The Selangor government has decided to increase quit rent for properties in the state by up to 800 per cent for this year.

QUIT Rent is a form of land tax collected by state governments via Land Office and is imposed on owners of all alienated land — freehold and leasehold land).

Under the National Land Code, it is compulsory for owners of all types of properties to pay quit rent annually to the relevant Land Office. For most states, the last date for payment is on or before May 31.

The amount of quit rent a home owner is required to pay varies from state to state.

When Selangor decided to increase its quit rent drastically by up to 800 per cent this year, many people have questioned the purpose of it.

Market consultants say the move by Selangor Land and Mines Office (PTGS) to increase quit rent by about eightfold is unreasonable.

Senior adviser Kumar Tharmalingam questioned the rationale behind the increase amid an economic slowdown.

He said many people and himself were puzzled by the sudden increase in costing as there was no consultations with any parties.

“Why are they taking so much money? You must ask the local council the reason for the rate increase? It’s hard to believe if it’s because local councils have no money. So far, in all these years, no citizens have ever questioned how local councils spend their money.

“Even politically, this is not a good idea.... you’re trying to make everybody happy in this country and you come up with this incremental cost, in addition to the (current high) cost of living. This (could) make people very suspicious as to where the money is going,” said Kumar.

He said the people should know how their money is spent. “What is the expenditure and where do they spend the money? How do we pay for the services and where is their cost? Is the local council paying extra rents or very high salaries?

“They (local councils) need to come out and justify the cost increase. If they can’t justify it, then that is something to worry about,” said Kumar, adding that the quit rent hike has affected a lot of people.

He also pointed out that the local council was not being friendly to the public in explaining on the rationale behind the rate hike.

“There is an increase of 500 to 800 per cent, which is a lot of money. The local council has to explain why it is necessary.”

ANOTHER MARKET DAMPENER

Kumar believes the quit rent hike will affect the market, although not by a large scale.

The consumer segment that is most vulnerable to it is those buying affordable homes below RM600,000.

Any slight increase in rates affects a person’s household budget, he said.

“Most apartment owners look at the rates as a charge. On top of the quit rent, they are paying service charge to the joint management body (of their property). They are also paying the assessment rate twice a year. So it is becoming very expensive,” he said.

However, Kumar doesn’t think the rate hike would affect the sale price of high-rise dwellings although he foresees property developers shying away from such developments and focusing on landed properties.

A resident in Petaling Jaya, who declined to be named, said she now has to pay RM200 a year instead of RM43, following the quit rent hike.

“This is ridiculous. The jump is not 10 per cent but triple-digit. We want PTGS to explain the sudden hike. I sent them an email early this month for an explanation but they have not responded. I don’t understand why state governments still require property owners to pay quit rent when the land and building is legally ours?” she said.

‘HIDDEN’ COSTS EVERY HOMEOWNER SHOULD KNOW

Owning a property is not easy or cheap.

You had secured a loan and now own a home but your expenses do not end there as there are other costs involved.

Here are some extra costs that house owners will need to commit to besides quit rent and home loan interest.

1. Property assessment tax

Homeowners are required to pay an assessment tax or ‘cukai pintu’. The tax is imposed by local authorities on every household to finance the construction and maintenance of public infrastructure, cleaning services and upgrading works in the area under its jurisdiction.

The tax is calculated as a percentage of annual rental value (therefore varying according to property type and location), multiplied by a set of rates determined by local authorities.

In general, a residential unit assessment tax is calculated at a rate of four per cent of the annual rental value and is payable in two instalments per year. This set of rates is determined by local councils every year to ensure they have money to run yearly activities under their jurisdiction.

2. Maintenance fees

If you stay in a strata-titled property, you have to pay maintenance fees and sinking fund on a monthly basis to the management office of your property. The fees are paid to cover general and management costs to upkeep the common areas and the facilities of the apartment. The sinking fund is paid in advance for any major fixtures, fittings or repairs needed, including painting of the buildings.

3. Mortgage insurance

In Malaysia, there are two types of mortgage insurance available — Mortgage Reducing Term Assurance (MRTA) and Mortgage Level Term Assurance (MLTA). Both offer protection for homeowners by helping them settle their outstanding home loan in the event of illness, disability or death.

However, despite what your banker might tell you, it is not compulsory for you to take a MRTA or MLTA. But it is advisable to take it to protect your family from the risk of losing a home. The amount of premium you need to pay is subject to your age, loan amount and loan tenure.

4. Indah water utility bill

Indah Water Konsortium is responsible for operating and maintaining public sewage treatment plants and underground sewerage pipelines. Every year, a homeowner will have to pay the Indah Water utility bill.

Domestic premises like houses are generally billed RM8 per month (27 sen a day) for sewerage systems that are connected to a public sewage treatment plant or RM6 per month (20 sen a day) for those with an individual septic tank.

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