State housing policies paint property developers into a corner

GEORGE TOWN: The difficulty of eligible affordable house buyers getting home loans is “biting the property sector hard”.

Under pressure from developers with unsold units, it is learned that the Penang state government is cutting more slack for affordable housing developers and allowing them, among others, to sell some of these units on the open market.

But the move threatens to wipe out the supply of affordable housing type C3 (RM200,001 to RM300,000), and developers of higher-end properties are left flustered because they paid high development charges for their projects and now face competition from such freed affordable housing projects.

A developer said those who built high-end homes were now left with the short end of the stick because they incurred high compliance costs and must build 30% low cost and low medium cost units for every high-end project they undertook.

“Now we have affordable housing developers who have waivers on most of the compliance cost and can push their projects in the open market,” he said.

He claimed that the new rules came out of a late December meeting among state officials, Real Estate and Housing Developers Association (Rehda), International Real Estate Federation (Fiabci) Malaysian Chapter and Penang Development Corporation.

“Because many successful applicants cannot get housing loans, we have a glut of affordable homes.

“It has been a problem for many years. The state gave developers strict rules but Bank Negara won’t let banks give out loans to eligible buyers,” the source added.

Rehda, which has both affordable housing and high-end developers in its stable, is at the receiving end.

“The market is not stable due to several factors,” said Rehda Penang chairman Datuk Toh Chin Leong.

Toh said although it has been more than seven months since the new government took office, the political situation is still fluid, with infighting among political parties affecting market sentiments.

“The Housing and Local Govern­ment Ministry has yet to come up with new Bank Negara guidelines on housing loans, which is a major cause of the rejection rate of 60%.”