 to RM600,000.

However, the concern of oversupply involves at the area covered by the Chinese developers such as in Danga Bay which do not price the properties at a cheap rate and go about building around 10,000 units of condominiums in a small plot of land, said the analyst.

The analyst said the supply from the Chinese developers will keep coming in, looking at the way the land is sold to them, and if these developers could no longer hold on to the properties, they could end up selling them at a cheaper price.

Nonetheless, the analyst has some optimism on the upcoming infrastructures such as the rail transit system that could lead to a growth in demand depending on how it is planned.

RHB property analyst Loong Kok Wen said the formation of a bubble could be seen in Iskandar Malaysia, yet it could not be ascertained if prices will fall, which is dependent on the financial position of the Chinese developers.

“We could see a formation of a bubble as property agents are offered 5% to 8% of commission from the usual 2% to sell the property. The ones that are not doing so well are the high-rise properties in which there is oversupply by the Chinese developers, which has led to a supply glut.

“The increase in the toll rates and the increase in the minimum threshold for foreigners to purchase property in Malaysia are contrary to the initial objective, which is to attract demand from Singapore,” said Loong.

Loong, however, cautioned that it is not necessary property prices will fall as the ability of the Chinese developers to hold on to the property will be dependent on their financial strength.

Raine & Horne International Zaki & Partners Sdn Bhd associate director James Tan said the latest policies by the government and the cooling measures are restricting demand when supply is coming on-stream.

“The supply is coming onstream but who is going to occupy them? The situation is worrying. There is a high possibility of a housing bubble coming soon, but not within this year,” he said.

Malaysian Rating Corp Bhd’s property analyst Yap Lai Ken said despite seeing the slowdown in Iskandar Malaysia, there is no necessity for developers to lower prices as other incentives could be given, such as rebates and freebies, to attract demand.

The concern of Iskandar Malaysia developing a bubble could be seen by major property developer UEM Sunrise Bhd’s recent plan to restrategise in terms of product offering and location, to reduce dependency on its projects in Iskandar Malaysia and spread out risks.

UEM has more than 60% of its landbank in Iskandar Malaysia.

A local property developer who refused to be named said the decision by UEM to put on hold its projects in Iskandar Malaysia clearly reflects the negative sentiments that developers have on the corridor.

Meanwhile, analysts from research house fundsupermart.com said they see a slowdown in Iskandar Malaysia if there is an oversupply, coupled with the slew of government measures being implemented, interest rate hikes, low income growth, affordability and capital gain tax.

“For example, to curb property speculation, the Singapore government implemented measures such as increasing the buyer’s stamp duty, sales tax and initial down-payment. Prices actually moderated and then fell, as the Singapore URA Residential Prices Index fell 3.2% from September 2013 to June 2014.

“We could see the same trend happening in Malaysia. Therefore, in the mid to near term, we see limited upside potential and a lack of diversification for property investments,” the research house said.

The formation of a bubble in Iskandar Malaysia did not come unannounced as Kenanga Research did release a report in July this year warning that Iskandar Malaysia is losing its steam.

The report revealed that there were signs of oversupply in the property market with weaker absorption rate of 1.1 times in the first-quarter of 2014.

Do You Have Friends Like This?

They have been trying to buy a house for themselves for years and every time they go view a property, they complain it's expensive because last year, the price of the same property or in the same locality was cheaper. So they do this every year and every year the price doesn't come down.

They keep asking you to recommend a property and when you think you found them a good deal, they say it's expensive. And year on year, they keep looking and yet the price doesn't come down...

Then finally, they finally found and bought a property... which turned out to be really overpriced.

Do you have friends like this? I am asking because I have many such friends...

GST on Maintenance Fees

Apparently the exemption on GST for maintenance fees is only for low and medium costs apartments. But today's article in the Malaysian Insider says that is not so. Low and medium cost apartment dwellers or their owners will still have to pay GST as a result of the pass on effect from their vendors. Doesn't this bode even worse news for the "normal" and higher end condominiums? Not only will GST be imposed on their maintenance fees but they will also increase their GST as a result of higher costs from their vendors. 

