Vacancy Tax in Malaysia: CAP Calls for Urgent Reform to Curb Speculation and Improve Housing Access

CAP Urges Vacancy Tax to Tackle Housing Speculation in Malaysia

The Consumers Association of Penang (CAP) has thrown its support behind the implementation of a vacancy tax on residential properties that remain unsold or unrented for extended periods, highlighting the growing housing affordability crisis in Malaysia’s urban areas.

CAP president Mohideen Abdul Kader emphasized that the proposed measure could help return idle properties to the market and deter speculative buying, particularly in the medium-cost housing segment—where many Malaysians are being priced out of ownership.

“A vacancy tax would act as a strong disincentive to leave properties idle and would encourage owners to rent or sell them,” said Mohideen.

What Is a Vacancy Tax?

A vacancy tax targets homes that remain unoccupied for more than six months in a year. This policy has been introduced in several international cities such as:

Why the Vacancy Tax Matters in Malaysia

Malaysia’s urban centres—particularly Kuala Lumpur, Johor Bahru, and Penang—have seen a growing number of vacant high-rise units, many owned by investors holding for capital gains or waiting for better market conditions.

Meanwhile, housing affordability remains a pressing concern:

Young Malaysians struggle to meet down payment requirements
Subsale prices for medium-cost units continue to rise
A significant portion of income is spent on rental due to limited access to ownership

CAP argues that idle properties create artificial scarcity, pushing prices and rents higher and undermining the principle of housing as a basic right.

Proposed Policy Reforms by CAP

In addition to the vacancy tax, CAP is advocating for a suite of structural reforms to rebalance the housing market:

1. Revised Real Property Gains Tax (RPGT)

Higher rates on short-term property flipping
Discouraging speculative sales within 3 to 5 years

2. Tiered Stamp Duty for Multiple Property Owners

Increased stamp duties for second and third homes
Priority given to first-time homebuyers

3. Stricter Foreign Ownership Controls

Tighter caps on foreign purchases in strategic locations
Higher minimum pricing thresholds for non-citizen buyers

4. Loan-to-Value (LTV) Adjustments

Lower LTV ratios for buyers of second or third properties
Reducing speculative borrowing from investors

CAP believes that such measures are necessary to redirect policy focus from investor-driven demand toward ensuring equitable access to housing for middle- and lower-income Malaysians.

Implications for Investors and Developers

If implemented, a vacancy tax could significantly alter investment strategies, especially in high-rise urban areas where:

Rental demand is weak or oversupplied
Capital appreciation is stagnant
Owners are relying on long holding periods

For developers:

Emphasis may shift to build-to-rent models, co-living concepts, or more affordable, owner-occupier focused launches
Pressure to deliver completed units with higher occupancy and activation rates

For investors:

Holding idle units may incur recurring tax costs, eating into yields
Greater incentive to price properties competitively for sale or rental
Portfolio recalibration toward higher-yield, lower-risk locations may become necessary

Final Thoughts: Towards a More Balanced Property Market?

While no formal policy announcement has been made, CAP’s proposal underscores growing public pressure on the government to address property speculation and vacant stock accumulation in urban Malaysia.

If the government adopts even parts of this policy mix, we could see a more balanced market emerge—one that prioritizes livability, sustainability, and genuine demand over unchecked speculation.

🧭 Looking to invest in occupied, rental-yielding units or first-time buyer-friendly projects?
Explore verified listings and market insights at klproperty.cc and stay informed on upcoming policy changes shaping Malaysia’s property future.