Najib: House cost not determined by raw materials alone

Former prime minister Najib Razak says the biggest factor in determining the price of a house is land cost. (Bernama pic)

PETALING JAYA: Najib Razak today criticised Putrajaya’s threat to revoke tax exemptions for building materials if the price of houses did not drop, arguing that the cost was not based on raw materials alone.

In a Facebook post, the former prime minister said tax imposed on services of architects, engineers and insurance as well as sales tax is also included in the sales and services tax (SST), which the Pakatan Harapan government re-introduced on Sept 1.

He also pointed out that there were other raw materials that were not exempted from the SST, including glass, ceramic-based items and wood.

But Najib, who was the former finance minister, said the biggest factor in determining the price of a house was land cost.

“Therefore to bring down the price of houses, steps must be taken to reduce the land cost.

“And because land is a state matter, the federal government must work with state governments to achieve this,” he said, adding that land costs in Penang and Selangor have surged in the last decade.

A few days ago, Finance Minister Lim Guan Eng urged developers to lower prices of homes as construction materials and services have been exempted from the SST.

He said if they did not do so, the government would review the SST exemption.

Lim also said he was hoping to see all the savings made since Putrajaya waived the SST on all construction services, such as rental and electricity bills, to be passed on to consumers.

Najib, however, took a swipe at Lim’s argument, sarcastically labelling it as “extraordinary”.

“So, if the price of houses do not go down, he wants to do away with the exemption, seemingly to punish the developers. But doesn’t he realised that the cost of houses will increase even more? Does he want to punish developers or the ‘rakyat’?”