HBA honorary secretarygeneral Chang Kim Loong's views and stance on several measures are detailed below. He appreciates the prime minister's wisdom in prohibiting the Developers Interest Bearing Scheme (DIBS) and his leading the government in the decisions announced under Budget 2014.
More than happy with the government and the prime minister's decision to ban DIBS "or any permutation that entails interest capitalisation," says Chang. He adds that developers, as entrepreneurs, should be responsible and bear the risks that are generated from their investment. "They should not be allowed to enjoy profits at the expense of house-buyers bearing the risks on their behalf. After all, if developers claim that DIBS 'assists new purchasers', they should be asked to use the Build-Then-Sell (BTS) 10:90 concept... if they are sincere in not wanting to shift the risks to the house-buyer."
Youth Housing Scheme and benefits for young buyers
The smart partnership between the government, BSN, EPF and Cagamas offering a funding limit for a first home not exceeding RM500,000 for married youth between 25 and 40 years old, with household income not exceeding RM10,000. The maximum load period is 35 years. Chang feels that under this scheme where the government will provide monthly financial assistance of RM200 to borrowers for the first two years will help reduce the burden of these young families just starting out. "I urge the government to impose a restriction that properties under this Youth Scheme cannot be sold for the first 10 years, similar to PR1MA properties. Borrowers can also withdraw from their EPF Account 2 to top up their monthly instalment and other related costs. "I urge the youth to grab this opportunity, offered on a firstcome, first-served basis, for 20,000 units only."
CAUTION: However, Chang advises young buyers not to forget that the RM200 subsidy is only for the first two years. "Take heed with regards to Zero Entry Cost properties," says Chang, as it encourages unnecessary speculation.
Building of more affordable housing
PR1MA to build 80,000 affordable homes with eligibility raised from monthly income of RM8k to RM10k; National Housing Department (JPN) to build 26,00 units under People's Housing Programme (PPR) with allocation of RM644 million; Syarikat Perumahan Negara Berhad (SPNB) to build 12,000 units of Rumah Mesra Rakyat (RMR) and 5,000 units of Rumah Aspirasi Rakyat on privately-owned land.
CAUTION: "Ensure the right implementation reaches the appropriate market. Affordable housing must be built at the right location and priced reasonably between RM150k and RM300k and not more than RM400k in prime locations. These should only be meant for first-time home buyers and not second-time house buyers in which PR1MA is allowing with conditions. The allocated land must also be used to build, and only build affordable housing, and not partner with private developers where only about 40% of the land (from what we understand from the market) is likely to be allocated for affordable housing, and the balance used for lifestyle properties, commercial and highend developments."
SUGGESTION: The best delivery agents for private affordable housing are private developers, Chang feels. "The government can boost the delivery of affordable housing if they give incentives and rebates to private developers to build affordable homes - such as lower corporate tax rates, lower land conversion premiums and/or fast track release of unsold bumiputra units."
Extension of 50% stamp duty exemption on the instrument of transfer and loan agreements until December 2016 + increased purchase limit from RM400,000 to RM500,000
"HBA agrees with the measures to assist the lower- and mid-income group to acquire their own properties."
CAUTION: "To ensure that benefits and compensations are not abused, these should only be available for first time home buyers."
Improvement of the Skim Rumah Pertamaku under the purview of Cagamas
The government has agreed to raise the ceiling price to RM500,000 in line with the stamp duty exemption. The age of the borrowers to qualify for the scheme has also been increased from 35 to 40 years.
SUGGESTION: Though HBA agrees with the above mentioned measures, it recommends that there should not be any cap on age limit. "There are many older low and middle income earners who have yet to own their first property."
States Chang: "The curb measures announced and implemented for next year's budget [real property gains tax (RPGT) exit costs, loan-to-value ratio (margin of finance/LTV) and prohibition of DIBS] have achieved their objectives in partially deterring speculators and 'bogus' house buyers. It has also brought some sense of orderliness to the housing arena." However, further measures have been prompted by HBA, which it hopes will be implemented in Budget 2015. These will be discussed in a subsequent feature.
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