Flat residents have to pay GST for maintenance despite exemption

BY JENNIFER GOMEZ

Published: 11 December 2014

Low- and low-medium-cost apartment residents will still be burdened with higher maintenance costs when the goods and services tax (GST) kicks in, a registered property manager said today.

This is contrary to the tax exempt supply list in which management fees for these apartments is listed.

Association of Valuers, Property Managers, Estate Agents and Property Consultants in the Private Sector, Malaysia (PEPS) advisor Wong Kok Soo said that these residents would still be exposed to GST passed on to them from the services provided by the likes of technicians and repairmen. Only goods and services on the zero-rated supply list can claim from Customs the GST incurred through payments to service providers, known as input tax. 

"So the net effect is (low- and low-medium cost housing) residents will be paying 6% of their maintenance charges to the government as tax," Wong said at a press conference in Petaling Jaya today.

This meant that there would be no relief to the lower income group, despite their residential developments being listed under the exempt supply list.

"The government thinks that they have relieved those living in low- and low-medium-cost stratified units and therefore they should be happy.

"But the reality is they are now forced to increase their maintenance collection by 6% because they have to pay higher bills to the service providers for maintenance," he said.

National House Buyers Association (HBA) honorary secretary Chang Kim Loong said that the scenario has turned out to be unfortunate for low- and low-medium-cost apartment dwellers.

"There is obviously lack of thought in the planning of GST and some were very ill-advised and didn't understand the entire concept of giving exemptions," he said.

Chang said that HBA, PEPS, the Royal Institution of Surveyors Malaysia (RISM) and the Malaysian Institute of Professional Property Managers (MIPPM) had sent a petition to Prime Minister and Finance Minister Datuk Seri Najib Razak earlier this month pointing out the problems with the low- and low-medium-cost stratified apartments.

These property industry groups want the government to exempt all categories of stratified properties from GST on management fees.

In the petition, they said it was unfair for other categories of stratified developments to be subjected to GST under the standard rated tax supply.

Other than low- and low-medium-cost stratified developments, those living in other categories of strata property would have to pay GST on their maintenance fees.

Under this standard-rated scheme, one can claim refund of GST input tax (imposed by service providers) from Customs.

But Wong said it was unfair to have to pay GST on their maintenance fees as they were contributing their own monies to maintain, upkeep, refurbish, upgrade and safeguard their own common property.

Wong pointed out that the Joint Management Body (JMB) or the Management Corporation (MC) is formed as a voluntary body by owners to maintain and upkeep common property with monies collected from property owners.

He added that the Income Tax Department recognised maintenance collection in strata developments as mutual income and not subject to income tax.

"So why are they subject to GST," he asked.

According to Wong, the GST Act lists JMB and MC as carrying out a business, despite it was not for pecuniary profit.

Wong said the effect of higher maintenance costs would mean that levels of maintenance, especially for the lower category of strata developments, would decline due to lack of funds.

He added that for strata developments, there is always insufficient collection of maintenance fees, giving the example of medium-cost apartments where the collection rate is only 40% to 60%.

However, GST needs to be paid based on 100% billing and not actual collection.

In their petition to the prime minister, the coalition wants all categories of strata properties to be put under the zero-rated list, noting that this would require an amendment to the GST Act, as the law currently states that only essential goods are categorised under zero-rated tax supply. – December 11, 2014.

- See more at: http://www.themalaysianinsider.com/malaysia/article/flat-residents-have-to-pay-gst-for-maintenance-despite-exemption#sthash.TUJNbbsU.dpuf

Is the Rental Market Slowing?

There appears to be a lot more vacancies in at least 2 of my apartments lately. Some people have been calling me to view my units and I found out they were already staying there. I asked them why they wanted to move, then came various answers... one wanted a bigger unit, one said owner is selling his apartment so he has to move and at least two were very direct - they wanted cheaper rent. But I suspect all of them, not just these two are shopping around for a better price and they may use the price to pressure their landlords into dropping their rent. 

