Dear all,

Wondering if any of you have experience with JV with developer.

Total GDV breakdown as follows:-

3 corner terrace - 400k per unit = 1.2mil

66 intermediate terrace - 350k per unit = 23.1mil

18 semi d - 500k per unit = 9mil

Total GDV = 33.3 mil

Dev propose that landowner gets 6 semi d, 20 terrace, 2 will be corner. About 10.1mil in value.

This post has been edited by jason1986: Jun 24 2015, 09:30 AM

Definitely not viable. This is what happens when developer has not enough or no money to pay main cons or biz partners. They tend to contra off with unsold properties.

Profit sharing is the norm in this kinda situation.

6 SD = 6xRM500k = RM3mil
18T + 2C = 18xRM350k + 2xRM400k = RM6.3mil + RM0.8mil = RM7.1mil
Total = RM10.1mil

RM10.1mil/RM33.3mil = 30.6%
damn good deal wei!
normally land owners gets approx 15%-30% dependent on the land, and its status and its zoning and its restriction, etc.

but be careful about treatment of taxes!

the landowner wants houses instead of cash.

15% is too low unless it is highrise. for landed i think will be higher.

As for taxes.. GST ohhh GST.. headache.

land is agriculture. If not mistaken, they take it that landowner dispose off the property to the developer. Agri land no GST. Hopefully that is the case. Need to confirm with customs. emailed them before but no reply.

This post has been edited by jason1986: Jun 24 2015, 09:46 AM

Walao seriously ah??????? 😨😨😨😨😨

you left out one important thing. Land owner will have to absorb all input tax from construction and any fees involved.

Custom only recognized the lawful and rightful of this JV owner which is the land owner not developer.

Nowaday JV is unlike previous. cannot goyang kaki and wait to harvest.

If i were the land owner, i will take the cash unless the JV development is commercial or industrial

Yeah landowner should just take money and ciao.

Well, i would take the money and ciao also. But this landowner wants the houses to collect rental.

30% is quite standard agreement for JV deals.

then u have to remind him on the GST part.

it is not only his portion affected, its throughout.

says total construction cost is rm 27 million. Im basing on one of my current project

6% will be rm 1.6million

From what i read online, supply of agricultural land and supply of residential properties is exempt from GST.

If by entering into the JVA with the developer is considered a supply of land on the part of the landowner, then it should be exempt.

If it is taken that developer supplies the residential houses to the landowner as remuneration, there will be no GST also.

The only GST applicable is on the developer's part when they purchase raw materials and equipments etc for building the houses but because it is residential, they can only adjust on the selling price and cannot charge GST to the purchasers.

But end of the day, still very pening. No clear guidelines. Will have to check with customs.

Thats why, land owner become end user. last tier of tax from contractor, supplier, specialist, consultant and authority for all supplied goods and services.

I try not to confuse you with GDV hence im using TCC as reference.

Ultimate question is, does the contra value amounting RM10 million is worth the land cost after 2 or 3 years from now excluding the said RM1.6 million tax.

JV agreement is sensitive nowaday with all this GST come around.

you are absolutely spot on hence my closing statement that the landowner better do proper due diligence on the tax structure of the deal.
new JV structures butt hurt the landowner big time!

best to engage an experienced tax agent to structure the deal properly.

on paper, the deal is attractive.
but looking at the cost of the development, suspect it is not a prime area.
hence i would rather pegged it to % GDV rather than physical units.

thats true kochin kor. even my melaka JV project also last minute pull off due to this taxation matter.

market is bad, we just cant simply increase the selling price to recover the super premium easy money 6% to government.

CASH is king nowaday. Get the cash convert to USD and SG.

talk about tough time, peri kor, your company recruiting bor?
fat cat looking for job.
let me follow you cari makan, can?

my boss also tighten up cash flow. luckily a very penny wise boss, i believe can maintain our wages for next 2 years even without project running.

i also looking for jobs now. Eco world and law development is recruiting

Peri gor.., you got any on running projects at Melacca? Mind to share about the foreigner consent's stuff? As one of my client pull hand brake because cant submit consent as their project is high rise without strata title yet, hence bank cant release payment for foreigner buyer. Any jalan to settle this issue??

