Hari Raya pictures from KSH

As people nowadays rarely take pictures for Hari Raya, our small legal firm decided to hold a picture taking session with us wearing proper baju Melayu and baju kurung, the traditional dress of Malaysians. It starts off with us clowning around, then a proper group pictures, pictures of the departments in our firm  and then a stand alone picture for most of us. As a firm, small gestures and event like this makes the bond stronger.

Anyway,

Have a great Eidul Fitri from all of us

Affordable houses schemes in Malaysia are not going the USA way (yet)

 

A friend on Twitter, Mr. @YouTiup thinks that Malaysia is heading the USA way in our affordable houses effort due to the similarities between our program and theirs. He got the idea through an article entitled 'White Picket Fence? Not So Fast' in the New York Times. America has been subsidizing homeowners and housebuyers with a few tax breaks and subsidies. The first paragraph of the article basically states the subsidies and tax breaks that homeowners/housebuyers got : Mortgages subsidies are given through government sponsored financial institution known as Freddie Mae and Fannie Mac (read about them in this article by History News Network); Americans get federal income taxes deductions for mortgage interest payments; tax deductions from state and local property taxes; and favored treatment from capital gains from sale of primary residence.

Malaysia has just launched two programs which are similar in the veins of USA affordable housing program. We have a My First Home Scheme which covers houses (first or second hand houses) between the price of RM100,000-00 to RM220,000-00 for first-time homeowner. It is a 100% loan provided by various financial institutions which include Maybank, CIMB Bank, Affin Bank and RHB Bank, among others. It is a 100% loan as the first 10% payment to buy the property will be guaranteed by Cagamas Berhad and has a maximum tenure of 30 years. It is only open to Malaysia citizen below the age of 35 years old with household income less than RM3,000-00. This scheme is already open for application and the executors for this scheme are the banks.

The second scheme has been launched in May 2011 and it is called 1Malaysia People's Housing Scheme or better known as PR1MA. A corporation called 1Malaysia Housing Program Corporation has been established and a CEO has been appointed. As of now, only a few information can be obtained from PR1MA website. The price of the houses are between RM220,000-00 to RM300,000-00. Unlike the My First Home Scheme, the executor for this project is a new entity which act much like a housing developer. It will identify locations and build houses for people who are eligible. As for who is eligible for this scheme, they must be Malaysians who never own a house before (first time homebuyer) and has a household income of RM6,000-00. Some of the features (unconfirmed) including exemption of stamp duty, eligibility of 105% loan from selected financial institutions with the 5% to pay insurance and legal fees and a lock-in period where the housebuyers cannot sell the house within the first 10 years of ownership. An Act of Parliament will be enacted for this scheme.

Other than these two schemes, let us note a few tax treatments that homeowners in Malaysia are currently under. As for now, there is a blanket stamp duty discount of 50% for any houses bought by anyone, either first hand (from housing developer) or second hand houses below the price of RM350,000-00 which will be in effect until 31st December 2012 and a 20% discount for stamp duty for any Islamic finance instruments, including house mortgage, which for now doesn't have an expiry date. There is a real property gain tax (RPGT) of between 30% to 5% for any sale of property owned by any homeowner below 5 years. On the sixth year, the RPGT will not have to be paid (Correction : The current rate for RPGT is 5% flat rate for any profit made for property sold below five years). Is there mortgage interest deduction in Malaysia? It is only applicable for loans to improve rental property. Between 2009 and 2011, mortgage interest deduction is applicable for first home too. It is also important to note that currently, a housebuyer who is buying his third house can only get 70% mortgage from any financial institution.

Let us go back to the New York Times article and compare it to Malaysia situation. Foremost, let us look at the question whether Malaysian houseowner is guaranteed by the government in any way? Except for the 10% of the My First Home Scheme, there is no mortgage guarantee. As the financial institutions which disburse the loan are private institutions (although some are Government Linked Companies or owned by them), we don't have a Freddie Mac or Fannie Mae. As for tax-break, I don't think we get much of it except as listed above. Total exemption from stamp duty in Malaysia does exist in pockets of housing development areas through application to income tax office which are mostly given to low cost housing although there was a blanket exemption once circa 2000 and 2005.

