EPF as Deposit to Buy a House?
Developers propose using EPF as deposit to buy a house
The Real Estate and Housing Developers'' Association (REHDA) has proposed that the government allow citizens to use their Employees Provident Fund (EPF) savings as a down payment for purchasing a house, ranging from 30% to 50%.
However, home buyers would need to repay the amount back into Account 2 if they sell the property.
This proposal was put forward during a meeting between the Finance Minister, Lim Guan Eng, and the Minister of Housing and Local Government, Zuraida Kamaruddin.
EPF is divided into two parts: Account 1 and Account 2
As commonly known, EPF contributions are divided into two accounts: 70% goes to Account 1 and 30% goes to Account 2.
Contributions in Account 1 cannot be withdrawn until retirement, while Account 2 can be used for specific purposes such as education and purchasing property.
Additionally, EPF contributors can use funds from Account 1 to invest in Unit Trusts.
Most recently, EPF members are allowed to invest their own contributions through i-Akaun.
Issue of selling property to foreigners due to property overhang
REHDA''s proposal for the government to allow citizens to use their EPF funds has sparked various reactions from the public.
This is because the issue of selling property to foreigners remains a hot topic.
Zuraida Kamaruddin, the Minister of Housing and Local Government, proposed the Home Ownership Campaign (HOC) to attract buyers from China and Hong Kong.
This was aimed at resolving the issue of unsold property overhang in the country.
REHDA''s proposal draws public dissatisfaction
There were various reactions and dissatisfaction among Malaysians when REHDA''s proposal was announced.
Malaysians argued that the proposal to increase the use of EPF funds from 30% to 50% as a down payment for buying a house actually benefits the developers, not the people.
Furthermore, if citizens are allowed to use their EPF, there is a high possibility that developers will raise house prices even further.
The public also felt that this proposal is not a real alternative for citizens to own their first home.
This is because EPF contributions are meant for retirement savings in old age.
Conclusion
Before any proposal is approved, it should obtain the agreement and views of the public so that all parties benefit without anyone being oppressed.
EPF is the body responsible for collecting retirement funds and investing them.
EPF will then invest the contribution funds into various instruments — commodities, bonds, and company shares.
Returns from these investments will be distributed to each contributor in the form of dividends.
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Frequently Asked Questions (FAQ)
1. Can I use my EPF to buy a house in Malaysia?
Yes, you can use your EPF Account 2 savings for purchasing property. REHDA has also proposed increasing the withdrawal limit from 30% to 50% for house deposits.
2. What is the difference between EPF Account 1 and Account 2?
Account 1 receives 70% of your EPF contributions and is locked until retirement. Account 2 receives 30% and can be withdrawn for specific purposes including property purchases and education.
3. Is using EPF for a house deposit a good idea?
While it provides immediate access to funds for a down payment, critics argue that it depletes your retirement savings and may cause developers to raise house prices further. Consider the long-term impact on your retirement fund.
4. How do I start investing in the Malaysian stock market?
The first step is to open a CDS account through a licenced broker. After that, you can begin buying and selling shares on Bursa Malaysia.