PETALING JAYA: A real estate company has cautioned the government against imposing any vacancy tax, saying it will interfere with the property market.
Commenting on an announcement that a vacancy tax is under discussion, Henry Butcher CEO Tang Chee Meng said introducing the tax would add to the burden of property developers.
“Housing developers in the country are already very regulated. Introducing the vacancy tax will add to the burden and cost of undertaking a property development project,” Tang told FMT.
He said should the vacancy tax be implemented, developers would be forced to reduce prices to dispose of the unsold units.
“This would be unfair to the buyers who had bought the units earlier at a higher price.
“It is also not beneficial to the banks who had provided end-financing to the earlier buyers who bought at a higher price as the valuation would now come down.”
Under the proposed vacancy tax, developers would be required to have a higher paid-up capital before the Advertising Permit and Developer’s Licence can be granted.
Housing and Local Government Minister Zuraida Kamaruddin told the Dewan Rakyat the proposed vacancy tax to be imposed on developers was for properties priced over RM500,000.
Zuraida said there had been many vacant units in the past five to 10 years due to the property overhang and the ministry had been given the challenge of looking into the issue.
Centre for Market Education CEO Carmelo Ferlito said he was especially concerned about the likelihood of infringement of property rights.
“A vacancy tax is a violation of property rights. Owners of properties should be free to dispose their goods as they please.
“A vacancy tax would set a dangerous precedent. It suggests that the government has the authority to interfere with the disposal of property rights.
“I understand the objective is to reduce overhang, but I do not think it will really achieve the intended result.
“Real estate development is a long-term investment project and is the result of decisions made over years and unfolding over even more years,” he told FMT.
Ferlito said the proposed vacancy tax could discourage future initiatives out of fear of wrong investments.
“I think it would be a dangerous disincentive towards future investment decisions,” he said.