To say that we are totally safe from a sub-prime crisis is to be totally optimistic. Home ownership is always in danger of being exploited by speculator (as any investment is). We do have a few cautionary tales and questions we should ask the government. Among them is whatever happens to the earlier government-owned affordable housing company like Syarikat Perumahan Negara Berhad which currently are building low cost housing for kampung folks and affordable housing below RM100,000-00. Financial institutions for now are very prudent and does not offer those 100% or 110% mortgages which were rampant in the early 2000s. We don't have financial institution which dishes up mortgage without you having to prove your income and get a reliable guarantor for your loans. Housing developers, especially new ones are investigated and need to pre-qualify to ensure they are reliable. Bank Negara Malaysia need to ensure they never return to their free-wheeling days of early 2000s. We hope the government is not going to flood the market with unwanted affordable houses with the PR1MA scheme. Make sure the first-time housebuyers are genuine and can afford the mortgage even to the point of regular spot-checks that they are living in the house that they bought and not turning it into a very lucrative income generator.

So, to answer Mr. @YouTiup, with prudence, we are not going down the road of the USA. Yet....

Kuala Lumpur suburbs living

Kuala Lumpur seems to be in need of more vibrant suburbs to attract more people to live there. Suburbs is defined by Wikipedia : Residential areas for a city or a residential area reachable through commuting. Suburbs can be those which have its own administrators and political autonomy or it relies on the big cities that these suburbs are connected to. Kuala Lumpur and a few of the big cities in Malaysia already have suburbs but we consider most of them to be cities too. We never label a few of the known suburbs as such. Tokyo, London, New York and Sydney are a few of the cities which have people commuting using cars, trains and other public transports into and out of it every day. Most accept it as a way of life. Does Malaysia or Kuala Lumpur for that matter actually have suburbs?

Let us look at the few known suburbs around Kuala Lumpur based on the daily commuters who comes and goes into it.

Kuala Lumpur or more known as KL, is a vibrant city on account of it is the capital of Malaysia. Most of the people who works and have offices in Kuala Lumpur doesn't live in it. Most live at towns such as Shah Alam, Klang and Petaling Jaya, which are known to be cities themselves. There are smaller town within these cities like in Klang where you can find Bandar Bukit Tinggi or Shah Alam which has Bandar Setia Alam or Petaling Jaya which has Subang Jaya and Damansara. These towns are so vibrant that although they are suburbs, they are so unlike the well-known American suburbs where people have quieter lives and easier traveling options. Traffic jam are norms which people here have to deal with.

There are quieter suburbs but are not favoured by many of KL-ites due to it being just that, quiet. Cyberjaya, a technology-skewed city which is surprisingly quieter for a place which is attracting foreign and local conglomerates like HSBC, Google and KRU Studios, to name a few well-known brands. There are other town like Nilai; which is more famous for its China-goods shopping; Bandar Enstek; a project by Tabung Haji Property with international school and a Coke bottling plants in the near future; and the most vibrant of it all is Seremban; which is experiencing a second coming where traffic jam on weekends have now become a norm.

On the north of town, there are Rawang; which seems to be back alive and might just save the once ghost-town of Bukit Beruntung; Batu Caves and Gombak; which are now known for more than just the place of worship for Hindus and rockclimbing. In the south of Kuala Lumpur, Kajang and Bandar Baru Bangi are areas which is now filling up to the brim thanks to highways such as Besraya and LEKAS. 

All around Kuala Lumpur, we have suburbs which seem to be thriving and catching up on the vibrancy of KL. The only space still not invaded, for now, seems to be the area leading towards Pahang as most of the area there are hills and the problem with slopes have put a damper on development there. However, I don't think that will last long before someone finds way to build more houses there. Some of these suburbs are successful in their capturing the spirits of suburbs where people can actually relaxed after returning home and some have to deal with what any other growing cities like increase crime rates.

With proper planning, suburbs can be the saving grace of Malaysia problem with affordable living. Young people with disposable income who is looking for homes need to accept the fact that city living is expensive. Not all people can afford to work and live within the city. Especially when you want to have houses with gardens and a bit of space for yourself. There are further burdens which come with city living like stress. Some of these housing developers should consider suburbs as a way to market their products and priced their houses below the RM200,000-00 with good design and more space. It may just be a gold-mine for them.

Everybody else is doing it, why don't we?

Are we creating a ticking bomb?

I once wrote in May after I came back from Mumbai about the need to make sure everything is equal for everyone in Malaysia, especially in the urban area. I was hoping for no one to get left behind in the modern Malaysia. People tend to forget that in order to live comfortably with nary a sign of garbage or have great food served to us, we need to have helps that we keep on complaining without any regards about their well-being or how well their livelihood is. 

