Service apartment tax of 1% might be imposed

JOHOR BARU: THE freeze on the sale of agricultural land here to foreigners will stay indefinitely as the state government is taking steps to protect the interest of all Johoreans.

It is learnt that state Housing and Local Government Executive Committee chairman Datuk Abdul Latiff Bandi, has put on hold all pending applications from foreigners interested to purchase agricultural land from Malaysians to later convert the land for commercial, residential or multi-development iskandar project.

Latiff said all applications had been put on hold following Menteri Besar Datuk Seri Mohamed Khaled Nordin’s directive last weekend to disallow the sale of agricultural land to foreigners.

Latiff said the move by the state government was an effort to safeguard Johor’s land value, and as a measure to control rising ownership of agriculture land by foreigners. Many foreigners has bought agriculture land from locals and convert them to commercial land for mix iskandar project developments.

“All affairs related to land purchase in the state will be reviewed bv the soon-to-be established Johor Real Estate and Housing Board, which will look into the issue next month,” Latiff said at the launch ceremony of the Malaysia Property Exposition (MAPEX) 2014 exhibition at Persada Johor International Convention Centre, here yesterday.

“We want to stop the activity as it will affect the land value and raise the prices further after it has been developed. We want to ensure that all locals can afford to purchase reasonably priced homes in Johor.”

The decision to disallow sales of agricultural land to foreigners, especially agriculture land granted by the state government (tanah kurnia), was made during the state executive council meeting last week.

Besides that, state government also suggests the implementation of 1% property tax to service apartment developments.That will means that the extra 1 % tax for service apartment gross development value gdv will be added to developers of service apartments. In the current new launch property market in Iskandar Malaysia Johor state, service apartments take up 70% of new launch property market.

According to Latiff, service apartment is suppose to be built for rent, not for sales. Service apartment is like hotel by its nature suppose to have services like housekeeping and receptionist. However, it has change its nature to be like condominium or apartment in current new launch property market without housekeeping and receptionist services but with commercial land title. The commercial land title indirectly push up the new launch property prices causing high property prices in Iskandar Malaysia. This condition is not healthy and causing worry for property market collapse and economy instability especially Malaysia family debt ratio is amongst the highest in the ASEAN which stand up to 89%.