Budget 2020 will be tabled on Oct 11 and I have a couple of suggestions which I hope will be considered and included in some way in the Budget!
Firstly, I’m keeping my fingers crossed that the Real Property Gains Tax (RPGT) will be abolished. The rich can absorb additional costs such as the 5% RPGT but it’s a considerable loss of income for middle-class folk, and especially for retirees who have to sell their properties to finance their retirement.
The RPGT can come up to about RM20,000 depending on the difference between purchase and selling prices. That comes up to six-month expenses to those who can live on RM3,000 a month. That’s a big loss of income for retirees.
Secondly, the government needs to provide effective incentives for the building of mid-range retirement homes for able seniors as more and more of them retire. The majority of old folks homes are for the poor and those needing assisted living. But, there are hardly any for able seniors. There are a few like the Aragreens in Ara Damansara and Green Acres in Ipoh.
The Green Acres independent units are leased out with an initial deposit of RM300,000 for 15 years with additional monthly contributions. It works out to about RM1600 a month, excluding monthy contributions. It’s a manageable commitment, especially since you get a unit with kitchen and living areas, but only a couple of retirement homes with such facilities are available. There’s a need for more affordable units in every town in the country.
Massive projects like Aragreens are out of the reach of middle-class retirees as each apartment costs about RM700,000 per unit and comes with luxurious comforts. The St Vincent de Paul Society (Catholic charity organization) is currently building a retirement village (expected to be ready next year) in Taiping with individual rooms with attached bathroom and a balcony and shared lounge and kitchen space. The initial deposit is a very affordable RM60,000 for a 25-year lease.
The couple of available retirement homes for independent seniors in the Klang Valley are usually bungalows turned into rooms with attached bath and shared living and kitchen areas. Well-planned senior-friendly affordable retirement homes for independent living are sadly lacking. It’s one of the greatest needs of the senior community which is ignored.
Independant living retirement homes are common in developed nations, although, the trend these days among the more financially stable seniors is to share homes in rented facilities. According to reports I have read so far, the reason is to enjoy company in old age. That’s a good arrangement, too, if one can find suitable roommates you can live with!
Independent living retirement homes are a great need for single seniors and couples who have lost a spouse and have children who live far from home. Considerable demand for it is latent and remains a huge market that is waiting to be tapped! Suitable incentives will stimulate supply to meet an urgent need of seniors which may translate to reasonable profits to investors.