REHDA Welcomes Homebuyer Incentives in Budget 2026, Raises Concern Over Foreign Stamp Duty Hike

The Real Estate and Housing Developers’ Association (REHDA) Malaysia has welcomed Budget 2026’s continued focus on supporting first-time homebuyers and strengthening financing access for the middle-income group, calling it a “positive and people-centric continuation” of the Madani government’s housing agenda.

However, the association expressed concern over the doubling of stamp duty for foreign property ownership, warning that the move could send mixed signals to international investors at a time when Malaysia is seeking to attract more foreign participation and talent.

Strong Support for First-Time Buyers

In a statement released following the tabling of the budget, REHDA president Datuk Ho Hon Sang said the association appreciates the government’s commitment to improving housing affordability and accessibility through several key measures.

Among them is the extension of full stamp duty exemptions on the memorandum of transfer (MOT) and loan agreements for homes priced up to RM500,000 — a measure that will remain in effect until December 31, 2027.

“The continued stamp duty exemption has benefited many first-time buyers over the years, and its extension for another two years will certainly help more Malaysians own their first home,” Ho said.

REHDA also commended the expansion of the Housing Credit Guarantee Scheme (SJKP) from RM10 billion to RM20 billion, a move that is expected to benefit 80,000 new homeowners, particularly gig workers, self-employed individuals, and informal income earners who struggle to obtain traditional housing loans.

“The SJKP expansion will continue to spur the housing market by broadening the financing ecosystem to reach buyers who are often overlooked by banks,” Ho noted.

Youth Housing Scheme and Second-Home Upgraders

The association further welcomed the extension of the Public Sector Home Financing Board’s (LPPSA) Youth Housing Scheme until December 2026, with the maximum financing limit raised to RM1 million.

Ho said this update would facilitate home upgrades for civil servants and professionals seeking better living spaces as their household needs evolve.

“The increase to RM1 million will ease the purchase of second homes, especially for those upgrading to accommodate family growth or changing lifestyles,” he said.

This measure, he added, would support demand continuity in the mid-market segment and indirectly stimulate new launches within the RM700,000–RM1.2 million price bracket — a range often targeted by upgraders.

Concerns Over Higher Stamp Duty for Foreign Buyers

While welcoming the pro-rakyat provisions, REHDA voiced reservations over the increase in stamp duty for foreign residential ownership.

Under Budget 2026, property transfers involving foreign companies and non-citizens will now be subject to a flat rate of 4% to 8%, compared to the previous maximum of 4%. Permanent residents are exempted.

Ho said that although foreign transactions form a relatively small portion of Malaysia’s overall property market, the higher rate could discourage international investors—particularly those looking to make Malaysia their regional base.

“This seems contradictory to the government’s aspiration to bring in more foreign investments and may be seen as a deterrent for these investors to set up base in Malaysia,” Ho cautioned.

Foreign ownership typically accounts for less than 2% of total property transactions nationwide, concentrated mainly in Kuala Lumpur, Johor, and Penang. However, Ho noted that the psychological impact of such policy shifts could affect sentiment at the upper end of the market, including luxury condominiums and branded residences, where foreign participation plays an outsized role in absorption and pricing stability.

“Malaysia’s competitiveness has always been partly anchored in its relatively open and affordable property environment compared to neighbouring countries. We must be careful not to dilute that advantage,” he added.

Awaiting Clarification on Conversion Tax Deduction

Another notable initiative under Budget 2026 is the 10% special tax deduction (capped at RM10 million) for expenses related to the conversion of commercial buildings into residential units.

REHDA said it awaits further clarification on how this will be implemented, as it could substantially ease the financial burden on developers undertaking urban regeneration or adaptive reuse projects.

“We view this as a promising measure that can help reduce commercial vacancy rates and rejuvenate city centres, but the mechanism must be clear — particularly regarding eligibility, time frames, and deduction processes,” Ho said.

Developers and analysts alike see the incentive as a potential catalyst for revitalising underutilised office and retail stock, particularly in Kuala Lumpur’s Golden Triangle, Pudu, and Brickfields — areas where older buildings could be repurposed into serviced apartments, student housing, or co-living spaces.

Call for Broader Financial Collaboration

Ho also voiced optimism about the Prime Minister’s call for financial institutions to support rent-to-own (RTO) and build-then-sell (BTS) models under the 13th Malaysia Plan (13MP).

“If banks and policymakers work closely together, these models can bridge the gap for the middle-income group who fall between affordable housing eligibility and conventional financing capacity,” he said.

REHDA has long advocated for more collaborative frameworks between developers, banks, and the government, ensuring that alternative financing models are practically viable and not merely policy experiments.

“For RTO and BTS schemes to gain traction, they need accessible financing, clear risk-sharing mechanisms, and market data transparency,” Ho added.

Industry Outlook: “Cautious Optimism”

Overall, Ho said the Fourth Madani Budget — valued at RM419.2 billion — signals the government’s intent to maintain fiscal discipline while still providing targeted support for key sectors.

“On behalf of the industry, we hope the RM470 billion allocation for development spending under this budget will have a positive spillover effect on the economy, particularly within the housing and property sector,” he said.

Analysts agree that the combination of housing incentives, infrastructure spending, and ESG-driven initiatives under Budget 2026 provides a foundation for steady, organic market recovery, though not an immediate boom.

The continuation of social housing investments, coupled with urban rejuvenation allocations such as DBKL’s RM500 million maintenance fund and Khazanah’s RM600 million restoration programme for Carcosa Seri Negara, underscores a policy shift toward liveability and adaptive development.

“Budget 2026 may not deliver sweeping new incentives, but it extends certainty, which is equally important for developers planning multi-year projects,” one Kuala Lumpur-based consultant observed.

Conclusion: Stability Over Stimulation

REHDA’s response encapsulates the broader industry sentiment: measured approval with lingering caution.

While developers appreciate the continuity of homebuyer support and the renewed focus on adaptive reuse, the higher stamp duty for foreign purchasers introduces uncertainty at the premium end of the market.

For the wider property ecosystem — from first-time buyers in Klang Valley to large-scale developers in Johor or Penang — Budget 2026 strikes a balance between fiscal prudence and gradual sectoral support.

As REHDA’s Ho concludes, the challenge now lies not in the policy announcements themselves, but in how effectively they are implemented to ensure that Malaysia’s housing market remains both inclusive and competitive in the years ahead.