Low-cost Housing Being Abused, Say Developers

Developers said today low cost housing mandated by state governments are missing their intended objective and becoming ghetto areas for immigrant workers, who form up to 15 per cent of Malaysia’s 28 million population.

Low-cost houses are being bought as rental properties catering to foreign workers, says Rehda

This comes as pressure has been increasing on developers to build more affordable homes for the Malaysian public. Putrajaya also recently launched two new property schemes for young executives earning up to RM6,000 a month in urban areas, in a bid to stave off effects of rising property prices.

“Low-cost houses are being sold as rental properties and are full of Bangladeshis,” said Che King Tow, Real Estate and Housing Developers Association (Rehda) council member at a briefing to the media today.

“The low-cost housing schemes are not market-driven but politically-driven.”

Rehda president Datuk Seri Michael Yam later told The Malaysian Insider that the wider society was cross-subsidising low-cost houses as they are sold for RM42,000 but cost between  RM60,000 and RM70,000 in construction alone and without factoring in the land costs.

The cross-subsidy is borne by those who purchase conventionally-priced houses.

“There is a concern that the cross-subsidy has gone to the wrong people,” he said. “If you think about it, the rental income is quite good.”

Che added that it would be better for a more market-driven approach to be taken rather than one imposed by the state.

He said that Rehda is proposing that a national database be established to register those interested in buying affordable houses, which he said would allow developers to plan accordingly and prevent abuse by people trying to purchase such properties for rental income.

Yam said that to make housing more affordable, authorities should allow densities to rise as it would amortise the cost of the land among a larger number of purchasers.

He added that the states should intervene less in the property sector and allow developers to be as efficient as possible, saying this would help lower development costs.

Putrajaya also has a unit, Syarikat Perumahan Negara Berhad (SPNB), which is now building 14,470 housing units of various types across the country.

The Najib administration has also launched the My First Home programme, proposed in Budget 2011, that targets homes within the RM100,000 and RM220,000 price range nationwide.

Under the scheme, young workers earning below RM3,000 monthly can procure 100 per cent financing with a 30-year repayment period from selected financial institutions, to buy such homes.

Prime Minister Datuk Seri Najib Razak kicked off the first phase of the 1 Malaysia Housing Programme (PR1MA) in July, which involves the construction of 42,000 houses on 20 strategic sites. Each unit would be sold between RM150,000 and RM300,000 depending on location and size.

Among developers involved in phase one of PR1MA are Putrajaya Holdings, SP Setia, Tradewinds, Cyberview, Sime Darby Property, MRCB Resources and 1MDB.

The project involves 825.1 acres of land in total.

News Source: The Malaysian Insider

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