The property sector’s wish list for new BNM governor

The financing package offered at 4% for Program Perumahan Rakyat (PPR) house buyers is definitely good news to the rakyat in view of the current situation where housing loan financing has become a main problem among house purchasers.

Such an initiative, it is hoped, will assist those planning to own a house, specifically those in the lower income bracket.

We also hope that the government will consider expanding this incentive to cover homes under the affordable housing category so that a larger group will be able to benefit.

Home ownership continues to be among the main priority, especially for the low income group and first time house buyers.

We also hope for the Developers’ Bearing Interest Scheme (DIBS) to be reinstated for genuine first time homebuyers.

This will ensure that there is no speculation in property prices, and the right people will benefit from these efforts.

On encouraging home ownership, we recommend a special preferential fixed interest rate of 3.5% for first time house buyers purchasing properties priced below RM300,000. This rate will only be given once a life time and the buyer must hold on to the property for at least 10 years after purchase.

As for affordable housing, we would like to emphasise that an affordable home does not mean a small home that sells within a certain price range. We suggest that BNM redefines the criteria for affordable housing, which means that more parameters should apply to what can be termed as “affordable” houses – such as cost per square foot, ceiling price, basic finishing, fixtures, and so on.

Meanwhile, on PR1MA projects, we feel that the government should be the developer and not bring in another profit entity by way of private developers. With the developers out of the equation, the government can realise higher profits or lower the costs of the affordable units.

On curbing speculation, we hope that the new governor advises the Cabinet to not re-introduce the Developer Interest Bearing Scheme (DIBS) as it encourages impulse buying and speculation.

For borrowers who have two existing mortgage loans, we suggest that BNM fixes the margin of financing for the third and subsequent housing loan to be limited to 50%, with a maximum repayment period of 20 years to prevent speculation activities.

The RPGT is too high and discourages property investment, so we hope that the governor will look into that.

Currently, there is an excess of stock in high-rise properties. We hope that there will be a policy for greater foreign ownership to boost sales to overcome the excess stock issue.

We hope that the valuation of properties will be based more on current prices rather than the current reference on transactions that are almost six months old.

We remain convinced that Malaysia’s economic growth to developed nation status is only possible through the production of goods as well as services. The increase in manufacturing output and exports in modern world trade is more about branding and not merely satisfying product demand and quality.

Therefore, our suggestions are that BNM focuses on policies that will encourage future expansion of the above sectors

We wish that financing for affordable housing, small businesses and traders and also for small and medium-sized enterprise manufacturers be earmarked as Higher Priority Lending Sectors. We hope that with this policy, banks will be encouraged to direct more loans to these sectors and also at lower lending rates.

We also wish that BNM works with the Customs department so that all interest charges and other related charges for affordable housing loans be exempted from the goods and services tax.

In view of the current acute shortage of affordable housing and taking into account that many upper floors of shopoffices/shophouses are still unoccupied, these can be converted to residential usage. We wish that BNM will encourage such conversions by encouraging banks to consider loan extensions and allow the disbursements of additional loan funds/top-ups of existing loan mortgages.

To increase the supply of lower priced housing, we wish that BNM reviews the current procedures for housing foreclosures and auctions so that the time from loan defaults to property auctions is reduced. This will release more properties into the property market, thus maintaining downward pressure/preventing further price hikes.