'Vacancy tax will aid in housing development planning'

The proposed vacancy tax slated for next year would be seen as a positive move by the government as it inculcates planning in housing development, said iProperty.com.my, a unit under REA Group Asia.

REA Group Asia customer data solutions general manager Premendran Pathmanathan said it is a matter of time before the government implements it, as the vacancy tax exists in other developing countries such as Singapore, Canada and Australia.

According to reports, a vacancy tax is imposed on a property that is left vacant and unsold for a certain amount of time, a penalty charged based on a percentage of the gross selling price.

“If you look at any developing country around the world, it is a matter of time (before the government implements it) as you have the vacancy tax in Singapore, and (with) Malaysia progressing towards a developed nation, things like vacancy tax will come into place.

“If you look at it, how Singapore or other countries do it, it keeps housing development planning under control. 

It is a good measure when it comes to government and developers planning for supply and to help curb oversupply in the future,” Premendran told reporters after iProperty.com.my H1 2020 Portal Demand Analytics virtual presentation on the housing industry today.

“We’re hoping with this in place, 10 years down the road, it would help with the whole planning,” he added. 

Premendran believes that it will also aid mismatching in the market.

“When you talk about planning, you’re talking about overhang and oversupply, and the vacancy tax is for that purpose (of preventing it).

"To motivate developers to build the right quantity and to make sure all those quantities are sold at a certain period of time. In the long-term, it is going to help address the oversupply issue,” he said. 

He said housing oversupply had shifted to a downtrend in the third quarter (Q3) of 2019, as well as Q4, as opposed to growing every quarter previously.

“The homeownership campaign helped a lot in reducing the overhang, (but there is) still a long way to go, as in Q1 this year there was still about 46,000 overhang units."

However, he opined that the vacancy tax is still in the planning stage, as there are a lot of clauses in it and other aspects that need to be discussed, including how the government is going to implement it.

- Bernama