KUALA LUMPUR, May 18 — Former finance minister Lim Guan Eng has urged the government to extend the House Ownership Campaign (HOC) for the rest of the year to help the property sector recover from the fallout wrought by Covid-19.

The DAP leader cited the need to clear the RM40 billion property overhang in residential units and serviced apartments recorded in 2020, and the HOC had shown to benefit homebuyers through discounts and stamp duty waivers.

Housing and Local Government Minister Zuraida Kamaruddin had said it was imperative that the HOC be continued until the end of 2021 to aid the economy in its recovery and assist home ownership.

But the Finance Ministry said the drive, to expire at the end of May, will not be extended because it would forego RM500 million in stamp duty revenue.

"This will be another broken promise by Zuraida,” Lim said in a statement should the Perikatan Nasional government refuse to continue the campaign.

The HOC was launched in 2019 and succeeded in generating sales totalling RM23.2 billion in 2019, surpassing the then Pakatan Harapan government’s initial target of RM17 billion.

Developers participating in the HOC are required to offer a minimum discount of 10 per cent and buyers of properties originally priced below RM2.5 million and higher than RM300,000, will enjoy waivers of stamp duties in the Memorandum of Transfer and Loan Agreements.

Lim, DAP’s Member of Parliament for Bagan, was a key player pushing for the campaign as finance minister at the time.

This latest HOC will have some RM36 billion of sales by the end of this month, enough to outweigh the potential loss from stamp duty revenue, Lim estimated.

"Although there could be a potential loss of stamp duty revenue of some RM500 million, this amount could be recouped by corporate taxes on profits earned by developers on the aforesaid RM36 billion or more sales revenue,” he said. 

"At a conservative 10 per cent profit on the RM36 billion revenue, it would mean 24 per cent corporate taxes on the RM3.6 billion of profit of around RM864 million,” he added.

This means some developers will have a profit margin exceeding 10 per cent of revenue, which would result in higher tax collection, the former minister opined.

"One should not be penny wise, pound foolish when the property industry has many positive economic spillovers and benefits,” he said.

The projected RM36 billion in sales revenue under the HOC could also spur the economy by catering to continuing demand for property-related activities and services, he added.

"Developers will also be able to pay their staff salaries and repay loans leading to increased lending. All these economic activities will generate profits and income that lead to more taxes collected,” he said.