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Kota Kinabalu: The Madani government has been urged to review the Sales and Services Tax (SST) policy for mixed property developments in this upcoming 2026 National Budget.

Sabah Housing and Real Estate Developers Association (Shareda) President Datuk Johnny Wong Chen Yee said normally residential properties are being exempted from SST policy.

However, he said the application of SST is on mixed developments — projects that combine commercial and residential components, such as shop lots or shopping malls on the lower floors and apartments above, which is a major concern to property industry.

“Currently, under SST regulations, if a project is classified as mixed development, the entire development — including the residential portion — is subject to SST. This automatically increases residential prices in the project.

“The property sector, has raised this issue in several dialogues with both state and federal authorities, including the Ministry of Finance (MOF).

“We are appealing for partial SST exemptions based on the proportion of commercial and residential areas within a project.

“For example, if 30% of a development is commercial and 70% is residential, then SST should only apply to the commercial portion,” he said to Daily Express here, recently.

Johnny was commenting on the property sector and industry players hopes for the upcoming tabling of 2026 National Budget by the Prime Minister Datuk Seri Anwar Ibrahim, this Friday.

He added that mixed developments play an important role in cities, especially in high-cost urban areas or central business districts (CBDs), where developers use commercial components to help cross-subsidize residential units, making housing more affordable.

“We hope the government will review the SST policy for mixed developments in this upcoming budget because adjusting it would help ease the burden on both developers and homebuyers,” he said.

Meanwhile, Johnny said reintroduction of the SST is expected to push up property prices in Sabah.

Despite residential properties being exempted, he said the cost of building materials and related services has already risen due to the tax.

He said the impact of SST will inevitably cause a slight price increase even for residential developments, as materials and construction inputs are now subject to tax.

“Like it or not, there will be an increase in cost even though residential units are SST-exempt. Building materials are already taxed, and that gets passed down to homebuyers,” Johnny said.

Hence, he urged the government to look into this and introduces subsidies or incentives for homebuyers to offset the higher costs caused by SST, so that ordinary Malaysians can still afford to purchase homes.

Johnny also called for the digitalisation of housing and property approvals, covering development plans, housing licences, and the issuance of land titles.

“By streamlining and digitalising the approval ecosystem, we can cut red tape, reduce costs, improve transparency, and boost investor confidence. This will directly benefit affordable housing projects and ensure faster delivery to the market,” he added.

“Sabahans deserve homes that are affordable, accessible, and of good quality. Budget 2026 is the right moment to reset policies and introduce the right incentives. 

“Shareda and its members are committed to working hand in hand with the government to turn these aspirations into reality,” he said.