Next steps for Pakatan (Pt 3)
Every government aspires to ensure that all citizens have a roof over their head.
The Pakatan Rakyat (PR) state governments can lead the way in developing a healthier and pro-active property sector.
One of the biggest headaches faced by property developers is in dealing with bumiputera-quota units, which needs to be fine-tuned so that all Malaysians can benefit.
Every government aspires to ensure that all citizens have a roof over their head.
The Pakatan Rakyat (PR) state governments can lead the way in developing a healthier and pro-active property sector.
One of the biggest headaches faced by property developers is in dealing with bumiputera-quota units, which needs to be fine-tuned so that all Malaysians can benefit.
The quota ranges from 30 percent of units built to as high as 50 percent, depending on the state/local council involved. The bumiputera quota units should not exceed 30 percent, as anything more will result in higher prices for other house buyers.
Local councils should apply discretion or flexibility in lowering the quota in areas where the non-bumiputera population is higher or where bumiputeras are less likely to buy units. For example, Puchong has a high Chinese population, so a quota of 20 percent or even 10 percent should be sufficient.
In exchange for a lower bumiputera quota, the developer can be asked to contribute to a special fund set up by the state government, to be used for the construction of low- or medium-cost housing.
There should be uniform rules on discounts for bumiputeras, to increase transparency and cap the type of properties on which such discounts can be given. The discount now varies from 7 percent to 15 percent, and is applied to everything from low-cost houses to million-ringgit bungalows.
No Malaysian will argue when discounts are given to help needy bumiputeras, but it is obscene when millionaire bumiputeras qualify for a discount on high-end property.
The discount should t be based on the price of the property:.
• 10 percent: below RM300,000
• 7 percent: RM300,001-500,000
• 5 percent: RM500,001-750,000
• 3 percent: RM700,001-99,999
• No discount: RM1 million and above
When developers cannot sell units allocated to the bumiputera quota, they have to go through a long and tedious process to get these released. It translates to holding costs, which is passed on to other house buyers in the form of higher prices. The state government and local council do not have the resources to buy the unsold units.
The solution lies in a systematic mechanism. For landed properties, 25 percent of unsold units should be released every six months. All unsold units should be released within two years of the project being launched or completed, whichever comes first.
For sub-divided properties, 15 percent of unsold units should be released every six months. All unsold units should be released within three years of the launch or completion of the project, whichever comes first.
This will benefit all parties as the holding costs will be reduced, leading to lower prices of units for all house buyers.
Affordable housing
The state government should concentrate on building low- and medium-cost housing, and not compete with developers who have profits in mind.
In Selangor, which has a ‘zero squatter’ target, state agencies must lead the way to provide alternative housing to those affected. However, the PKNS website shows that the state economic development agency appears to be more interested in selling ‘luxury property’.
Developers should get incentives to build more low- and medium-cost housing, including lower charges on premium, quit rent and assessment on the undeveloped land bank. Squatters should be given special loans to buy units or be charged a nominal rent.
Credit must be given when due. The BN government introduced a One-stop Centre to expedite approval of applications for housing projects.
It also amended the Housing Development Act to protect the interest of house buyers. This saw the introduction of two new systems of delivery - the 10:90 system and the build-then-sell system - to safeguard buyers against problems such as abandoned projects, late delivery and shoddy workmanship.
As the fastest-developing states, Selangor and Penang can promote these systems and encourage developers to adopt them by giving incentives like discounts on land premium or quicker release of unsold bumiputera-quota units. Another target could be for ‘zero’ abandoned housing projects.
PR must show that it is able to work together for a better Malaysia for all Malaysians. The countdown to the next general election has started, so it is imperative for it to show results - or face the consequences in the next elections.
DEREK LAW is a chartered accountant and retired banker. His ultimate dream is for politics in Malaysia to rise above religion and race.
