Foreigners to pay 4-5% of the property price they buy in Johor

Foreigners will have to pay a tax of 4% to 5% of the property price they buy in the state under a new policy to be unveiled by the Johor government. Under the current policy, foreigners have to fork out a one-off payment of only RM10,000, regardless of the value of the property.

• State Housing and Local Government Committee chairman Datuk Abdul Latiff Bandi said the move, expected to be implemented by year-end or early next year, was a bid to control property prices and foreign ownership.
• He said the new levy would be for both commercial and residential properties. Latiff said the state government would also look into barring Malaysians who purchased property from selling their units to foreigners. "Local buyers will not be able to transfer ownership of their units to foreingers once the 30% quota (for foreigners) has been filled." (NST)

This move would have a negative impact on property sales to foreign buyers in Johor as the one-off payment will rise from RM10k to RM20-25k for a RM500k property and RM10k to RM40-50k for a RM1m property. But we view the impact as temporary, perhaps 3-6 months, as property prices in Johor remain a fraction of that in Singapore. Foreign buyers will hold back on purchases for a while but should gradually return as the Iskandar Malaysia proposition remains very attractive.

Source: CIMB Daybreak - 08 October 2013