Tuesday, February 7

Builders can’t be lenders


State government against developers lending money to buyers, offers alternatives to bank loans for houses

KUCHING: The state government will not adopt the move by the federal Urban Wellbeing, Housing and Local Government Ministry to allow private housing developers give loans to homebuyers.

During a press conference at Wisma Satok here yesterday, Deputy Chief Minister Datuk Amar Abang Johari Tun Openg, who is also the Housing and Urbanisation Minister, said the state has its own ways to help people buy houses.

He said that the state government had decided to officially reject the move because it could pose financial risks and increase the costs of end-financing and distract developers from carrying out their core business.

“One thing for sure is that the developers may not be as experienced as the banks when it comes to providing buyers with housing loans. They (developers) may experience problems in loan repayments.

“Collecting money from the buyers is not an easy task. The banks are more experienced in doing that than the developers, who are independent private companies. The developers should only worry about selling houses, not burdening themselves further by providing loans to their buyers,” he pointed out.

He said the state, through the Housing Development Corporation (HDC), had this experience in the past.

He mentioned a few alternatives such as setting up a lending agency and building more affordable houses in the state as there were still many parcels of land in the state for the purpose.

“To address end-financing problems affecting house buyers, the state government has in fact set up Mutiara Mortgage and Credit Sdn Bhd, a fully owned subsidiary of HDC, to provide loans to the low-income group. For the time being it focuses on loan for public housing projects under the Program Perumahan Rakyat (PPR) and HDC’s own affordable housing projects,” he added.

This lending agency would be a better alternative for prospective homebuyers who have difficulty  securing loan from banks but it will however follow bank management standards in processing loan applications while giving some flexibility to the deserving and qualified applicants, he explained.

Sarawak has introduced a set of Affordable Housing Policy and Guidelines to increase the supply of affordable houses and cater to the housing needs of the lower and middle-income groups.

Besides that, the guidelines which are effective since April seek to improve the minimum specifications of the previous low-cost housing units towards meeting higher expectations and requirements of house buyers.

In addition, the state government would also continue to intensify its efforts towards implementing public housing initiatives such as PPR, 1Malaysia People’s Housing (PR1MA) programme, 1Malaysia Civil Servants Housing programme, Skim Rumah Mesra Rakyat and MyHome programme.


The minister also revealed that the state government would be providing land for the development of future affordable housing projects through HDC and Borneo Development Corporation.

Lack of affordable housing supply in the market has gained limelight nationwide recently.

Under these circumstances, Urban Wellbeing, Housing and Local Government Minister Tan Sri Noh Omar recently said his ministry would issue the licence under Money Lending Act 1951 (Amendment) 2011, which would allow developers to provide housing loans to overcome difficulties faced by buyers in securing bank loans.

The ministry decided to introduce this initiative after industry players urged the federal government to reintroduce the Developer Interest Bearing Scheme (DIBS), which was abolished in 2014 after it led to massive speculation in the property sector.

However, it is learned that buyers taking up loans from the developers could be charged an interest rate of between 12 and 18 per cent.

Also present during the press conference were Assistant Minister of Housing Datuk Abdul Karim Rahman Hamzah and Assistant Minister of Infrastructure Development and Urbanisation Datuk Talib Zulpilip.