FACULTY OF ARCHITECTURE, PLANNING & SURVEYING.

DEPARTMENT OF QUANTITY SURVEYING

DIPLOMA IN QUANTITY SURVEYING

(AP114)

DQS 356 CONSTRUCTION ECONOMICS III

ASSIGNMENT 1: PROPERTY MARKET

PREPARED BY:
1. CHRISTY MELENIE ANAK HILLMOND (2018412256)
2. GLORIA EZLYNCIA ANAK DANIEL (2018220822)
3. NUR DANIA BINTI HARRY (2018890352)
4. MOHD ALI RIDZUAN BIN ABDUL RAHMAN (2018634608)
5. CASANDRA JOAN ELVIN (2018408062)
AP1146B

PREPARED FOR:
DR MOHD AZRAI AZMAN

SUBMISSION DATE: 1 DECEMBER 2021

CONTENTS

1.0 INTRODUCTION .................................................................................................. 1

2.0 INCENTIVES FOR FINANCING PROPERTY ...................................................... 3

2.1 POLICIES ON INCENTIVES FOR FINANCING PROPERTY .......................... 3

2.1.1 TERMS AND DEFINITION OF POLICIES ON INCENTIVES FOR

FINANCING PROPERTY .................................................................................... 3

2.1.2 IMPLEMENTATION OF POLICIES ON INCENTIVES FOR FINANCING

PROPERTY ........................................................................................................ 3

2.1.3 INCENTIVES FOR FINANCING PROPERTY IN MALAYSIA ................. 4

2.2 FUNCTION OF INCENTIVES FOR FINANCING PROPERTY IN MALAYSIA

10

2.2.1 EXAMPLES OF INCENTIVES FOR FINANCING PROPERTY IN

MALAYSIA ........................................................................................................ 12

2.3 EFFECTS OF INCENTIVES TO THE FINANCING PROPERTY ................... 15

3.0 CONCLUSION ................................................................................................... 17

REFERENCES ......................................................................................................... 18

APPENDICES .......................................................................................................... 19

i
1.0 INTRODUCTION

What are policies on incentives of financing property? The policies on incentive of

financing property are a motivation or encouragement to buy or invest in land and

property through program. In Malaysia, the one who implement the policies is the

Malaysia Federal Government. Purchasing a home is difficult for the majority of

Malaysians. A large down payment combined with long-term mortgage commitment

can be intimidating, so it makes sense to take advantage of any assistance you can

get to reduce the cost of home ownership. Any mechanism used to encourage

people’s actions is known as a reward policy. When used in a corporate setting, it

refers to an organization’s use of incentive schemes to inspire workers to do or not do

something that benefits the company.

The reason for the implement this policy is to increase the productivity of

economy and industry in Malaysia. The government has always taken a balanced

development approach that places emphasis on economic growth and the well-being

of the people. Although there is no specific definition of well-being, the term is generally

associated with a standard and quality of life that encompasses economic, social,

physical, and psychological aspects that benefit society. Incentives are something that

aspire and encourage people to do something.

There are several of programs or incentives for financing property by Ministry

of Housing and Local Government (KPKT). For example, My First Home Scheme

(Skim Rumah Pertamaku, SRP), BSN MyHome for self-employed individuals, First

Home Deposit Funding Scheme (MyDeposit), PR1MA 1 Malaysia Scheme, Stamp

duty exemptions, Housing Loan for Government Servant and EPF Withdrawal.These

1
types of incentives are the government’s initiative to provide financial relief to home

buyers. It also tackles the issues of unsold properties in the country’s property sector.

Although it is to increase productivity in the economy and industry in Malaysia,

but it also has advantages and disadvantages. The advantage of this policy is to raise

the standard of living. This is because the government has made huge investments to

improve the standard of living in Malaysia for the convenience of the people. The

increase made by the government is to increase subsidies to Malaysians who are less

able to own a house. To meet the needs of affordable housing for low- and middle-

income households, the government has provided various forms of financing

assistance to home buyers and streamlined the regulatory framework to facilitate

home ownership. Other advantages are enhanced property productivity.

