Should the Home Ownership Campaign be extended to boost the property sector?

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The House Ownership Campaign's Potential Extension for Property Sector Growth

There is a proposal to extend the House Ownership Campaign (HOC) beyond its scheduled May end date to stimulate the property sector, which has been impacted by the Covid-19 pandemic. This initiative aims to address a significant property overhang and offer benefits to homebuyers, while also considering the potential economic spillovers and tax revenues that could offset forgone stamp duty.
Addressing the Property Overhang

A substantial property overhang, amounting to RM40 billion in residential units and serviced apartments as of 2020, highlights a need for measures to clear unsold inventory. The HOC, which was launched in 2019 and generated RM23.2 billion in sales that year, exceeding its RM17 billion target, is seen as a mechanism to tackle this issue. Participating developers are mandated to provide a minimum 10% discount on properties, and buyers of units priced between RM300,000 and RM2.5 million benefit from stamp duty waivers on both the Memorandum of Transfer and Loan Agreements.
Economic Impact and Revenue Considerations

The current iteration of the HOC is projected to achieve RM36 billion in sales by the end of May. While the Finance Ministry has indicated that extending the campaign would result in a RM500 million loss in stamp duty revenue, proponents argue that this loss could be recouped through other tax channels. For instance, a conservative estimate of a 10% profit on the projected RM36 billion in sales revenue could yield approximately RM864 million in corporate taxes, based on a 24% tax rate on RM3.6 billion in profits. This suggests that increased economic activity and developer profits could potentially compensate for the reduction in stamp duty collection.
Broader Economic Benefits

Beyond direct sales and tax revenue, extending the HOC is anticipated to generate positive economic spillovers. These benefits include supporting staff salaries within the property sector, facilitating loan repayments by developers, and potentially encouraging increased lending. Such economic activities contribute to overall growth and generate further profits and income, leading to additional tax collections. The argument is that focusing solely on the immediate loss of stamp duty revenue overlooks the broader economic contributions of a thriving property market.
Support for Continuation

The call to extend the HOC has garnered support from key figures. Former finance minister Lim Guan Eng has strongly urged the government to prolong the campaign throughout the year, emphasizing the need to avoid a "penny wise, pound foolish" approach that could stifle the property industry's economic impact. Housing and Local Government Minister Zuraida Kamaruddin has also advocated for its continuation until the end of 2021, viewing it as crucial for economic recovery and promoting home ownership.

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Should the Home Ownership Campaign be extended to boost the property sector?

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