News: Rehda Report: Provision Of Affordable Homes Plagued By 9 Structural Issues

Jul 17, 2018

The construction of more affordable homes is being hindered by nine structural problems, according to the Real Estate and Housing Developers Association Malaysia (REHDA) Institute in a report by the New Straits Times.

These include rigid housing policies, limited available land, rising cost of construction materials, the building of low-cost homes in unsuitable locations, and the uneven playing field between public and private companies.

Another is the delay in getting up-to-date market statistics, low mortgage approval for low-income households, unproductive use of public funds that result in oversupply, and cross subsidies that allegedly make properties more expensive.

“At the moment, there is a lack of coordination between the public and private sectors in providing affordable homes,” said REHDA Institute Chairman Datuk Jeffrey Ng during the launch of its “Affordable Housing Report” on Saturday (14 July).

He pointed out that there are many government agencies responsible for providing affordable housing, while many private companies also undertake low-cost residential projects. This has resulted in a miscoordination. In turn, this led to a mismatch of supply and demand, with tens of thousands of unsold homes.

“We would like to suggest that it is the government’s responsibility to build affordable housing and the private sector to deliver market-driven properties, without price control and quota.”

More: Speak To Our Experts About Affordable Housing 

The definition of low-cost housing also varies from state to state, likewise for the median household income. Moreover, for a housing project to be approved, a developer is required to build a number of affordable homes, but this is scattered in different locations, including some unsuitable for such units.

To solve this issue, the new Federal Government should create Special Purpose Central Agency (SPCA) under the housing ministry that will have oversight over the planning and construction of low-cost homes across Malaysia.

“The SPCA should streamline the policy formulation based on household income and demographics in respective states and local areas,” explained Ng.

REHDA is also urging the authorities to make it easier to release Bumiputera units in the open market, as such properties accounted for a significant portion of the 23,599 unsold homes as of March 2018. There is also substantial cost involved in keeping such units and this adds to the overall cost of residential projects.

In addition, buyers of non-quota units are forking out higher prices for subsidised low-cost housing due to the cross subsidy policy for private residential projects.

“Malaysia is the only country with high cross subsidy and this has been going on for the past 40 years,” said REHDA President Datuk Seri Fateh Iskandar Mohamed Mansor.

“This (cross subsidy) can happen if the market is okay, but for the last four years the property market has been facing challenges.”

Regarding this, the REHDA Institute’s latest report is calling the government to turn the subsidies into social housing stock like rental homes and sell affordable dwellings to those who can afford, particularly low- and middle-income families.

Aside from urging the re-imposition of an improved Developer Interest Bearing Scheme (DIBS), they also want banks to provide 100 percent loan-to-value (LTV) to first-time home buyers and low-income households.

Image sourced from NST Online

This article was edited by the editorial team of PropertyGuru. To contact them about this or other stories email

Home buyers, sellers or property renters looking for Affordable Properties, visit the Project Reviews page. Also, read up on how to improve your chances of obtaining a housing loan here.

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Eva Tan Yee Hwa
Senior Property Consultant
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