Budget 2019: Can it solve some of Malaysia's housing woes?

Ida Lim
The National House Buyers Association has long warned of a looming housing crisis and a potential ‘homeless generation’ of Malaysians unable to afford owning homes. — Picture by KE Ooi

KUALA LUMPUR, Oct 22 — Owning a home is a priority for many Malaysians who await each year to see if the federal government will introduce measures in the Budget to make such a dream more achievable.

Ahead of the Pakatan Harapan (PH) government's Budget 2019 in November, Malay Mail looks at the wishlist of two key groups: those who want to purchase a house and those who build them.

Make it affordable

The National House Buyers Association (HBA) has long warned of a looming housing crisis and a potential “homeless generation” of Malaysians unable to afford owning homes.

HBA defines affordable homes as those sold at between RM150,000 and RM300,000 (as opposed to below RM100,000 for low-cost houses), with a minimum two-bedroom layout with at least 800 sq ft of space, and in an accessible location with good public transport links and public amenities.

Here's a list of HBA's proposals on what the government can do.

Tax property speculators to curb rising prices

Noting that most Malaysians would be able to afford two homes at most, HBA proposed higher stamp duty on buyers from the third property onwards and a 30 per cent Real Property Gains Tax (RPGT) if an owner with more than two pieces of property sells within the first 10 years of taking vacant possession.

Incentivise developers to build affordable housing

The government can reduce costs for affordable homes via measures such as through fast-track project approvals that would allow for quicker sales and better cash flow and making utility companies bear the cost of the last-mile connectivity for services such as electricity, water, sewage that developers had been forced to pay and pass on to homebuyers.

The group said land acquisition costs (land alienation prices and land conversion premiums) could be lowered if at least 70 per cent of the land is for affordable housing.

It also proposed tax exemptions on up to 70 per cent of profit from affordable housing projects.

Rent-to-own scheme for affordable housing

The HBA urged Putrajaya to form a task force involving federal and state governments to introduce nationwide rent-to-own scheme for B40, M40 income groups who make up 80 per cent of the Malaysian population

Introduce a price control mechanism for affordable homes

It proposed a maximum limit on profit margins for affordable housing developers, which will result in lower prices charged by those in the housing industry including sub-contractors, suppliers and vendors.

“If the government can control the prices of essential goods such as rice, sugar, cooking oil and other daily essentials, it should also be able to control prices of houses, more so for the affordable housing category,” HBA said, noting that the government was already regulating prices for construction materials such as cement, sand and steel; as well as professional fees for architects, engineers and surveyors.

Separately, the Malaysian Trades Union Congress (MTUC) proposed that the Employees Provident Fund direct RHB Bank and MBSB Bank — where the retirement fund holds stakes of 40.7 per cent and 65.4 per cent — to provide housing loans without charging interest to B40 and M40 workers.

Help us make it affordable

The Real Estate and Housing Developers' Association Malaysia (Rehda) proposed for banks to make it easier for Malaysians to obtain loan approvals and offer higher margins of financing.

It also wants more “flexible” terms such as longer loan tenure or loans that consider borrowers’ future earning potential.

Rehda also proposed for the direct transfer of EPF savings of house buyers to developers to cover the 10 per cent downpayment for new home purchases, instead of the current requirement where the buyers have to fork out their own money first before the EPF funds are transferred.

It also mooted that the percentage of contribution to Account II — which can be used for the downpayment — to be increased from 30 per cent to 50 per cent.

Other points on Rehda's wishlist are:

Increase supply of affordable housing by among others: 

Using government land for such houses; providing transit housing until renters can afford to buy own home; freezing resale of subsidised housing to ensure adequate supply and prevent profiteering; converting quota for low-demand low cost housing to high-demand affordable housing; and reviewing planning policy for residential projects.

Reduce cost of doing business to enable savings to be passed on to house buyers:

Such as through reviewing or abolishing unnecessary charges or requirements; changing the policy where private utility companies such as Syabas, Tenaga Nasional Berhad and Telekom impose capital contribution charges on developers ― who bring in new customers and are already required to lay infrastructure in their development projects

Revisit Tun Dr Mahathir Mohamad’s Home Ownership Campaigns (1998, 1999), National Housing Campaigns (2001, 2002) to clear unsold residential properties (currently 146,196 units as at end of first quarter of 2018)

Rehda proposed a reviving of such a campaign for properties priced below RM500,000 that are sold from a developer to a purchaser, with incentives such as: waiving stamp duty for housing units, free or reduced legal fees and loan processing fees, higher financing margin, and discounted insurance premiums.

Revise Bumiputera housing discount policy

Standardise and put maximum limit on Bumiputera quota (30 per cent) and Bumiputera discount (five per cent); disallow Bumiputera discount on high-end properties (RM1 million and above) which would be borne by other buyers

Encourage Industrialised Building System (IBS)

Government to provide more incentives and funds to promote developers' adoption of IBS; adopt IBS system for government projects to ensure economies of scale and bring down production costs for IBS components

Lower legal fees for some

With newly revised fee structure resulting in nearly 26 per cent increase in legal fees that has to be fully borne by the house buyer, Rehda suggested that home ownership costs be reduced for housing units priced up to RM500,000 by reverting to the old legal fee structure

Form Central Housing Database Agency to use big data to monitor and manage supply and demand of housing units

“This Central Housing Database Agency will consolidate data from multiple agencies at federal, state and local levels to help in the planning and allocation of residential units in the country, especially affordable housing,” Rehda said, adding that both public and private developers could then receive advice on building the right product with the right price, location and timing; as well as allow developers to gauge if their new projects match local affordability.

MTUC suggested the formation of a Land and Housing Regulatory Authority for the drawing up of a blueprint on the actual demand and supply situation of affordable housing in Malaysia, adding that it can eventually manage housing schemes.


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