There are also some of disadvantages on the incentives that were implemented

by the government such as production quality maybe sacrificed. It also can lead to

dispute among property buyers. Other than that, falsifying of production records may

occur. After that, to contribute to economic progress. Malaysia, as most of us know, is

in recession as a result of the Covid-19 Pandemic's economic harm, with GDP

anticipated to decline in the third quarter. There is no doubt that a downturn in the

economy will have a detrimental influence on a property's value. Things can be a little

more challenging for the few people who want to buy residences, especially first-time

buyers. As a result, it is clear that the government's incentives will unquestionably

benefit homebuyers.

2
2.0 INCENTIVES FOR FINANCING PROPERTY

2.1 POLICIES ON INCENTIVES FOR FINANCING PROPERTY

2.1.1 TERMS AND DEFINITION OF POLICIES ON

INCENTIVES FOR FINANCING PROPERTY

2.1.2 IMPLEMENTATION OF POLICIES ON INCENTIVES

FOR FINANCING PROPERTY

The policies on incentives for financing property is implemented by our government,

Malaysia Federal Government. These policies are introduced through several

programs to assist and encourage Malaysian citizen become the legal owner of their

own properties.

One of the major reasons why the government gives incentives is to help

develop Malaysia's property market. Due to enormous unemployment, salary cuts,

economic issues, and job insecurity following the coronavirus pandemic, many people

are concerned about making the most important decision of their lives, such as owning

a home. However, this will not be a major issue for the time being because the

government will include numerous stimulus initiatives, such as tax exemptions and

financial incentives for property sectors, to boost the expansion of the housing

industry. Prime Minister Tan Sri Muhyiddin Yassin addressed this matter at the

PENJANA Economic Recovery Plan.

Following that, to aid in economic growth. Malaysia, as most of us are aware,

is in recession because of the economic damage caused by the Covid-19 Pandemic,

with GDP expected to fall during the third quarter. There is no doubt that an economic

3
downturn will have a negative impact on the value of a property. However, for the few

individuals who want to buy houses, especially first-time buyers, things can be a little

bit difficult. As a result, it is apparent that the government's incentives will undoubtedly

be beneficial to home buyer.

Nevertheless, the government's incentives are primarily aimed at a short-term

economic recovery plan. What exactly is a short-term economic plan? It entails the

government restarting, resolving, and reforming the current economic system as the

country enters the new normal, as well as focusing on the recovery plan to be

implemented as the current economic condition worsens over time. It is evident that

this short-term economic strategy benefits the real estate and property sectors, as

these two industries were among those hit by the pandemic outbreak. During his

speech, the Prime Minister stated that the government had planned a few tax breaks

to help the real estate market recover from the effects of Covid-19.

Moreover, the incentives make it more affordable for young people to buy

homes. Most of the time, people wonder what prevents younger generation from

purchasing their own home rather than simply paying monthly rent. The reasons for

this are that young people are afraid of acquiring property since it entails high rent

rates, student debt loans, and the financial crisis toll. However, there is no difficulties

to own a home by owing to the government's incentives.

2.1.3 INCENTIVES FOR FINANCING PROPERTY IN

MALAYSIA

Nowadays, most Malaysians find it difficult to own a home. This will drive most people

to delay their buying decision due to the market, even if they have the resources.

4
Considering having a large down payment and a lifetime mortgage commitment can

be difficult, it is important to take advantage of any government assistance to reduce

house ownership costs. Fortunately, the government has implemented a slew of

programmes to assist individuals, particularly those with modest incomes and first-

time homebuyers. The following are some examples of government incentives for

financing property in Malaysia:

• My First Home Scheme (Skim Rumah Pertamaku, SRP)

• BSN MyHome for self-employed individuals

• First Home Deposit Funding Scheme (MyDeposit)

