Testing times for new Unity Government to address the housing sector

Contributed by Sulaiman Saheh

As the 15th General Election results unfold, Malaysia enters yet another uncharted territory of having a unity government to manage the country. While the dust settles after a dramatic week, Malaysians get back to their daily lives and many would expect impending changes in making the country more progressive with a more inclusive and sustainable economic growth. 

Also, at a more personal level, this means going back to face the existing challenges of improving the quality of our lives and addressing the issue of rising costs of living. This includes the elusive question of how to improve access to home ownership and make homes more affordable to many first-time home buyers of various income classes. In improving access to housing for the B40 and M40, it is expected that the new government will continue many of the existing programmes though it may change its form and branding, and fine-tune its mechanisms to be more efficient and effective.

Meanwhile, the tabled Budget 2023 provisions were rather neutral to the property sector, similar to the stance observed from the previous Budget, it was evident that there was continued focus on first-time home buyers and lower costs for home buyers and residential transactions as well as maintenance of assets, especially low-cost housing units. 

Now it is time to see how the unity government would deliver the promises made via their manifesto, especially of the two of the larger coalitions (Pakatan Harapan and Barisan Nasional) in relation to addressing the nation’s housing dilemma. It should be noted that the absence of a statement in a manifesto does not mean that it will not be implemented, and vice versa. However, it is hoped that the intention is to optimise all means necessary to deliver the promise - which in the case of housing for the Rakyat, is a subject matter that is very close to each individual’s and every household's heart.

The focus on increasing the supply of affordable housing is expected to continue as both of the main blocks had previously vowed. The implementation models were on both sale and rental models, acknowledging the challenge of upfront capital for purchase deposits and the capability of securing sufficient loans are real for many of the targeted B40 and M40 homebuyers and home seekers.  

Rent-to-own schemes are promising but the mechanism of financial considerations may have to be tweaked to make it a win-win for both the lessor or unit developer and the tenant or prospective buyer. The rental rates may have to be subsidised to balance the financial feasibility for the stakeholders, including for the government coffers. Such investment is to be recouped through community and productivity-capacity building of a local area or society through increasing their capability to commit to the labour force. The target market, as highlighted in the coalition’s manifesto, should be the youth and first-time homebuyers who should not be judged from any political affinity, but based on merit and eligibility. Newlyweds and young families with toddlers needing daycare should also be considered as they are likely to rely on more assistance and support. 

The new government’s proposal to have the Special Housing Tribunal's role be expanded to address the rights and interests of both landlords and tenants should also be looked into while the current tribunal’s role ought to be maintained and improved. In the upcoming years, the tribunal's role will need to be expanded to include handling landlord-tenant tenancy disputes as more people are expected to engage in renting their homes thanks to initiatives like Rent-to-Own and the increasing societal acceptance of the practice, especially in urban areas. The taboo of renting rather than purchasing has slowly eroded driven by the lagging-income-induced affordability issue. To make the rental market more active and vibrant for the growth of the housing sector in general, the interests of tenants and landlords should be protected more effectively and without the burden of high expenses.

Back to the focus to provide more affordable housing, increasing the number of units alone is not enough. The implementation of the distribution or delivery system must be tightened to avoid leakages to those non-eligible participants, not only at the first-level participants who are the home seekers signing the Sale and Purchase Agreement or the Rental Agreement but also to the eventual occupiers. Control measures need to be improved on the tenant registry or occupier registry by the relevant authorities – most likely by the local governments or municipality councils – to avoid abuse of the system where sub-tenancies for profit-making are seen. A process of implementation and monitoring of registered owners and audits of actual occupancy is required to avoid abuse of the buyer/tenant selection system and reduce the risk for parties who take advantage. This situation is not something new, and stricter implementation and monitoring are required of existing policies.

It is expected for such programmes that are already on-going to continue but the selection of future project locations should be more strategic nearby urban and employment centres as well as nearby public transport hubs. The use of transit-oriented locations should be emphasised where opportunities on MRT and LRT-based landbanks and nearby parcels of land are to be fully utilised. Development of Transit-Oriented Developments (TODs), where typically a high-rise condominium or serviced apartment block is erected on the car park block of the station or the residual landbanks of the stations, should focus on the affordable housing and social housing segment at discounted prices. This is as opposed to pure private-sector-led developments that generally expect price premiums on TODs hence causing the units’ selling price to become less affordable to the deserving lower-tier target markets. 

Another challenge faced by many homebuyers today that needs continued government support is housing financing and downpayment support. Schemes such as the Housing Credit Guarantee Scheme (HCGS), My First Home Scheme and others have been introduced to help first-time home buyers, especially those who find it difficult to get financing for the purchase of a home. 

The HCGS provided by Syarikat Jaminan Kredit Perumahan Bhd (SJKP), a wholly-owned company of the Minister of Finance Incorporated, was established to guarantee the financing facilities provided by participating financial institutions for those without fixed income, such as gig and freelance workers, e-hailing drivers, farmers, petty traders and self-employed individuals - to obtain financing facilities to purchase their homes. 

The success trumpeted in the press on the more than 13,000 applicants with RM1.5bil approved under the programme since 2008 is a sign of the underlying need. But even with the guarantee scheme, the integrity of the country’s financial system must be observed to avoid the calamity of a subprime crisis that happened in the United States more than a decade ago.

Cost reduction in purchases through stamp duty exemptions is also another focus. Many developers and even buyers are hoping that the incentives offered under the Home Ownership Program (HOC) scheme will be reintroduced. But the cost to the foregoing stamp duty income applicable only for buyers from developers should be reviewed – and should be offered to sub-sale or secondary market buyers as well. The impact on the overall market is expected to be more significant by expanding the use of incentives like this as the secondary transactions market is wider which contributes a large proportion of housing loans in a bank’s business.

The issue of housing and ownership of a house is universal. Political involvement should democratise access to housing for all Malaysians and special assistance should only be given to the target groups in need. Implementation and monitoring as well as consistent enforcement of policies are important to succeed in the desire to increase access to quality housing in strategic locations for all. It is hoped that the newly formed unity government can continue to focus on the housing sector and increase the level of ownership, especially for the B40 and M40 groups. Improvement of policies should continue along with more robust implementation, monitoring and enforcement.

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