GEORGE TOWN (Oct 26): Penang, which was hoping for some good news for the housing sector, was disappointed when last week’s Budget 2016 made no mention of relaxing commercial bank loan requirements to make it easier for the people to purchase affordable homes.
State housing exco Jagdeep Singh Deo (pictured) said Budget 2016 failed entirely to address the issue of the difficulty first-time house buyers had in securing a bank loan for an affordable home, despite calls from numerous stakeholders and lawmakers for it to do so in the run-up to its announcement.
He said the new perk announced for housing – a RM200 million First House Deposit Financing Scheme under the Urban Wellbeing, Housing and Local Government Ministry to assist first-time house buyers of affordable houses to pay the deposit – was "shortsighted".
“You (the government) pay the deposit but what about the balance? The people will still have to find a way to pay for the houses, and the housing loans are so difficult to secure," he told The Malaysian Insider yesterday evening.
Jagdeep said no details were given on how the scheme worked, including whether the deposit must eventually be repaid to the federal government, but what was clear was that house buyers would still face difficulty getting a housing loan.
He said if the federal government had funds to give, the money would be better spent on a Shared Ownership Scheme (SOS), whereby the government provided a part of the loan for the house and the buyer applied for a bank loan to cover the rest of the payment for the property.
"The government loan can be provided interest free. The size of the loan will depend on the financial situation of the house buyer. for example, the government could cover 35% of the house price and the buyer, 65%," he said, adding that Penang was running the scheme in a pilot project involving 104 low-cost houses in Taman Sungai Duri in southern Seberang Perai.
Jagdeep said similar schemes were in place all over the world, such as in West Australia, where the home buyers had access to "Keystart Home Loans".
The government introduced the programme in 1989 to provide low-deposit home loans to West Australians unable to meet the deposit requirements from mainstream lenders. In 25 years, Keystart has helped over 85,000 West Australians access home ownership.
"They have a revolving fund of A$5 billion (RM15.3 billion) for the programme. Such a scheme exists in many places. We should look at programmes like that to use for a model," he said.
On the 1Malaysia People’s Housing (PR1MA) programme, Jagdeep said Penang was again excluded from the housing allocations listed by Prime Minister Datuk Seri Najib Razak under Budget 2016 yesterday afternoon.
PR1MA homes were promised to Penang in the run-up to the 2013 general election.
In the budget announcement yesterday, Najib said PR1MA would build 175,000 houses, which would be sold at 20% below market prices, with an allocation of RM1.6 billion.
A total of 10,000 units are expected to be completed next year, he said, without mentioning where the projects were.
The statement that RM155 million was set aside by for maintenance of low-cost public housing and 1Malaysia Maintenance Fund (TR1M) also did not go into specifics, Jagdeep said.
He said it was not known how and where the funds would be distributed.
"The funds are there but many applications to get the money for repairs on elevators, railings, wiring and others are not being approved. It is the same old story," he said.
Penang has brought up the TR1M issue on many occasions because the state has many low-cost housing scheme in need of funds for maintenance and repairs. -- The Malaysian Insider (BAJET 2016)