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KYB Legal Alert: Extensions to the stamp duty exemptions under the Home Ownership Campaign 2021

The Home Ownership Campaign


The Home Ownership Campaign ("HOC") was one of the many initiatives kick started back in 2019 by the former Minister of Finance, Lim Guan Eng, in order to promote homeownership in Malaysia. Through the HOC, a series of incentives were introduced to increase the level of homeownership among Malaysians. At the same time, it also serves as an encouragement to increase the sales of unsold properties floating in the Malaysian housing market.


In 2020, COVID-19 happened and as its wrath spreads throughout Malaysia and across the globe, the government has since implemented various Movement Control Orders to combat the upsurge in COVID-19 cases in Malaysia, which inevitably affected the Malaysian economy across all sectors.


As a result, Prime Minister Tan Sri Muhyiddin Yassin’s government reintroduced the HOC in 2020 vide the Short-Term Economic Recovery Plan (PENJANA) in an effort to stimulate the Malaysian property market and to provide financial relief to homebuyers. It has since been extended from 1 June 2021 until 31 December 2021 under the Strategic Programme to Empower the People and Economy or PEMERKASA.


One of the financial reliefs provided by the HOC features stamp duty exemptions which have been gazetted under the Stamp Duty (Exemption) (No. 3) Order 2020 and Stamp Duty (Exemption) (No. 4) Order 2020 on 28 July 2020. The duration of these exemptions has now been extended under the following Orders on 12 July 2021 pursuant to subsection 80(1) of the Stamp Act 1949:


Stamp Duty (Exemption) (No. 4) Order 2021


This Order exempts stamp duty in respect of any loan agreement to finance the purchase of a residential property under the HOC 2021 by an individual which has a value of more than three hundred thousand ringgit (RM300,000.00) but less than two million five hundred thousand ringgit (RM2,500,000.00).


The loan agreement must be executed between the individual named in the sale and purchase agreement and –

  • a licensed bank under the Financial Services Act 2013;

  • a licensed Islamic bank under the Islamic Financial Services Act 2013;

  • a development financial institution prescribed under the Development Financial Institutions Act 2002;

  • a co-operative society registered under the Co-operative Societies Act 1993;

  • any employer who provides an employee housing loan scheme;

  • Borneo Housing Mortgage Finance Berhad (Company Registration Number: 25457-V);

  • Mutiara Mortgage and Credit Sdn Bhd (Company Registration Number: 257663-T);

  • a licensed insurer authorised to provide a housing loan under the Financial Services Act 2013; or

  • a licensed takaful operator authorised to provide an Islamic housing loan under the Islamic Financial Services Act 2013.

The stamp duty exemption is subject to the following conditions: -

  • the sale and purchase agreement for the purchase of the residential property is between an individual and a property developer ("SPA");

  • the purchase in the SPA is a price after a discount of at least ten per cent (10%) from the original price offered by the property developer except for a residential property which is subject to controlled pricing; and

  • the SPA is executed on or after 1 June 2021 but not later than 31 December 2021 and is stamped at any branch of the Inland Revenue Board Malaysia.


Stamp Duty (Exemption) (No. 5) Order 2021


This Order exempts stamp duty for any instrument of transfer for the purchase of a residential property under the HOC 2021 which has a market value of more than three hundred thousand ringgit (RM300,000.00) but less than two million five hundred thousand ringgit (RM2,500,000.00), subject to the following conditions being fulfilled: -

  • the SPA for the purchase of the residential property is between an individual and a property developer;

  • the purchase in the SPA is a price after a discount of at least ten per cent (10%) from the original price offered by the property developer except for a residential property which is subject to controlled pricing; and

  • the SPA is executed on or after 1 June 2021 but not later than 31 December 2021 and is stamped at any branch of the Inland Revenue Board Malaysia.

However, it is important to note that the exemption is only for the stamp duty imposed for the first one million ringgit or less from the market value of the residential property.


In the event the total stamp duty is more than one million ringgit (RM1,000,000.00), a stamp duty of three ringgit (RM3.00) shall be imposed for every one hundred ringgit of the balance amount of the market value of the residential property which is more than one million ringgit (RM1,000,000.00).


To give an example, assuming that the market value of a residential property is RM1,200,000.00, the individual would only need to pay stamp duty of RM6,000.00 which is imposed on the excess amount of RM200,000.00.


For purposes of both the Stamp Duty (Exemption) (No. 4) Order 2021 and the Stamp Duty (Exemption) (No. 5) Order 2021:-

  • a "residential property" means a house, a condominium unit, an apartment or a flat, purchased or obtained solely to be used as a dwelling house, and includes a service apartment and small office home office (SOHO) for which the property developer has obtained an approval for a Developer’s License and Advertising and Sales Permit under the Housing Development (Control and Licensing) Act 1966, Housing Development (Control and Licensing) enactment 1978, Sabah or Housing Development (Control and Licensing) Ordinance 2013, Sarawak.

  • an "individual" means a purchaser of a residential property who is a Malaysian citizen or co-purchasers of a residential property who are Malaysian citizens.

  • a "property developer" means a property developer registered with REHDA, SHAREDA or SHEDA.


Key Takeaways


In order to obtain the stamp duty exemptions under these Orders, the individual concerned is required to submit a Home Ownership Campaign 2021 Certification ("Certificate") to any branch of the Inland Revenue Board Malaysia issued by the either: -

  • the Real Estate and Housing Developers’ Association (REHDA) Malaysia in Peninsular Malaysia;

  • Sabah Housing and Real Estate Developers’ Association (SHAREDA) in Sabah; or

  • Sarawak Housing and Real Estate Developers’ Association (SHEDA) in Sarawak.

The individual concerned may explore the websites of REHDA, SHAREDA and SHEDA respectively, to confirm whether the property intended for purchase is a registered project and whether the property developer is a participating developer.


Furthermore, the Frequently Asked Questions (FAQ) under the REHDA website also provides comprehensive clarifications in relation to the HOC. For example, the FAQ clarifies that the individual concerned will not be burdened with any fees by the property developer, REHDA/SHAREDA/SHEDA or the government to purchase a property under the HOC as the property developers will be the party responsible for the registration and certification fees.


With the COVID-19 situation still running rampant across all areas of Malaysia, this extension presents as a welcome move from the current administration and marks one of the few steps forward in the right direction to reduce the impact of COVID-19 on the Malaysian economy and to revitalise and boost commercial activity within the Malaysian real estate industry.


This article is written by Benjamin Chia Lin Fung, the co-founder and partner of Messrs. Kuruvilla, Yeoh & Benjamin, who leads the Projects & Real Estate practice group.


For more information, please visit www.kyblegal.com or please feel free to contact Benjamin Chia at benjamin@kyblegal.com.


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KYB Legal Update - Extensions to the stamp duty exemptions under the Home Ownership Campai
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