• PR1MA 1 Malaysia Scheme

• Stamp duty exemptions

• Housing Loan for Government Servant

• EPF Withdrawal

Stamp duty exemptions

Stamp duty is a tax imposed by governments on legally recorded documents, usually

when land or property is sold. Stamp duties, sometimes known as stamp taxes, are

imposed by governments on papers necessary to legally record various types of

transactions. Governments also imposed stamp duties on a variety of papers,

including those relating to the sale or transfer of land, property, property patents,

5
shares, and copyrights. A stamp duty is required for the Sale and Purchase

Agreements (SPA) for any residence and the transfer of possession title, commonly

known as the Memorandum of Transfer (MOT). In Budget 2021, the government

proposed waiving the tax on transfer instruments and loan agreements for the

purchase of initial residential dwellings priced at RM500,000.00, up from

RM300,000.00 before, to encourage Malaysians to purchase their first home. The

exemptions apply to sale and purchase agreements (SPAs) entered between 1st

January 2021 and 31st December 2025. Buyers, particularly young first-time home

buyers, can save a great deal of money with stamp duty exemption.

BSN MyHome for self-employed individuals

What does the BSN MyHome (Program Perumahan Rakyat) mean and who will

benefit the most with this incentive? The BSN MyHome (Program Perumahan Rakyat)

are conducted by Bank Simpanan Nasional (BSN) aims to assist both single and

married individuals who are self-employed, in taking the first significant step toward

property ownership. For qualifying candidates aged 18-60 years old, this scheme

financed low cost or average properties. The maximum loan for this scheme is from

RM 25,000 to RM 300,000 with a maximum age limit of 65 years old at the end of the

tenure. Another requirement required that must be acknowledged by applicants is

aside from being a Malaysian, the applicant’s monthly income must be below RM

1,000.

My First Home Scheme (Skim Rumah Pertamaku, SRP)

Skim Rumah Pertamaku, or My First Home Scheme, is a low-cost home scheme

launched in 2011 to help first-time homebuyers receive adequate resources for a

6
home purchase. The programme offers qualified borrowers up to 110 percent home

financing, allowing them to avoid paying mortgages, down payments, and other

upfront charges when purchasing a property. To be eligible for this plan, they must be

a Malaysian, under the age of 40, a first-time house buyer, and a permanent employee

at a current employer, or have worked for at least 6 months. For joint applicants with

a monthly net gross income of up to RM10,000. A single applicant's gross monthly

profits shall not exceed RM5,000. Not only is the homeowner's eligibility crucial, but

the house must also meet the condition of being a residential property in Malaysia's

principal and secondary markets, with a maximum value of RM500,000.

PR1MA 1 Malaysia Scheme

PR1MA is well-known for being a program that offers quality homes at reasonable

prices to individuals who qualify, and it was established under the PR1MA Act of 2012.

This initiative offers a variety of unit kinds and sizes in strategic locations throughout

Malaysia, primarily in cities. PR1MA Malaysia residences typically cost between

RM100,000 and RM400,000. Applicants must be Malaysian citizens, single or

combined family income of RM2, 500 - RM15, 000, be above the age of 21, and

possess not more than one property between spouses to be eligible for the PR1MA

scheme. When applicants sign up, there are no costs or legal expenses to pay

because the PR1MA application is completely free. Other criteria may apply because

the primary goal of the PR1MA objectives is to give Malaysians with an affordable

home solution. The property owners must have no sub-letters occupied, their PR1MA

house cannot be sold within 5 years of ownership, and other regulations may apply in

some jurisdictions.

7
First Home Deposit Funding Scheme (MyDeposit)

The MyDeposit Scheme was launched by the Ministry of Housing and Local

Government to aid the National Housing Policy's goal of expanding people's ability to

purchase their own house. The scheme only allows for one allocation for down

payments of up to 10% of the purchase price, with a maximum fee of RM30,000.

Because it is a government contribution, this amount does not have to be paid. This is

a specific government product designed to aid the middle-income people in obtaining

their dream home. The scheme's terms and conditions state that the property must be

sold within ten years, that the owner cannot rent out the house, and that it is only

available to Malaysian residents aged 21 and up, as well as first-time homebuyers with

a monthly household income of RM3,000 to RM15,000. Although if applications are

currently stopped, let us hope that they will reopen in the future because this plan

allows many people to own their own home.

