On behalf of iProperty.com.my, Malaysia’s No.1 Property Site, we would like to share our thoughts on the government’s latest financial aid package, Pemerkasa Plus. We are very supportive of this financial aid package as it will provide relief to many Malaysian property consumers during the third movement control order (MCO).
The loan moratorium and loan repayment assistance under the Pemerkasa Plus package are timely for property owners with existing home loans from the B40 group and those affected by job losses due to the COVID-19 pandemic. These initiatives will no doubt alleviate their financial burdens by allowing them to spend on essential needs such as food, medicine, and childcare.
We also welcome the extension of the Home Ownership Campaign (HOC) until the end of the year as it will continue to encourage homeownership among Malaysians especially young people. Additionally, the extension of the HOC could incentivise more property transactions this year as property seekers would take advantage of the current low interest rate.
While we remain hopeful that the Pemerkasa Plus package will deliver on its goal to help Malaysians stem the tide of the current MCO’s economic impact, we have several suggestions that we hope the government will consider.
1. We hope the government and financial institutions will consider extending the loan moratorium to include all income groups similar to the automatic blanket loan moratorium introduced during the first MCO in 2020. The moratorium should focus on assisting consumers from all income groups who have been facing financial distress from the start of the year.
If these affected groups were not given a moratorium, this would cause the bank to register more non-performing loans which will affect their overall profit, besides regurgitating foreclosed properties back into an already stagnant market.
2. We hope the government could introduce income tax relief on home loan interest as a way to assist Malaysians who are currently servicing home loans and to provide an incentive to those looking to obtain a home loan by allowing them to save some monies via a tax rebate.
This cost-saving policy may encourage first-time homebuyers to jump onto the property ladder, which in turn will spur the local property market. This initiative would be a great addition given that the HOC has been extended until the end of 2021.
3. Another initiative that we would like to see is rental incentives for both tenants and landlords. The sense of uncertainty brought about by COVID-19 has resulted in more people preferring to rent over buying a property.
As more people are working from home, the need to have a comfortable and conducive living environment is now more important than ever. Renting provides an opportunity for people to save on accommodation costs in the short term. To support this trend, the government could introduce an initiative that provides incentives to first-time and seasoned tenants.
As for a suggested initiative to help landlords, the government could introduce income tax reliefs to them for providing rental discounts to tenants. We believe these rental initiatives will go a long way in assisting tenants and landlords in facing the impact of COVID-19.
Written by: Shylendra Nathan, General Manager of iProperty.com.my