CAP calls for vacancy tax, tighter controls to curb property speculation

New Straits Times

17-07-2025

GEORGE TOWN: The Consumers' Association of Penang (CAP) has called for the introduction of a vacancy tax on residential properties that are left unoccupied for extended periods.
It also called on the government to review and strengthen the Real Property Gains Tax (RPGT).
CAP president Mohideen Abdul Kader said these measures were urgently needed to address the deepening problems of property speculation and declining housing affordability in Malaysia.
"A vacancy tax typically applies to properties that remain vacant — unsold or unrented — for more than six months in a year.
"In countries such as Canada and Australia, particularly in cities like Melbourne, this tax is set at between one and three per cent of the property or land value.
"Its primary aim is to deter property speculation, particularly in the medium-cost segment, where rising prices in the subsale market have increasingly placed home ownership beyond the reach of middle-income earners," he said in a statement today.
According to the Khazanah Research Institute, housing prices in Malaysia rose by an average of 5.8 per cent per year between 2010 and 2022, well above the healthy growth range of three to four per cent.
As a result, many in the M40 income group found it difficult to purchase their own homes.
In urban areas, the typical 'modern' three-bedroom apartment ranges from 800 to 1,000 square feet.
Mohideen said this limited space was not conducive to multi-generational or extended family living, nor does it offer adequate privacy or comfort for those forced to share with other families.
"Speculators often compete directly with genuine homebuyers, inflating demand and thereby encouraging developers to acquire more land to keep up with what is essentially artificial pressure.
"In land-scarce areas like Penang, this has resulted in a rise in land prices and a growing reliance on costly land reclamation from the sea.
"It is also worth noting that many apartment blocks are not fully occupied, despite having been sold. In these developments, owners of vacant units — who are not living in them and cannot easily sell or rent them out —often neglect their obligations to pay maintenance fees.
"This undermines the upkeep of the building and penalises residents who do live there.
At present, many residential properties, particularly in urban centres, remain empty while thousands of Malaysians continue to struggle to find homes they can afford," he added.
The property market, Mohideen noted, had become increasingly dominated by those who treat housing as a speculative investment rather than a basic human need.
He said this trend had led to inflated prices and a false sense of scarcity, especially in cities where housing demand is greatest.
"A vacancy tax would act as a strong disincentive to leave properties idle and would encourage owners to either rent out or sell them, returning more units to the active housing market.
"In addition, CAP also calls on the government to review and strengthen the RPGT, as the current system fails to adequately discourage short-term speculation.
"We propose a more progressive model that imposes significantly higher tax rates on profits from properties sold within a short holding period," he added.
Mohideen also called for a revision of stamp duty rates and tighter controls on housing loans.
He said that unless the government introduced comprehensive policy reforms, Malaysia's housing sector would continue to favour investors at the expense of ordinary citizens.