Home Ownership Campaign (HOC) is Back!
In an effort to stimulate the property market and provide financial relief to home buyers following the Covid-19 outbreak, Malaysian government has reintroduce the nation-wide Home Ownership Campaign (HOC) under the National Economic Recovery Plan (PENJANA) to attract more first-time buyers into the market in the second half of 2020 as the campaign had achieved good results last year.
HOC could be the best option for now as it offers a platform for genuine homebuyers who are looking for good deals while helping developers to reduce their current oversupply of unsold properties in the market. Catalyst for many who have ready funds can grab the opportunity and spur the property market. Once the numbers start to show, then the first-timers will be confident enough to enter the market actively again.
1. What is Home Ownership Campaign (HOC)?
The government first unveiled the Home Ownership Campaign (HOC) as one of the housing initiatives under Budget 2019. The HOC was launched in January 2019 and it was a joint effort by the Housing and local government ministry (KPKT) and the Real Estate and Housing Developers' Association (REHDA) Malaysia.
HOC was originally supposed to end on 30 June, but with economic uncertainties caused by the Covid-19 pandemic, the HOC has been reintroduced and will now run from 1 June 2020 until 31 May 2021 to spur property market demand.
2. What are the HOC's Eligibility?
- HOC only applies for residential properties sold between 1 June 2020 and 31 May 2021.
- It is open to all Malaysian purchasers, with no limit to the number of purchases. The current 70% margin of financing limit applicable for the third housing loan onwards for properties valued at RM600,000 and above will also be lifted during the HOC, subject to internal risk management practices of financial institutions.
- Only 'residential properties', defined as houses, condominium units, apartments and flats including service apartments built and used as dwelling houses; all other property types are not included in this exercise;
- For residential properties in the primary market (homes that have been launched or completed): This means only new residential properties purchased directly from developers with APDL (Advertising Permit and Developer License).
- For the homes in the secondary market, such as those purchased from a friend, family member or any other person that has previously bought the home from a developer, do not qualify.
- The service apartment must be for residential use only and cannot be converted for commercial activities;
- Property price : RM300,001 to RM2.5 million (before discount);
- It must be a sale from a developer to a purchaser or co-purchasers, all of whom are Malaysian citizens;
- A minimum of 10% discount (from selling price) is applicable to all units that are not subjected to government price control.
- Eligible properties in Peninsular Malaysia must be registered with REHDA Malaysia. Eligible properties in Sabah and Sarawak must be registered with SHAREDA (shareda.com) and/or SHEDA (www.sheda.org.my) respectively.
3. How does the HOC benefit homebuyers?
A. Stamp Duty Exemption on Instruments of Transfer
- Exemption for homes that are priced between RM300, 001 and RM2.5 million. Homes that are valued at less than RM300, 000 do not qualify for the exemption.
- Properties that fall in the RM1million – RM2.5 million price range will be subject to a reduced stamp duty of 3%, where the 3% stamp duty will only be imposed on the balance amount after RM1 million. For instance, if the property price is RM1.5 million, the 3% fee is imposed only on RM500, 000.
B. Stamp Duty Exemption on Instruments of Loan Agreements
- The 0.5% stamp duty charge on your loan agreement is also exempted – this applies for properties up to RM2.5 million.
- Properties that fall in the RM1million RM2.5 million price range will be subject to a reduced stamp duty of 3%, where the 3% stamp duty will only be imposed on the balance amount after RM1 million. For instance, if the property price is RM1.5 million, the 3% fee is imposed only on RM500, 000.
C. Discount Offered by Developers
- Homebuyers will get to enjoy a (minimum) additional 10% discount on the purchase price and this discount must be reflected in the Sales & Purchase Agreement (SPA). Property developers are required to offer at least a 10% discount for their residential projects in order to register their development(s) under the HOC.
NOTE: All the discount is given based on approved APDL pricing.
4. What should buyers take note of?
- Under the previous campaign period (up to 31 December 2019), those who purchase a property and sign the SPA by 31 December 2019 but only get their SPA stamped in January 2020 (typically, the deadline for stamping the SPA is one month after it is signed) will still be eligible for the stamp duties exemptions on MOT & SPA and on Loan Agreement. This is provided that the developer registers the residential unit by 15 November 2019 and submits the necessary documents for certification by 15 January 2020.
- As the HOC site has yet to be updated, we would assume that the same condition applies under the new campaign period – you would still be eligible for the stamp duty exemptions even if your SPA gets stamped in July 2021.
- It was previously reported in the media that some of the projects being marketed under the HOC have yet to be launched – homebuyers should practise caution in identifying these as the 10% discount will then not apply for these projects.
- A developer is allowed to offer the 10% discount to purchasers prior to registering a project with REHDA for HOC. However, the developer must ensure that the sold unit(s) are registered once the registration process begins and that the SPA is signed within the campaign period.
- The Finance Ministry would take action if it were to receive any report from developers on housing loan applications being rejected without strong justifications.
5. How do I Purchase a House under HOC?
Property buyers could expect more innovative homeownership packages offered by developers. Multiple expos will be held around the country for developers to showcase their residential properties under one roof.
6. How Much Can I Save From The Purchase of a Property Priced at RM500,000?
It's pretty obvious that buying a home under the HOC will save you quite a bit of money. Let's say you were to buy a home worth RM500,000, you will save :
- You will save RM50,000 = Savings from 10% discount offered by developer based on purchase of property priced RM500,000
- You will save RM8,000 = Savings from stamp duty exemption on instruments of transfer (SPA price after 10% off is RM450,000)
- You will save RM2,025 = Savings from stamp duty exemption on instruments of loan agreement (90% margin of financing – RM405,000)
- Your total savings = RM60,025!
With the incentives outlined above, buyers should take advantage of this offer to own their dream home. The stamp duty holidays and the lower interest rates announced by Bank Negara Malaysia in May 2020 will help spur homeownership as we continue to battle the effects of the Coronavirus pandemic.
Before you start hunting for your dream home, you are welcome to complete our free assessment form to discover if you can still qualify for a mortgage.
12/6/2020 | by HomeCrowd team