Housing Loan for Government Servant

One of the most well-known Housing programs which implemented by Malaysian

government is the housing loan to government servant only. The main purpose of this

program is to enable government servant to apply housing loan to purchase or build

their house. The application process of this housing loan is, firstly, the applicant must

fill up two (2) sets of form for Housing Loan Division and Valuation & Property Services

Department (JPPH). Then, the applicant must allow the JPPH to inspect the property

within 8 working days upon receiving the application form.

8
Withdrawal to Purchase or Build a House

Malaysian government collaborate with implementing agencies such as KWSP to

encourage Malaysian citizen or non-Malaysia to own a home. Applicants are eligible

to apply for withdrawal to purchase or build a house if they match the requirement

required. Firstly, the applicants must reach age 55 years old at the EPF receives

member’s application. Secondly, the applicants must have at least RM 500 in their

Account 2. The applicants must has signed the sale and purchase agreement (SPA)

and the applicant must never made any previous housing withdrawal. Once the

application successful, the withdrawal payment will be credited directly into applicant’s

account.

Other Incentives for Housing Sector

• RM350 Million to build and refurbish 17,000 units of dilapidated homes in

remote villages and Orang Asli Settlement.

• The Ministry of Urban, Wellbeing, Housing, Local Government gets RM 134

million to build 9,850 houses under People’s Housing Programme (PPR).

• Government to complete 30,000 units of 1 Malaysia Civil Servants Housing

(PPA1M) priced from RM 90,000 to RM 300,000, or 20% below market

price.

• Public housing loan eligibility up from between RM 120,000 and RM 60,000

to between RM 220,000 and RM 750,000.\

9
 • Build around 10,000 houses in urban areas for rental to eligible youths with

permanent jobs, including graduate entering labour market for a maximum

period of 5 years.

2.2 FUNCTION OF INCENTIVES FOR FINANCING PROPERTY IN

MALAYSIA

Incentives can mean something that inspires, encourages, or motivates someone to

do or achieve something. It is also defined as the privilege that the state grants to a

person, company, or institution in general. It usually comes in the form of a financial

burden or tax cut. It can also be seen as relieving any kind of burden granted and is

often seen as promoting the public interest, the common good or economic policy. But

the question here is why, amid the pandemic and in the current economic climate, is

the state introducing the real estate finance incentives and what are its functions? The

real answer is quite simple, which is to stimulate the housing market and offer financial

assistance to first-time home buyers.

One of the main reasons the government is introducing incentives is to get the

real estate industry going in Malaysia. Many people are very clear about making the

biggest decision of their life such as buying a home due to massive unemployment,

wage cuts, economic crises, and post-coronavirus job instability. This should not be a

major problem for now, however, as the government would put in place several

incentive plans such as tax exemptions and financial benefits for the real estate

industry to help stimulate growth in the housing industry. This was stated in the

10
PENJANA Economic Recovery Plan by Malaysian previous Prime Minister Tan Sri

Muhyiddin Yassin.

In addition, the incentives also make it affordable for young people to buy. Most

of the time, people wonder what is stopping millennials from buying their own property

instead of just paying monthly rents. The reasons for this are that young people fear

buying real estate, as it is associated with high rental prices, student loans and the

financial crisis. But thanks to the government for introducing the incentives, there's no

better time to buy a home than now, especially if it's a first-time buyer.

Next, to help the economy grow. As most of us know, Malaysia is in recession

due to the damage to economic activity caused by the Covid-19 pandemic, with GDP

expected to decline in the third quarter. There is no question that an economic

downturn will have a negative impact on the value of a property. For the few categories

of people looking to buy homes, it can be a little trickier, especially for first-time buyers.

Hence, it is undeniable that the incentives introduced by the government will help a

lot.

