FREE MALAYSIA TODAY. 20TH APRIL: Property experts believe the state government’s initiatives still have room for improvement.
For most people, the main preoccupation in life is to save up enough money to buy a house.
The Selangor government has tried to fulfil this need through the introduction of Rancangan Selangor Pertama (RS-1), its housing development blueprint for the period 2021 to 2025.
Several initiatives such as home repair assistance and a revised housing policy are included in RS-1.
However, several shortcomings have yet to be addressed mid-way through the five-year plan.
There remains a mismatch between demand and supply, choice of location as well as financing, according to a recently published thematic report by MIDF Research.
Most homes under affordable housing programmes in Selangor are strata units (typically highrises) of less than 1,000 sq ft in size. However, a survey conducted for RS-1 revealed that buyers prefer non-strata (typically landed) properties of 1,000 to 1,500 sq ft.
Property experts are divided over the viability of some of the initiatives under RS-1, such as the rent-to-own and expanded repair financing schemes as well as issues such as affordability and size and type of property.
Location remains a concern
The Rumah Idaman and Harapan programmes under the Rumah Selangorku initiative focus on constructing homes with a minimum built-up of 1,000 sq ft.
While they fulfil most expectations on size and type of property, the location is not ideal, Consilz Tan, a property expert and senior lecturer at Xiamen University Malaysia, told FMT Business.
For instance, two of the Rumah Idaman projects are located in Semenyih, 40km away from the centre of Kuala Lumpur. The two projects are One Park, in Sunway Semenyih and Acacia Phase 3 in Diamond City Semenyih.
The homes are priced at RM250,000 to RM260,000, making them affordable.
However, there is no rail service to the city. To get into Kuala Lumpur, residents will have to take a bus or taxi to Kajang and then walk towards the MRT station, a journey that takes at least an hour.
This is followed by another 40 minutes on the MRT to Kuala Lumpur.
The trade-off is substantial. Tan said public transportation should be a big consideration when development decisions are made.
Rather than just speeding up the approval process for new developments, she said, the government could help by ensuring that a basic necessity such as public transport is within reach.
The price factor
With or without government initiatives, the market trend is determined by affordability, according to property expert Siders Sittampalam of PPC International.
“(Affordable housing is) where the market is now. (Developers) can’t be building very high end properties and trying to dispose of it with ease in today’s market,” Sittapalam told FMT Business.
Typically, homes in the affordable range cost below RM500,000.
Several schemes have been introduced to help those in the low and middle income groups pick up their first property. One is the Skim Smart Sewa, a rent-to-own option targeted at households with income of RM5,000 and below.
After all, government housing programmes that require people to take loans are very likely to fail, chartered surveyor Ernest Cheong told FMT Business.
On the other hand, RTO schemes do not require an upfront downpayment or bank loan, making it easier for purchasers.
At the end of five years, the renter has the option to buy the property, at which time 30% of the total rental paid in the preceding five years will be given to him as a rebate.
Prices of these properties are fixed so changes in market conditions will not have an impact on them.
Cheong said the government should impose a condition under the RTO scheme that the property has to be passed down to the second or third generation before it can be sold. This is to prevent speculators from taking advantage of the scheme.
However, there have been occasions when some of the conditions were not adhered to, making the success of the programme spotty at best.
Nonetheless, Rahim & Co International Sdn Bhd CEO Siva Shanker believes that any scheme is better than no scheme at all.
For instance, he said, a person could have decided to buy a new home that costs RM500,000, but by the time he has saved up enough money, the market price has risen to RM700,000, making it unreachable.
“By locking in the price at the start of the lease, the RTO scheme ensures that the rented property is within the reach of the buyer when it comes time to exercise the purchase,” he told FMT Business.
More to be done
Tan said that while the Selangor government’s effort in RS-1 is commendable, more can be done.
She proposed that a centralised wait list be started for the Skim Smart Sewa and Skim Smart Sewa to Ownership (2STAY) schemes, and a website be set up to take applications.
Currently, there are two wait lists, one for the Rumah Selangorku and the other for Skim Smart Sewa.
“Having multiple agencies and sources will not improve access to information and assistance,” she said.