The Urban Wellbeing, Housing and Local Government Ministry’s latest proposal for private developers to provide housing loans to buyers has been questioned by the Penang government.

State executive councillor in-charge of housing Jagdeep Singh Deo said the proposal to provide loans not more than 18 percent interest is not viable as it would further burden the buyers.

“With such high interest rates, the cost of the units would be further increased,” Jagdeep said in a press conference in Komtar today.

Jagdeep wants the minister, Noh Omar, to provide more information about the new proposal, saying clear guidelines must be given if the scheme is to be implemented.

“This is because different private developers have different capacities to carry out the loan scheme, and this can pose high risk to the buyers.

“A workshop on the matter should be held and should be attended by all housing department personnel and stakeholders including Bank Negara officials,” said the DAP Dato Keramat assemblyperson.

Jagdeep said the Penang government had earlier mentioned that the high rate of commercial banks rejecting housing loans must be addressed first.

He was referring to Noh’s statement about a proposal for housing developers to be issued a moneylending licence to help non-bankable house buyers and overcome downpayment issues.

The minister made the remark at the 19th National Housing and Property Summit 2016 yesterday, adding that he had observed many buyers having difficulty making down payments.

He urged big players in the housing industry - Sunway Group, EcoWorld, Mah Sing and Glomac - be issued with moneylending licences.

Meanwhile, Jagdeep said Penang has proposed several measures to address the issue of home buyers failing to obtain bank loans.

The measures include Developers Interest Bearing Scheme which was abolished in 2014 for first time house buyers, accelerated or flexible tiered payment, providing them with 100 percent loan and an extended period for loan repayment.

Jagdeep also asked for more clarification regarding a proposal for a housing bank from former minister Abdul Rahman Dahlan in September 2014 to address the issue of high rejection of bank loans.

He is also seeking answers from Finance Minister II Johari Abdul Ghani regarding the proposal for a new scheme for buyers to obtain loans.

“The housing ministry should give more priority for building of affordable housing units with lower prices to address the real problem of house ownership for first time buyers,” Jagdeep said.