‘6% interest rate is fair’

PUTRAJAYA: A maximum loan in­terest of 6% is considered fair rate for developers to charge house buyers.

“We are still getting feedback to look on what is the acceptable rate. But roughly, based on early feedback, I think developers should impose up to 6% interest rate only,” said Urban Wellbeing, Housing and Local Government Minister Tan Sri Noh Omar.

The minister feels that develo­pers with money lending licences are not seeking profit from the interest.

“They are more concerned about selling off their properties. The loan that is offered is to help house buyers bridge the gap by covering the deposit money,” said Noh at a press conference here yesterday.

He said the Moneylenders Act stated that as minister, he has the power to decide what is the acceptable interest rate.

“Under the Act, it is stated that the money lender can charge a maximum of 18% interest rate if without collateral, or 12% with collateral.

“The media and the public kept highlighting the maximum allowable interest rate, but you must know that as minister, I have the power to set the interest rate as well as the loan repayment period,” he said.

Noh stressed that the loan given out by developers was only to help house buyers cover “the remaining 20% or 30%” that was not given by the bank.

“Generally, the bank will not give 100% loan to house buyers. Usually it is 70% or 80%. Where do the house buyers get the remaining 20% or 30%? They borrow from their relatives, families, friends, or make personal loans.

“Therefore, the Act allows deve­lopers to give out personal loans to cover this balance,” Noh explained.

Earlier this month, it was reported that Noh said developers could provide loans to property buyers.

He was later asked to explain the matter to the Cabinet, which then instructed his ministry to review and improve the policy which had existed under the Moneylenders Act.

“We are studying it thoroughly and looking at its effectiveness. We will seek feedback from all quarters, including developers and Bank Negara,” said Noh, although he declined to give a timeframe when the study would be completed.

Earlier, he handed appointment letters to five new presidents of the Tribunal for Homebuyer Claims and seven new presidents of the Strata Management Tribunal.

Noh said the Tribunal for Homebuyer Claims had successfully solved 40,536 cases, which is 98% of 40,923 cases, since Jan 1, 2003.