Furthermore, the incentives introduced by the government mainly serve the

short-term stimulus package. What does a short-term business plan mean? This

means the government is restarting, dissolving, and reforming the current economic

system as the nation moves to the new normal, and focusing on the recovery plan to

be carried out as the current economic situation could deteriorate over time. It is

undeniable that this short-term economic plan will benefit the real estate and property

sectors, as these two sectors were among the sectors affected during the outbreak of

the pandemic. The previous Prime Minister, Tan Sri Muhyiddin Yassin announced in

11
his speech that the government had prepared some tax incentives to revitalize the real

estate market because of Covid-19.

2.2.1 EXAMPLES OF INCENTIVES FOR FINANCING

PROPERTY IN MALAYSIA

It is difficult for most Malaysians to buy a home these days. This causes most people

to postpone their buying decision based on the market, even if they have the money.

It can be difficult to have a high upfront payment and a lifetime mortgage approval, so

it makes sense to seek any help from the government to bring down home costs.

Fortunately, the government has put in place numerous incentives to help citizens,

especially the lower-income category and first-time home buyers. The following are

examples of government incentives to finance property in Malaysia:

• Stamp duty exemptions

• Youth Housing Scheme

• First Home Deposit Funding Scheme (MyDeposit)

• My First Home Scheme

• PRIMA 1 Malaysia Scheme

Stamp duty exemptions

Stamp duty is a basically a fee on legal documents known as taxation by the

governments such as the method of transfer and loan agreement when you purchase

12
a house. Governments impose stamp taxes, also known as stamp taxes, on

documents required for the legal recording of certain types of transactions. This

includes legal documents documenting marriages, military commissions, and the sale

or transfer of a property. Governments have also stamped several records, including

documents relating to the sale or transfer of land, property, property, patents, shares,

and copyrights. The Sale and Purchase Agreements (SPA) for each home and title

transfer, also known as the Memorandum of Transfer (MOT), are two types that

require stamp duty. The government proposed to waive the tax on transfer instruments

and loan agreements for the purchase of primary homes at a price of RM500,000,

which was previously RM300,000 in the 2021 budget, to allow Malaysians to purchase

their first home. The exemptions apply to sales contracts (SPAs) concluded between

January 1, 2021, and December 31, 2025. With the stamp tax exemption, buyers can

save a lot of money, especially the young first-time home buyers.

Youth Housing Scheme

What does the youth housing scheme mean and who will benefit most from this

incentive? The youth housing scheme, managed by Bank Simpanan Nasional (BSN),

aims to help both single and married youth take the first important step towards

ownership. For qualified candidates aged 21 to 45, this program covers real estate in

the range of RM100,000 to RM500,00. Apart from that, the government will provide up

to RM 200 per month for the next two years from the date of the first monthly grant.

Expenses and charges will be excluded. So, what are some of the requirements?

Apart from the fact that the buyer is a Malaysian and first owner, the monthly

household income of the buyer cannot exceed RM10,000.00. Currently, these

13
incentives end on December 31, 2020. Buyers must also note that the property cannot

be sold or transferred to the owner within 5 years.

First Home Deposit Funding Scheme (MyDeposit)

The government introduced the MyDeposit scheme through the Department of

Housing and Local Government to support the goal of national housing policy to

increase people's ability to own homes. The system only offers a one-time allocation

for down payments of up to 10% of the purchase price with a total fee of a maximum

of RM30,000. This amount would not have to be reimbursed as it is a state

contribution. This is a special product launched by the government to help the middle-

income community buy their dream home. The conditions for this regulation are that

the property cannot be sold for a period of 10 years, the owner cannot rent the house

and only for Malaysian citizens aged 21 and over and for first-time buyers with a

monthly household income of RM3,000 to RM15,000 Although applications are

currently closed, we hope it will open again in the future as this program helps many

people who may own a home.

My First Home Scheme

Skim Rumah Pertamaku, or My First Home Scheme, is a commercial home ownership

program founded in 2011 to help first time home buyers raise funds to buy a home.

