6% SST on Construction Services Will Burden Homebuyers, Warns REHDA
- Marcus Liew
- Jul 20
- 2 min read
The Real Estate and Housing Developers’ Association (REHDA) has voiced serious concerns over the 6% Sales and Service Tax (SST) on construction services, cautioning that the move will drive housing prices up, especially in urban mixed developments, with homebuyers ultimately bearing the brunt.
Construction Sector Already Facing Cost Pressures
According to REHDA president Datuk Ir Ho Hon Sang, developers are already grappling with:
Indirect taxes on building materials and labour
Operational challenges post-pandemic
Tight margins on affordable housing initiatives
“The industry is already bearing indirect taxes… the addition of the SST will only add to our burden,” said Ho.
Serviced Apartments on Commercial Land Hit Hardest
Although residential buildings under the Housing Development Act (HDA) are exempt from SST, units built on commercial land, such as serviced apartments in mixed-use developments, will be affected.
“In city centres where land is scarce, residential units are often part of mixed developments. Subjecting these units to SST will inevitably lead to increased housing prices,” said Ho.
This will disproportionately impact:
First-time homebuyers
Buyers of affordable housing schemes like:
Rumah Madani
Rumah Selangorku
Rumah Mesra Rakyat
Purchasers of shop lots within strata developments
Owners of infrastructure within mixed-use schemes
REHDA Urges Postponement and Grace Period
With the SST implementation set to take effect on July 1, REHDA is requesting:
✅ A postponement of the effective date
✅ A grace period until 2026 for SME developers to register with LHDN
✅ No retrospective application of SST on signed contracts
“Many of our SME members are unprepared and have not registered with the Inland Revenue Board,” Ho explained. “A delay would allow sufficient time for adjustment.”
Risk of Market Slowdown
Ho warned that developers may delay or scale down projects in response to cost uncertainties, which could:
Slow down new housing supply
Worsen the affordability crisis
Reduce market momentum in the second half of 2025
Balance Needed: Fiscal Policy vs Housing Affordability
While the government’s goal of broadening the tax base is understandable, REHDA argues that the implementation must be sensitive to the unique challenges of the housing sector.
“To maintain fairness, we sincerely hope SST is not applied retrospectively. Any contract adjustments before July 1 could lead to cost overruns,” said Ho.
Final Thoughts
With housing affordability already under strain, the 6% SST on construction services could have unintended consequences, especially for:
Mixed-use projects in city centres
Affordable housing programmes
SME developers
REHDA’s appeal adds to the growing chorus of voices — including retailers, SMEs, and property investors — calling for more time, clarity, and exemptions under the revised SST framework.