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EXPANSIONARY BUDGET 2026 WITH CONTINUED FOCUS ON EDUCATION, HEALTH & DEFENCE WITH NOT MUCH GOODIES FOR THE PROPERTY SECTOR
T
he allocation of RM419.2 billion under Budget 2026, which represents 19.7% of gross domestic product (GDP) is the biggest so far for the country and is a slight increase from the revised budget estimates for 2025. As with the budgets of recent years, the government has continued to prioritise the education, health and defence sectors, allocating a combined share of 32.1% of the 2026 budget to these ministries. There were however, little goodies for the property sector, with industry stakeholders’ wish list for a revival of the Homeownership Campaign and reconsideration of the service tax on rentals not being addressed in the budget. The following are the key measures in the budget which will have an impact on the construction and property sectors:
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a) Continued Positive Economic Growth Despite the geopolitical tensions, uncertainties and expected slowdown to the global economy resultant from the conflicts in Ukraine and Gaza, and the yet to be resolved tariff war between the USA and China as well as the rest of the world, the Malaysian Government expects the domestic economy to grow by between 4.0% and 4.5% in 2026, whilst the fiscal deficit is expected to be reduced to 3.5%.
The continued positive economic growth will lead to a stable and conducive environment for the
country and this augurs well for and will help to support the property sector. b) New Industrial Master Plan The government has allocated a substantial sum of RM180 million under the New Industrial Master Plan (NIMP) Industry Development Fund to finance industrial development programmes in highimpact sectors.
This is expected to boost the manufacturing sector and in turn benefit the industrial property sector and probably encourage more developers to undertake industrial park development. c) Extension of Stamp Duty Exemption for First Time Home Buyers The government has proposed to extend the current full stamp duty exemption on transfer instruments and loan agreements for the purchase of homes by first time home buyers for houses priced up to RM500,000 for another two years, until 31 December 2027.
This is a boon to those in the low to middle income groups who will be able to reduce their financial outlay when they purchase their first home. This measure will continue to drive demand and support the affordable homes segment.
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d) Increase in Stamp Duty for Foreigners The government has proposed to raise the stamp duty on residential property transfers by non-citizens and foreign companies from four (4) per cent to eight (8) per cent. Permanent Residents will be excluded.
This is a bit of a setback to the housing industry, especially to developers who are developing higher priced homes targeting at foreign buyers or who are hoping to tap the overseas market to take up the slack caused by slow demand for their houses by local buyers as the higher stamp duty means an increase in incidental acquisition costs that the foreign investor have to bear. e) Tax Deduction on Costs to Convert Commercial Buildings to Residential Status The Government has proposed a ten (10) per cent special tax deduction on costs incurred to convert commercial buildings into housing, capped at RM10 million.
This measure is a positive one for the property sector as it will encourage developers / building owners to convert old, vacant or poorly occupied office / commercial buildings into residential buildings if studies show that there is demand for residential properties in that location.