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Stamp duty rise raises hackles

07/06/2009 The Star

PETALING JAYA: Housebuyers and owners have joined construction players in asking the Government for an exemption of the new stamp duty on construction contracts, or at least a delay.

“This is a burden,” says G. Thanalethumi, a 73-year-old homemaker, who intends to renovate her house this month.

“Now I have to save up more. I am unemployed and it’s going to take a while longer to get enough money to rebuild my house.”

She was responding to reports that the increase in stamp duty, effective Jan 1, from the nominal RM10 to a 0.5% of the contract value, would be passed on to the end consumer. Construction costs will now go up by between 1% and 2%.

At a press conference on Friday, Master Builders Association Malaysia president Ng Kee Leen had said the association felt that construction contracts were not service agreements and therefore should not fall within the scope of “services” under the Stamp Duty Act.

He added that he would raise the matter with the Government at a dialogue with the Finance Ministry on Thursday.

Store manager Olagnathan Ramasamy, 49, who retired from the army, suggested the increase be delayed until the economy had improved.

“As buyers, we are already burdened by having to pay the loan interest and lawyer fees, This increase in stamp duty will be another reason for real estate dealers to raise the price of properties,” said Olagnathan who was planning to buy a second home.

“It is difficult for us to cope with this in the current economic situation, with

the rising cost of living. I hope the Government can make an exception by delaying this, at least until the economy recovers,” he said.

His views were shared by Premadevan Sagadevan, 25.

“It should be postponed by at least five to six years,” said the bank officer, who has put back his plans to buy a house.

“Otherwise, I might end up paying more interest to the bank,” he added.

Michael Chin Woon Yew, 41, who has worked as a real estate negotiator for 12 years, said the rise in stamp duty would affect the property buying rate.

“The market is still soft,” he said, adding that the buyers’ wait-a-see attitude would affect real estate agents, too.

Industry player Ng Teck Hua, 52, who owns Teck Hua Construction and Renovation, said home owners might delay renovating the homes.

“It is okay to amend the Stamp Duty Act, but it would be better if the Government can guarantee a reasonable profit return for the construction and renovation sector,” said Ng.


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