So how much cheaper? They are currently paying about RM3,000/month for their single bedroom units. They can opt for smaller studio units which are asking about RM2,500 to RM2,700 but when I asked what is their budget, they said RM2,000. So I had to apologize that I do not have any units to meet their budget. One of them said it's OK, he will be viewing a few units tomorrow offering that price. I said good luck. 

They may be calling my bluff but I still think landlords are now competing for that small pool of tenants. There will always be desperate ones. The fact is, there will be even more condo units entering the market next year and this pool of tenants are not increasing. So, will holding power hold out till the situation recovers and rent goes back up again? 

The short term rental market however is doing roaring business in this holiday period. Perhaps it is time to revisit this. For the short term serviced apartment 1 week to 1 month stays, Somerset in Bukit Ceylon is running over 90% occupancy since August and Invito opposite recently have to take down their promotional rate in order to cope with demand.   

the Potpourri

People take notice every time a big blue chip developer like See Hoy Chan launch something. Even if it's in Ara Damansara which is plastered with condominium projects - Ara Green and Verde among them. Even if it's leasehold like their latest launch the Potpourri.

If you compare all the other projects in Ara Damansara such as The Ara, Ara Greens Residences, Verde etc etc, they all look about the same barring some architectural uniqueness here and there. All feature a number of blocks within a gated compound and facilities one can't even finish enjoying through the lifetime. In the Potpourri, See Hoy Chan offers hanging Sky Lounges and apartments which are literally built on bridges that link 2 blocks together.

If you want to live on one of these bridges, you'd expect to pay slightly more. For example, a 10th floor 713sf "Bridge unit" is priced at RM736,800

while a slightly larger 755sf normal unit on the 2nd floor is going for RM694,800 - even if one takes into account a RM5,000 hike per floor, RM40,000 premium for the 8 floor difference between our 2nd and 10th floor. So, for the novelty of living hanging off a bridge, the 50sf space is hardly a sacrifice.

 



 

Similar to their Uptown Residences, the project is split into a Family Block and a Lifestyle Block. This is See Hoy Chan's recognition of the trend in matured and successful Chinese areas like Bandar Utama and Damansara where a number of properties there such as Ameera Residences, are buoyed by the demand from children of residents who return to live close to their parents and where they grew up. However, probably due to the softening market, the Potpourri is not witnessing the kind of hot sales like the one at Uptown. There are altogether 8 blocks, each block being 13 - 15 storeys and housing 6 - 10 units per floor. So altogether we have over 800 units in this project which is not too low in density but the developer is also smart to recognize that PJ dwellers won't settle for just 1 car. So they are offering 2 parking lots for each of the smaller 1-2 bedroom units and 3-car parks for the larger 3 bedroom units. The number of variations in layouts are so diverse, I'd leave it to readers to check out these out in their website instead.

 

Location wise, it is closer to amenities compared to Ara Greens and Verde. It is half the walking journey to the new upcoming LRT station and just within a stones throw to Citta Mall. There is still a number of land bank in this area. Soon, we will see a very congested and dense Ara Damansara area.

While concept is really great, I am not too heated up by the leasehold and commercial title. Citta Mall next door is not the most exciting place either so for the kind of investment, just as I have commented about Ara Greens and Verde, I'd still look for landed properties in this area.

Effects of GST on Properties Next Year

My question still remains, are serviced apartments, which hold commercial titles exempted from GST? Since they follow Schedule H which recognizes them as residential properties, are serviced apartments exempted? Nobody is able to answer me till today.... Nevertheless, GST will still cause a nett rise in property prices through the spiral effect.

Residential property prices to rise 3% to 4% after GST

By Charlotte Chong / The Edge Financial Daily   | November 13, 2014 : 9:10 AM MYT   

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KUALA LUMPUR: Residential properties are exempt rated but the net impact from the implementation of the goods and services tax (GST) will cause their prices to rise 3% to 4% after the consumption tax comes into play next April, said Mah Sing Group Bhd executive director Datuk Steven Ng Poh Seng.