The program offers qualified borrowers up to 110% home financing and relieves

homeowners from paying mortgages, down payments, and all associated upfront

costs when buying a home. Eligibility for this program must be a Malaysian under the

age of 40, a first-time home buyer and a permanent employee in a current business,

or with a minimum of 6 months of employment. For joint applications for a monthly net

14
income of up to RM10,000. The monthly gross profit of a single applicant must not

exceed RM5,000. Not only the eligibility of the homeowner is important, but the house

must also meet the requirements for residential property in Malaysia's primary and

secondary markets, limited to residential properties between RM100,000 and

RM500,000 and must be inhabited by the owner.

PRIMA 1 Malaysia Scheme

Known for being a program that enables skilled individuals to provide quality homes

at affordable prices, PR1MA was established under the PR1MA Act of 2012 in Large

Cities. PR1MA Malaysia homes typically cost between RM100,000 and RM400,000.

To be eligible for the PR1MA program, applicants must be Malaysian citizens, have a

single person or a combined household income of RM2,500 to RM15,000, be over the

age of 21, and have no more than inter-spouse property. There are no fees or legal

fees to register, as applying for PR1MA is completely free. Other conditions may apply

as the central aim of the PR1MA objectives is to provide affordable housing for the

Malaysian population. The conditions are that landowners cannot have sub-tenants,

their PR1MA home cannot be sold within 5 years of ownership, and additional rules

may also be imposed in some states.

2.3 EFFECTS OF INCENTIVES TO THE FINANCING PROPERTY

Psychologists and economists agree that a variety of incentives can influence human

decision-making in the laboratory. They frequently disagree, however, on the scientific

and operational aspects of modelling and researching these incentives (Zwick, Erev,

& Budescu,1999). Incentives are competent to enhance the marketing of property,

however, it may also carry risk of cons to the marketers. Incentives generally outcomes

15
in both positive and negative consequences to the financing property. With the

implementation of incentives to financing property among Malaysians such as My First

Home Scheme (Skim Rumah Pertamaku, SRP), BSN MyHome for self-employed

individuals, First Home Deposit Funding Scheme (MyDeposit), PR1MA 1 Malaysia

Scheme, stamp duty exemptions, housing loan for Government Servant, and EPF

withdrawal, more citizens can cease the opportunity to own a house.

Just as the incentives serves its purpose to encourage clients to participate in

the purchase & sales of houses and properties in the market, impoverished citizens

may have the opportunity own a property to fulfil their necessity of getting appropriately

and contentedly sheltered through these incentives. On the downside of these

incentive plans, some citizens take advantage to contain luxurious greed.

Implementation of incentives may also cause the quality of property obtained to be

disregarded. Incentives potentially increase the purchase of property, hence, shall

boost the infrastructure and economic developments nationally.

#Cons- luxurious/ take advantage

16
3.0 CONCLUSION

In Malaysia, the one who implement the policies is the Malaysia Federal
Government. Purchasing a home is difficult for most Malaysians. The reason for the
implement this policy is to increase the productivity of economy and industry in
Malaysia. There are several of programs or incentives for financing property by
Ministry of Housing and Local Government (KPKT). It also tackles the issues of unsold
properties in the country’s property sector. This is because the government has made
huge investments to improve the standard of living in Malaysia for the convenience of
the people. The increase made by the government is to increase subsidies to
Malaysians who are less able to own a house. There are also some of disadvantages
on the incentives that were implemented by the government such as production quality
maybe sacrificed. There is no doubt that a downturn in the economy will have a
detrimental influence on a property's value.

17
REFERENCES

Zwick, R., Erev, I., & Budescu, D. (1998). The psychological and economical

perspectives on human decisions in social and interactive contexts.

https://www.investopedia.com/terms/s/stampduty.asp

https://en.wikipedia.org/wiki/Stamp_duty

https://www.pwc.com/my/en/publications/mtb/stamp-duty.html

https://malaysiahomie.com/5-schemes-to-help-first-time-home-buyer-in-malaysia/

https://www.propertyguru.com.my/property-guides/apa-itu-skim-rumah-pertamaku-

my-first-home-scheme-14982

18
APPENDICES

(1. BSN MyHome (Youth Housing Scheme))

19
(2. PRIMA 1 Malaysia Scheme)

20