Standard quotas, prices for affordable homes proposed

Standard quotas, prices for affordable homes proposed

KUALA LUMPUR, 2 November: The Urban Wellbeing, Housing and Local Government Ministry is preparing a paper to standardise the quota and pricing of affordable homes nationwide.

“When private developers have to build more low-cost homes according to quotas set by state governments, they have to do cross-subsidisation from high end to low cost,” said Deputy Urban Wellbeing, Housing and Local Government Minister Datuk Halimah Mohamed Sadique.

“That’s why the ministry is preparing a paper to be presented to the National Housing Council for us to standardise the quota and price that is set by state governments,” she told reporters after launching Rahim & Co Research’s seminar titled “The Malaysian Property Market: Opportunities Amidst Uncertainties” yesterday.

Halimah said state governments have different conditions or quotas for affordable homes. For example, in Negri Sembilan, 50% of a project must be affordable units while in Johor the quota is 40%.

“We are preparing the papers now. The chief ministers also acknowledged the differences and have requested for it to be streamlined…we hope to discuss how to standardise the valuation of quota and house prices,” she added.

Halimah said house prices are not solely driven by the market and can be reduced via certain actions, not just at federal government level but also at state government level, especially in terms of land cost and land premium.

“For example, if the government or PR1MA wants to build houses they apply for land from the government. The land cost is determined by the state government, so if the state government puts a high price tag at the government level, we absorb the land cost and will not pass it on to buyers. But for the private sector, some developers will pass on the cost to buyers.

“Another thing is land premium. Sometimes it is very high, according to market value. If there is an effort between government and private sector to build more affordable homes priced RM300,000 and below, the initiative must be driven by state governments so that land cost and land premium can be more reasonable,” she said.

Halimah said these steps will incentivise the private sector, which needs support from the government, to continue building more affordable homes. It may also help to reduce house prices as land cost and land premium make up at least 75% of total cost.

In addition, the ministry is working out the details for a rent-to-own programme for first-time house buyers. Those eligible will not need to pay any deposit, and rental is considered payment towards owning the unit.

“We are looking at the SOP for that programme, which we hope to start next year,” said Halimah.

She said the government is on track to achieve its target of building one million affordable homes by 2018, with 723,000 units at various stages of construction now.

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