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KL homeowners facing sharp assessment hikes

City Hall plans to raise annual values by up to 300%

KUALA LUMPUR property owners, an estimated 10-16 per cent of whom are foreigners, are facing sharply higher assessment payments of up to 300 per cent following the latest move by City Hall (DBKL) to boost its coffers.

DBKL's "Notice of revision of valuation list" has been posted to homeowners, detailing the proposed annual value on which assessment is payable.

In the popular Mont Kiara area, for example, a serviced apartment of about 1,100 square feet, whose annual valuation last year was RM15,600 (S$6,000), has now been assessed at RM30,000.

Consequently, the annual assessment payable will jump to RM3,600 from RM1,872 - a 92 per cent hike given that serviced apartments and other properties with commercial titles attract a 12 per cent tax. The residential rate is half that level, at 6 per cent.

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Lawmakers, inundated by their constituents' requests to fight the hike, reckon that assessments would go up by 100 to 300 per cent.

But DBKL maintains that the hike is justified because valuations have not been revised for 21 years even as property values have gone up significantly, as have the council's operating costs.

Rate-payers counter that revisions ought to be more gradual, every five years, for example.

Furthermore, owners - many of them retirees - say that they do not benefit from higher property values as most occupy their homes, and believe that the proliferation of new developments should have added to DBKL's revenues.

Slamming the council for its lack of consultation, they complain that its services have not improved as roads continue to be full of potholes and drains clogged, while many parts of Kuala Lumpur are dirty.

The fault does not entirely lie with DBKL since quite often, a newly resurfaced road is messed up when a utility company decides to lay down new water pipes or telco cables, and its independent contractor does a shoddy patch-up job.

In a column, tycoon Tong Kooi Ong wrote that DBKL's expected total revenue for 2013 of RM1.62 billion more than covered the RM1.4 billion budgeted in operating expenses. Although it anticipates incurring RM782 million in development expenses, about half of it would be paid from federal government funds. It is unfair to overly tax KL residents, he said, as they also pay Putrajaya hefty corporate and personal taxes.

An increase in assessment payable is likely to result in higher inflation and rentals. However, because the supply of commercial space and high-end residential units in Kuala Lumpur outstrips demand, rental hikes might be smaller.

In the past five to six years, many high-end apartments have mushroomed in Malaysia's biggest city, fuelled by strong demand on the back of low interest rates, easy credit and financing schemes such as Dibs (developer interest bearing scheme), and more relaxed real property gains tax (RPGT).

But the party could be coming to an end as RPGT rates have been doubled and Dibs has been banned to the delight of those such as Chang Kim Loong, honorary secretary-general of the National House Buyers Association (HBA), who blame speculators for ramping prices up.

Mr Chang said that an assessment payable increase would unduly penalise the majority of private home owners who have one or two properties. "If City Hall wishes to increase the (assessment) for private homes . . . HBA proposes a hike of not more than 10 per cent."

Owners who do not agree with the new assessment have about a month to object in writing.