The estimation came after the group had a dialogue with its contractors, he told pressmen after the groundbreaking ceremony of the Southville City Direct Interchange project yesterday.

As for commercial properties, buyers will be charged the full 6% GST as they are “standard-rated” items, he said.

Cyberjaya

Which condo - luxury or not - in Cyberjaya which is not just another student dorm?

How many expats will want themselves of their family to live beside a dorm?

Settling My Home Loan

I just wanted to find out what are the costs I have to pay the bank to settle my loan early. They cannot tell me this information at the counter and their loan officer on the phone tries his best to twist and turn the information.

All I need to know is, how much is the balance of my loan and what are the bank charges? They want me to pay RM50 to get this information in a so-called redemption statement. I don't do this often but as I remembered when I settled some of my previous loans there were legal fees and other redemption fees etc etc... lots of hidden charges.

OCBC Bank is one such bank and I am so unfortunate I have 2 housing loans here. Their service up to date has been excellent. The personal bankers are pretty, smiles all the time, very polite and so lovely. But the minute you say you want to settle your loan everything changes. I asked her this simple question, can you please tell me ROUGHLY how much I need to pay to settle... she goes wishy washy and when pressed, she quoted an amount from her screen which was my outstanding balance.... and then she blurted out, this is just rough figure.. you need to pay RM50 to see all the hidden charges in the redemption statement...!!!!

Rehda: GST will push up home prices by 2.6%

Tuesday, 21 October 2014

By: ISABELLE LAI

PETALING JAYA: Home prices will rise by about 2.6% once the goods and services tax (GST) comes into play, said the Real Estate and Housing Developers’ Association Malaysia (Rehda).

The chairman of the association’s task force on accounting and taxation, Datuk Ng Seing Liong, said that the calculation was based on its consultations with industry experts and member developers.

Rehda’s 2.6% estimate differs from that of the Customs Department, which expects the GST to have an impact of between 0.5% and 2% on house prices, assuming there’s no change in supply and demand conditions.

Ng said the association was in full support of the GST and concurred with Customs GST director Datuk Subromaniam Tholasy, who had said that land did not incur the 6% GST rate.

However, he said land was by no means the largest cost component in property development.

“As our calculation clearly spells out, the construction cost, which constitutes 46% of the total development, is not only the largest component but also the component which will attract the GST of 6%,” he said in a letter to StarBiz.

He said the GST on this component would inevitably lead to an increase in house prices.

Appending calculations for a housing unit originally priced at RM400,000, Ng said the price post-GST would be around RM410,560.

Under the 46% construction component, costs were broken down into non-service taxable and service taxable segments, representing 44%, or RM176,000, and 2%, or RM8,000, respectively.

Under the non-service taxable segment comes items such as cement/concrete, steel, bricks and sand, while the service taxable segment includes tiles and fittings/sanitary. Under the existing sales and service tax, no tax is imposed on the non-service taxable category, while the service taxable category has a tax of up to 10% imposed on it.

Post-GST, Rehda’s calculations showed that the non-service taxable cost had gone up to RM186,560, while the service taxable cost remained at RM8,000.

It maintained the same cost estimates for other items, including land (15% or RM60,000), infrastructure and pre-development works (10% or RM40,000), professional fees and marketing costs (6% or RM24,000), finance costs (6% or RM24,000) and profit (17% or RM68,000).

Ng said Rehda also disagreed with Subromaniam, who had said that developers could easily absorb cost increases as their margins were around 30%.

He said it was currently impossible for developers to earn up to a 30% profit, as most development costs were on the rise, along with various capital contributions and charges imposed on developers.

“On average, as tabulated in the calculation, developers, most of which are public-listed companies, are only making around 17% at best,” he said.

However, Ng said it was still too early to determine the actual house price increases post-GST, as Rehda was still in discussions with the Government and there appeared to be many more issues to be ironed out.