KUCHING: The state will conduct a study on abolishing supplementary housing agreements to ensure housebuyers are committed to just one loan based on the total housing price stated in the sale and purchase (S&P) agreement.
Housing Minister Datuk Amar Abang Johari Tun Openg said the provision of the supplementary agreement on top of the S&P is not legal practice as it is not recognised by financial institutions.
“The original sale and purchase agreement is based on the price of government low cost housing. What happened here was that developers would upgrade their low cost houses. It is the cost to the upgrading of the house that is involved in the supplementary agreement.
“In the end, government loans for low cost plus housing ended up with buyers having to sign two sets of agreements. Apparently this practice is not legal,” he told reporters yesterday.
Explaining the mechanism of the supplementary agreement, he said: “When a buyer who is eligible for an RM100,000 loan buys a house worth RM50,000, the developer will propose to upgrade the house to meet to the RM100,000 value, which is beyond the original sale and purchase agreement.
“The upgrading exercise (difference of RM50,000) will be covered by the supplementary agreement borne by the buyer with their respective developer.”
Abang Johari said an overall study would be conducted to upgrade eligibility for low cost plus housing loans.
The Housing Ministry is planning to raise the income eligibility of individuals or households for low cost plus houses to RM5,000 as well as increasing the price based on new specifications and quality.
The government will also look to increase loans for low cost plus houses from RM70,000 to RM100,000.
He added that the study would take at least six months to complete before being presented to the cabinet.
The ministry will also hold a dialogue with developers on the best solution while referring to the Housing Ordinance.
“This is not an easy matter to look into considering that there will be lots of adjustments to the civil servants’ loans.
“Not forgetting the private sector employees as well, who depend much on their EPF (Employees Provident Fund). All these efforts will be made to abolish the supplementary agreement,” said Abang Johari.