This post has been edited by Tavia88: Jun 24 2015, 11:25 PM

30.6% is considered a very nice figure.. but if without any upfront payment collected from developer, the risk is still there..

Agree this is a great deal, just take the deal!

Alternatively, there's an option to take cash also - not the whole RM10.1 mil lah, maybe RM2 mil cash + RM8.1 mil worth of assets?

i dont think is foreigner buyer issue, is the bank with the developer issue. your buyer should get those panel banks with the developer unless quota full. Outside banks may look at the encumbrance of the land especially leasehold land in Melaka. Then the viable of the project. Look like the risk assessment from bank is high to the project, worst come to worst, tell your buyer pay in cash.

i hope i interpret your question correctly. Melaka is tough market.

EW no hiew fat cat.
apa itu law development.

Law development sdn bhd or aka TS Law Holding @ kuchai lama, got few key vacancy.

They are planning something big at prime land.

you lead, i follow.
ada kang tao, just pm me lor.
serious punya. not play play

Landowner is still negotiating with the developer. Will prefer to have upfront cash payment + units as per your suggestion.

Still clarifying with customs on the GST issue. Seems like customs themselves DO NOT HAVE A CLEAR ANSWER. Bastards really.

Anyway, based on their VERY GENERAL guideline, landowner supposed to charge the developer if it is applicable based on the total value that landowner will receive. So if 10mil, then will need to collect 6% from the developer and submit to customs.

The thing is the land is a agriculture land which based on their VERY GENERAL guideline, no GST is applicable.

Really dislike dealing with govt departments. Vomit blood.

If foreigner is purchasing, they will need to apply for the foreigner's consent under s.433B of the National Land Code. Certain conditions will have to be met, including the minimum threshold, i.e. house price must be more than a certain price and this minimum threshold differs from one state to another.

For KL and Sel, you can apply for such consent even before the issuance of the strata title. Not sure about malacca as each state authority have their little napoleons dictating different rules.

This post has been edited by jason1986: Jul 3 2015, 05:56 PM

Threshold is definitely. Its rm500k capping for high rise residential at Malacca. The main issue with Malacca project now is the foreigner consent part. The authority there would only accept the application of consent together with either strata or individual title. So, new project would definitely facing this issue especially if the target buyer is foreigner because bank cant disburse the loan without foreigner consent. Anyhow, we've just found some solution for that.

Care to share the solution?

The only plausible way from my view is that the authority processes the application.

Why Not.. here is the platform to share and learn together!

The recent changes to Strata Titles Act 1985 which enforced towards all the new development to hand over VP together with strata title helps in this case.

Based on the latest amendment, developer is required to:-

(a)               apply for the certificate of proposed strata plan to the Director of Survey within three (3) months from the date of issuance of the document that certifies the super structure stage (applicable to the case where the sale and purchase agreement of any parcel that takes place and the document that certifies the super structure stage is issued after the commencement of the Strata Titles (Amendment) Act 2013); and

(b)               apply for subdivision of building or land within one (1) month from the date of issuance of the certificate of proposed strata plan.

So, With proper followup in the midst of the application, the strata title can be issue within 4 to 6 months. Depends on how the developer liaise with the authority..

So, with the issuance of strata title, then the issue of foreigner consent would be solved and no further issue for bank to disburse the loan. Anyhow, this scenario is not applicable to all the case. Its applicable to the case of my client as their foreigner buyer able to purchase with 50% cash so the margin of loan they need is only about 50%. Hence, during the stages of super structure which is normally about 30% of the progress, the developer can start to apply for the issuance of strata title already. So, the timing is around there which can match the disbursement of the other 50% loan from bank.



This post has been edited by Tavia88: Jul 3 2015, 11:03 PM

Thank you for the info. But this will be applicable to your case only due to 50% loan margin of finance and not to all cases. Anyway, good info.

hi bro, you mean if you received 10mil value prop, gov will charge 6% GST, thus you get developer to pay?

please include me in your update if you have a clear answer in future thanks

Based on the guidelines issued by the customs, landowner is supplying land to the developer n landowner must charge gst on the supply. But this is a very general statement. Need to clarify on issues I have highlighted in my earlier posts.