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SG Johor to impose 2% levy on foreigners

Property Here - Thursday, November 14, 2013

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The Johor government plans to impose a two percent levy on foreign buyers across all property segments including the secondary market starting from May next year, media reports said.

This is in addition to the recent cooling measures announced in the country's 2014 Budget.

Although this is lower than the rate of four to five percent proposed earlier, it is still more than double the current RM10,000 (S$3,900) fee paid by foreigners to acquire properties within the state. Given that the property price cap for foreigners is at RM1 million (S$389,200) and above, the RM10,000 fee is almost equivalent to a one percent levy.

But the RM1 million cap applies only to new applications and not for projects that have already been approved, explained Real Estate and Housing Developers' Association (Rehda) Johor Chairman Koh Moo Hing.

Commenting on the state government’s response that it is expecting the levy to grow its coffers and curb skyrocketing home prices, Koh noted that it was local demand causing the increase in prices and that current quotas have already been put in place to limit foreign ownership.

As a result, the association warned the state government that the levy would not be effective since projects or areas such as Country Garden's Danga Bay development or Medini are exempted from the price thresholds and quota. Elsewhere, developers are mandated to set aside 40 percent of the development for low-cost housing and 40 percent for bumiputeras, leaving only 20 percent to foreigners. 

Moving forward, Koh expects demand for housing in Johor to remain firm, but “may soften” over the next 12 to 18 months following the completion of various projects.