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We are totally lost, say developers

Property developers discussing the perplexing different housing policies.

Property developers discussing the perplexing different housing policies.

Frustrations expressed over varying affordable housing policies

While developers are obliged to build affordable units, termed Mampu Milik, the implementation of these units is not as clear-cut as it should be. These guidelines differ across states to ensure the provision of quality and sustainable housing, with its own criteria and simultaneous programs to be followed.

In Selangor, developments beginning from five acres are required to build 20% to 40% affordable units. These requirements depend on the type of property being built. In Johor, development from three to five acres requires 20% affordable units, with anything above five acres, allocated 40% requirement. 

In Kelantan, the requirement begins from three acres or more than 250 units with 20% of affordable units. In Pahang from three acres, affordable units must be at 30%, priced between RM70,000 and RM90,000. Negeri Sembilan’s affordable housing standard states that developments below 10 acres require a minimum of 30% affordable units, while 10 acres require 50%.

These quotas are imposed upon the project regardless of location and demand. The differing requirements make it difficult for property developers to keep track of their affordable housing requirements.

“We just wish to ask the government to look at various states’ different policies, then maybe pick a standardised one and then implement it nationwide,” Scientex Bhd executive director Beh Chun Chong said.

Sime Darby Property Bhd group managing director Datuk Azmir Merican compared the grey area in the Malaysian affordable housing policy with the financial industry in the 90s. He noted that there had been so much regulation, nobody could cope with it. The solution came in the form of a disclosure-based system, which he believed could be a similar solution to the property developer industry.

The lack of a clear policy on affordable housing negatively impacts the provision of such units.

“At the end of the day, we are talking about affordability, correct? And housing policy is one of those that contributes to why the cost, the pricing is so high,” Glomac Bhd chief operating officer Zulkifly Garib said.

“I can tell you that it’ll be difficult for you to have a standard nationwide policy, because… it’s a state affair and every state government will want to have their own policy,” Zulkifly pointed out.

“But if we can tell them look, we can show them one of the reasons why house [prices] are high is because of the cross-subsidy. I mean Selangor has got 20 to 40% subsidy, for example, and again, different, Johor has got the 15% but the selling price differs,” he added.

These cross-subsidies are partially funded by the open market units for feasibility, distorting the price of these units.

“I think most of us are willing to give away land… we’re resigned with the fact that we’ve got to give them the land,” Zulkifly said, in agreement with a few other developers who note that they suffer less loss when they give the land away to the government. 

The issue goes beyond simply providing these affordable units. 

“Upon completion, there’s only about a 50% takeup rate, we still have a lot to sell. So what’s the problem? Whether people actually don’t need it, or they can’t even afford affordable housing?” Gamuda Land chief operating officer Wong Siew Lee asked.

Developers hold onto the unsold property for an extended period, and sometimes, they apply to release the unit to those who shouldn’t be eligible to buy, defeating the purpose.

Sendayan Group of Companies director Louis Ting pointed out that most developers, to minimise the losses, will try to relocate the affordable housing to another region, where the land cost is cheaper.

“Now this is where… the social problem arises, you are going to create a cluster of low-cost residents in an area which may not be in a conducive living environment, that actually creates a more even more serious mismatch in terms of the day to day needs in that kind of situation,” Ting said.

In this regard, he noted that there might be a better option for the government to take over the construction of low-cost units in locations that suit people’s lifestyles. Alternatively, the government could provide a grant for homebuyers to apply, up to RM150,000 to RM200,000 for them to buy a unit from the open market that suits their needs.

“In short, the developer need not build, and the government need not worry about where the low-cost housing is. Let the buyer choose as to where to buy, as long as you fulfil the main test, the threshold test, then you just apply for whatever the allocations available by the government,” Ting said.

According to Matrix Concepts Holdings Bhd group managing director Ho Kong Soon, the crucial point to affordable housing was to make it sustainable. In his experience, while many speak on the topic of affordable housing, there is no willingness to make the change. 

This was the reason that the affordable housing issue, despite being a core issue, is a complex environment, he said. In the end, there was no consistent policy itself, ensuring that the process would take an extended amount of them.

Ho pointed out that the policy itself had to be changed to encourage its developers to create large, transformative projects. This is an issue about trust, he said.

“What I mean is that at the end of the day itself, policymakers are important… [it’s] hard for us in the private sector to move alone,” Ho added.

Unification efforts

“When Zuraida (former Housing and Local Government Minister Zuraida Kamaruddin) first came on board, she wanted to actually unify all these [policies], all the developers don’t have to do their own,” Sunway Property central region senior executive director Chong Sau Min said.

He recalled that the first attempt was initiated by government-linked companies, which would contribute to the land. Developers would select their chosen site and build something modelled after the Housing & Development Board (HDB) units in Singapore. The project never took off. 

“When Lim Guan Eng was a minister, finance minister, he actually proposed to have contributions from developers,” Chong said. “These were organised, in Rehda (Real Estate and Housing Developers’ Association)we actually worked on it. See how much to propose… but eventually, [it] didn’t take off.”

Rehda president NK Tong noted that for the prosperity of the nation, developers were more than happy to contribute, however, the efficiency of the process had to be improved.

Ho added that the developers have their role in building the nation’s economy, but the government has to step in to ensure that the environment is conducive. These policies have to be effective to benefit the people.

“Better the government take that role, and Rehda is already proposing a national housing trust, where developers contribute a certain small percentage in lieu of the affordable housing and that trust can decide,” Tong said. 

According to the proposal, the board of trustees would be a mixture of government and private sector. Utilising state land, it will then be up to the developer or contractor to do the building.

“And then there’s a shortfall the housing trust can subsidise, because that actually came from the developers in the first place, but the second benefit of that trust is then the developer is fully aware of what is the expectation for the subsidy component, [it is] very transparent [and] can price more competitively,” Tong added.

The trust would have a masterplan of the affordable housing unit, and identify land. The state would know best where the need is, not individual developers, he said.

“It’s not gonna be one size fits all because Sabah, Sarawak have their own uniqueness,” Koe acknowledged.

Koe pointed out that developers were willing to surrender their land, allowing the proposed national trust to hold it and sell it at the competitive tender without making money, as a social agenda. The solution would avoid the issue of overhang by targeting the areas of need, relying on the realities of affordable housing rather than a rigid process.

Source: StarProperty.my

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