Many small property firms may not be able to provide housing loans

An ongoing apartment project in Bandar Meru Raya. – filepic

THE proposed policy to allow developers to apply for moneylender licences may not benefit developers in smaller cities.

Real Estate and Housing Developers Association Malaysia Perak branch chairman Tony Khoo Boon Chuan said developers here were already facing a shortage of cash flow for development purposes.

As such, he said, the developers would not have the means to provide loans to buyers.

“Firstly, there will not be many takers because the interest rates will be higher, compared to what the banks are offering.

“Probably the public-listed developers who have higher cash flow will be able to benefit from the initiative, but not developers in smaller states who depend on end-financing,” he added.

Recently, Urban Well-being, Housing and Local Government Minister Tan Sri Noh Omar said eligible developers could apply for moneylender licences to provide loan facilities of up to 100% to property buyers.

He said they are allowing developers to provide housing loans to overcome difficulties faced by buyers in securing bank loans.

Khoo, however, said the initiative would be an extra burden for developers who were already finding it difficult to finance their development.

He added that developers were already paying a high cost for land premium as well as infrastructure and construction.

The government, he said, should look into the stringent lending policy by financial institutions instead.

He said out of 10 potential purchasers, half of them did not qualify for the loans.

“The rules and regulations are so strict that they fail during the application process,” he said.

Total Investment Sdn Bhd executive director John Chong said some developers could take advantage of the initiative since banks have tight control on lending.

He added that it was a good move and a relief for developers.

In terms of the interest rates offered, Chong said the market would decide the rate.

“If the rate offered is too high, maybe some developers can lower the interest rates.

“Even smaller developers can take advantage of it and offer loans according to their company’s capabilities,” he added.

Another developer who declined to be named said in Perak, the developers were not big enough to offer loans.

“I am worried that money laundering may occur,” he added.