In Mumbai, slum is a way of life, people get individual title to the small area they are living in and actually now become a tourist attraction. Not sure if it was due to the Slumdog Millionaire movie or it was an initiative started by Indian government long ago.

Now, we saw a city like London which seems to be the place to be by the rich around the world with so many celebrities owning property worth millions and even billions there, in a state of uprising. Then people start asking, is there a deeper meaning from the the dissatisfaction the younger generation than just the killing of a young father allegedly by the police in north London. 

One report quote a young guy going into an candy store and comes out eating ice cream and chocolate. Laughable right? What if the guy can never afford candy and ice cream? Still laughable?

Malaysia is currently planning affordable housing in a few segments around the Klang Valley. One is called the First Scheme Housing and another the affordable housing called PR1MA. In the state of Selangor, they have their own affordable housing scheme which is spearhead by their own state linked company. The governments seem to realised the need for affordable housing areas. 

However, how many fairy tales have we heard as a child about the jealousy of the poor looking at the ivory tower of the rich. While the children of the poor get the lesser opportunity of getting good education and time to play, the children of the rich grows fat and using money, get more than they deserved.

I know the intention is good but I hope the execution will not create a ticking bomb which might blow up one day. If not now, one day...

Book Sale!

My publisher, True Wealth Sdn Bhd, is having a book sale for 72 HOURS starting from Tuesday midnight, 9th August 2011 until Thursday midnight, 11th August 2011. True Wealth is own by Azizi Ali and of course, most of his book about property investment and gold investment are a part of the title.

Furthermore, all orders above RM150 will be entitled to a FREE book (of their choice) and the person with the highest order will be given a RM400 discount voucher to attend their upcoming Gold Investment Workshop!

 

Go NOW to True Wealth's website Book Planet for more details. And while you are at it, why not buy my book. Just click here : 

How to choose a book title?

I always have a title in the back of my mind before I write anything, especially a book. It is actually how I start working on a book or a blog post. It is a starting point for me to start drafting and then properly write. I can't say that has always been the case but my computers are full of drafts and unfinished manuscripts. All have titles although it might not have an end or in some cases, even a beginning.

So far, I have published but one book, in two languages.

Let me tell the story how I decided on the title of my one book : 40 Questions You Should Ask Your Lawyer Before Buying A Residential Property in Malaysia.

Quite a mouthful right? I know. But I did adjust it from a much longer title, if you can believe that.

My first title was : 100 Questions You Should Ask Your Lawyer Before Buying A Property in Malaysia. This was the title I pitched to Azizi Ali when I went to see him. You can follow that story in the blogpost : How did I published my first book?. And that story has everything to do with the title of my book too.

When I pitched my idea to Azizi Ali, the title I presented to him was '100 Questions You Should Ask Your Lawyer Before Buying A Property in Malaysia'. It was supposed to be the definitive book on property law which a person buying any type of property in Malaysia would need. If the buyer is a layman or even a lawyer, he or she will only need my book to refer when they buy either a house, a shop or a plot of land.

Azizi, as a book writer and publisher said to me : Why don't I make the title "101 Questions.... or 99 Questions...." which odd number can be a much 'nicer' number. I actually concur...

That was the initial plan. Then I started writing....

That was how I discovered writing is not an easy job. Trying to put two words together then a few more to make a coherent sentence is not easy. Turning legal words into layman term is not an easy task.

So, I cut the number down to 80 which makes the title into '80 Questions You Should Ask Your Lawyer Before Buying A Property in Malaysia'.

Then I discovered that I will have too many questions to answer if I want tow write about every type of property. I decided to change my approach to narrow my topic down to residential property. The title became '80 Questions You Should Ask Your Lawyer Before Buying A Residential Property in Malaysia'.

As writing becomes a labor due to work, I tried to find a reason to narrow it down further, which include cutting the number of questions from 80 to 70 to 60 to 50. It hovered between 60 and 50 for a longest while. I also tried to narrow it further from writing about all residential property to just those residential property sold by housing developer and as ridiculous as it sounds, the title did once became - [insert number] Questions You Should Ask Your Lawyer Before Buying A Residential Property from A Property Developer in Malaysia.

In the end, when I sent the first manuscript, I settled more or less on the current title which was '44 Questions You Should Ask Your Lawyer Before Buying A Residential Property in Malaysia' and when the second draft was sent, it was finally settled between the publisher and me that the title will be -

40 QUESTIONS YOU SHOULD 

ASK YOUR LAWYER BEFORE 

BUYING A RESIDENTIAL PROPERTY IN MALAYSIA