IF YOU are anywhere between your 20s like me and have entered the workforce for a while now, I am sure that the thought of investing in some sort of property (or at least starting to look into it anyway) has crossed your mind at one point or other.
Yet, unless you have been actively meeting with property agents or bank representatives, you might be like me initially, and still not know exactly what kinds of property you are eligible to purchase in Brunei at the moment.
Unless you have been also actively keeping abreast with Bruneian news in recent years, you might also not know that property ownership in Brunei for permanent residents (PRs with red identity cards) and foreigners (with green identity cards) is a situation best described as uncertain, at best.
In early 2012, Minister of Development Yang Berhormat Pehin Orang Kaya Indera Pahlawan Dato Seri Setia Hj Suyoi Hj Osman first announced legislation that will effectively ban the purchase of property through a power of attorney (PA) or trust deed – the old system which was previously afforded to PRs and foreigners.
During last month’s 11th Legislative Council (LegCo) session, YB Pehin Dato Hj Suyoi revealed that the ministry is still refining the legislation.
In 2012, the development minister announced that the 47,000 deeds previously issued through PA would be converted into 60-year leases, following finalisation of the legislation.
Since then, permanent resident and foreign owners of property in Brunei has been left confused and uncertain, as they still do not know if they will be able to retain their property for future generations’ use after the property’s tenure of 60 years (under the new law) is up.
It is also unknown whether the 60-year lease will begin from 2012; the year the property was initially purchased; or as soon as the new legislation is finalised.
What can locals or yellow IC holders currently buy?
One thing that remains unchanged under the new law is that residents of Brunei (yellow IC holders) are able to buy “freehold” land, houses and shop houses.
This was confirmed by BruWorld property management agent Amy Liew, who explained that owning something “freehold” equates to permanent ownership of the property.
Under the Land Code (Strata Act) 2009, locals can also purchase apartments which they will own up to 99 years, after which the apartment will go back to the land owner.
What can permanent residents (PRs) or red IC holders currently buy?
Currently, with impeding legislation, there is no more “freehold” property that can be purchased by permanent residents.
PRs can still buy land, houses and shophouses, but ownership will only be for 60 years (as mentioned, what happens to the property after has yet to be determined at press time).
PRs can also choose to buy apartments, of which ownership will last for 99 years.
What can foreigners or green IC holders currently buy?
Similar to PRs, foreigners can purchase land, houses and shophouses but freehold ownership is non-existent, and property ownership will only last for 60 years.
They can also buy apartments which will be considered theirs for 99 years.
Uncertainty for red and green ICs
Liew says that property agents in Brunei has seen a recent decline in property purchasing among permanent residents and foreigners, following announcement of the new law three years ago.
“Buyers do not have confidence in buying property at the moment because (ownership) will be just for 60 years, and no one knows what will happen to the property after the 60 years is up,” she reiterated.
“If you say the property can be renewed after 60 years then they would have confidence in buying it,” Liew pointed out.
Liew explained that plenty of permanent residents and foreigners were particularly interested in buying houses in Brunei, as they and their children had lived the majority of their lives here and consider the country as home and wanted to make it as such.
“There’s some instability faced when they rent houses as sometimes the house owners can tell them (the tenants) to move out because the owners have sold the house or need to use it for something else such as a child’s wedding,” she explained.
Another issue hindering people from buying property at the moment was the fear of market value decline.
“If an investor buys a house now for 60 years and intends to sell it 10 years from now, the house’s market value will drop because it’ll now be considered as only worth ‘50 more years’,” Liew explained.
Suffice to say, market value for a house worth 50 more years compared to its original 60 is vastly different, and selling it would result in a loss for the seller, she pointed out.
There was also little interest among investors of all IC colours in purchasing local apartments due to their fear of difficulty of renting apartments out, Liew said.
“Apartments (in Brunei) are usually used by overseas tenants who are interested in renting it. But now, a lot of people are not coming to Brunei as much, due to things like more and more cuts in foreign quotas,” Liew said, citing the government’s intention to protect jobs for locals.
For now, wannabe property investors in Brunei (besides yellow IC holders) will most likely wait for the impending new legislation to be finalised before they decide their next move.
Will the government consider an amiable, attractive renewal policy that allows red and green ICs to keep their property, even after 60 years?
Or will buying property – apart from apartments – in Brunei be seen as a futile move in the long-run?
Only time will tell.
– The Brunei Times [click here to view article]