Malaysian Prime Minister Datuk Seri Najib Abdul Razak has granted one of the wishes of home builders to extend the Special PR1MA End Financing (SPEF) scheme to private residential projects, when announcing the details of Budget 2018.
The move aims to make it easier for would-be buyers to get housing loans and spur property developers to boost the supply of affordable houses in the country.
Property developers and some experts are pleased with the move as it would help the middle 40 percent of the population (M40 group) acquire their own houses.
“I see this as a very positive move as it will definitely be able to assist the M40 group. The scheme will not only be limited to 1Malaysia People’s Housing Programme (PR1MA) projects and will open up the market to more choices,” said CBRE-WTW Managing Director Foo Gee Jen.
However, he warned that the authorities must make sure the SPEF is not misused by private home builders and property speculators, who purchases homes on credit and quickly sell for a profit.
“The registration and verification of buyers who apply for the scheme must be done very thoroughly. In addition, the scheme should be limited to those buying their first home, not for speculators and investors.”
Meanwhile, the House Buyers Association (HBA) thinks that the move could result in residential price hikes in the long run.
“HBA had previously opined that although such ‘step-up financing scheme’ appears to help the rakyat buy their dream homes by relaxing the lending criteria and giving higher end-financing, such scheme is detrimental in the mid- to long-term as housing developers will be encouraged to increase house prices knowing that the buyers can take higher end-financing,” said its Secretary-General Chang Kim Loong.
As such, the group is urging the government to control home price growth by increasing the selling cost of speculators and investors who own many properties by raising the stamp duty and real property gains tax (RPGT).
Previously, the SPEF scheme was only available for PR1MA housing and this enabled buyers of such units to get mortgages with greater end-financing. While the monthly loan repayments will be lower during the first five years, it will rise thereafter on the assumption that the borrowers’ income have risen over the period.
Image sourced from FMT.
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