Penang postpones low-cost housing fee hike for builders

By Opalyn Mok
Tan Sri Abdul Rahim Abdul Rahman, executive chairman of Rahim & Co, noted that income levels are currently not in tandem with the increase in property prices and said developers will have to cater for the demand for cheaper homes. — Picture by KE Ooi

GEORGE TOWN, April 12 ― The Penang state executive council has decided to postpone an increase in low-cost housing contribution for developers next year.

Funds collected from the contribution was to allow the state government to build more low-cost and low-medium cost housing in the state, state executive councillor Jagdeep Singh Deo told reporters today.

"Next year onwards, they have to pay the new amounts fixed," he said.

He explained that the state government emphasised on low-cost and low-medium cost housing for the people.

"We have to increase the contribution amount due to the increase in construction costs and the GST," he said.

Under the state’s housing policy, developers are required to build 45 low-medium cost units for every 150 housing units built in urban areas; and 30 low-cost units for every 100 housing units in rural areas.

Penang-based developers who opted out of building low-cost or low-medium cost housing units are required to pay RM120,000 per unit to the state government while non-Penang based developers have to pay RM180,000 per unit.

The contribution amount was recently increased to RM150,000 per unit for Penang developers and RM300,000 per unit for non-Penang developers.

The Penang branch of the Real Estate and Housing Developers Association (Rehda) had asked the state to postpone implementing the new fees due to poor market conditions.

"All Rehda members are complaining about the slow housing market and we are only seeking for some breathing space," said Datuk Toh Chin Leong, its chairman.

He claimed the worst-hit will be the non-Penang developers as RM300,000 per unit is a hefty fee to pay.

Toh also said Penang Rehda had initially proposed this contribution method several years ago for practical reasons and so the state government could take over building low-cost and low-medium cost housing.

"For example, if we have a 200-unit project, this means we have to build a 60-unit low cost housing and in future, maintenance problems of this 60-unit housing might arise as there were not enough unit owners to pay for full maintenance of the project or the owners refused to pay maintenance fees, and many other issues," he said.

He said it was after looking at other low-cost projects that were faced with maintenance issues, that the developers proposed that the state collected contributions from them and use it to fund low-cost and low-medium cost housing in the state.

When told of the state's decision to postpone the implementation of the new contribution fee to next year, Toh expressed his gratitude to the state for considering their plea.

"This is good news, it will give us some breathing space at least for this year," he said.