December 27, 2011

Biggest property news in Malaysia in 2011 Part 1

Everyone is doing a list, so why shouldn't I? Furthermore, 2011 has been an exciting year for the property market in Malaysia. Not every news is necessarily can be considered as good news. It seems that there are property news for everyone in Malaysia.

Those low-income group who never owns a house received various news about houses which they now can afford. Those who had just graduated and started working can now afford to buy a house. Those who have worked a few years and found it hard to buy property can now afford to do so. The business communities are getting new business enclaves. Speculators in property prices especially those who buys residential houses got their fair share of news too.

Let us go through these news which can be found the whole year of 2011 :

1) MRT finally got off the ground

Of course, one of the biggest news this year is when the government decided to finally integrate the public transportation system by having the Klang Valley Mass Rapid Transit (KVMRT) as the final piece in the puzzle that has never been completed properly. Klang Valley public transports are always fragmented with KTM's Komuter, LRT, Monorail and a few bus companies plying the route. Launching it in July 2011, after announcing it back in June 2010, Dato' Seri Najib, Prime Minister of Malaysia, said that he hopes that it will finally solve the woes of the city dweller by allowing them to park their car from wherever they are staying and ride public transport to work or wherever they need to be in the city.

The biggest news which came in light of the MRT project, among others were :

a) Its alignment as to where the train will passes and who will benefits from it;

b) Land acquisitions which had threaten a few heritage sites and the issue of land surface acquisition vs. underground land for the projects. Among notable cases which were filed in court due to this matter were by businesses in Jalan Sultan (Chinatown), Jalan Imbi and Jalan Bukit Bintang;

c) The possibility of the rise of land prices wherever the MRT will pass and the issue of MRT Corporation getting involved in property development;

d) The issue of the contracts awarded and whether the right companies were given the right jobs. This is one issue which will never fully resolved as this RM40 Billion project has so many interested parties.

Some news and link on MRT :

2)  My First Home Scheme

My First Home Scheme covers houses (first or second hand houses) between the price of RM100,000-00 to RM220,000-00 for first-time homeowner. In the 2012 Budget, the maximum price for this scheme has been raised to RM400,000-00. The scheme is given in the form of 100% housing loan provided by various financial institutions which include Maybank, CIMB Bank, Affin Bank and RHB Bank, among others. The 100% housing loan is due to the arrangement where the first 10% payment to buy the property will be guaranteed by Cagamas Berhad and has a maximum tenure of 30 years. This means that the 10% will be paid by Cagamas and the buyer will owe the amount to Cagamas. It is only open to Malaysia citizen below the age of 35 years old with household income of less than RM3,000-00. This scheme is already open for application and the executors for this scheme are the banks. You can check the scheme at any participating banks.

Here are some news and links on the My First Home Scheme

3) Perumahan Rakyat 1 Malaysia (PR1MA)

Launched in May 2011 and is known as 1Malaysia People's Housing Scheme/Perumahan Rakyat 1 Malaysia, hence the acronym PR1MA. Unlike the My First Home Scheme, the executor for this project is a new entity which acts much like a housing developer. It will identify locations around Malaysia and build houses for people who fulfill certain criteria. The corporation is called 1Malaysia Housing Program Corporation has been established and as of today, two projects have been launched under it. One is in Putrajaya and will be built by PR1MA itself and the other one is a joint venture between PR1MA and Sime Darby Property in Bandar Ainsdale, Seremban. The mode of allocating the property to the masses is through balloting.

The price of the houses in this scheme are between RM100,000-00 to RM220,000-00.  The criteria to be eligible for this scheme is that the applicant must be Malaysians who never own a house before (first time homebuyer) and has a household income of RM6,000-00. Some of the features for the houses build by PR1MA include the exemption of stamp duty, eligibility of 105% loan from selected financial institutions with the 5% to be utilised to pay insurance and legal fees and a lock-in period, where the housebuyers cannot sell the house within the first 10 years of ownership. An Act of Parliament has been enacted for this scheme and was passed in early December 2011.

Some links on PR1MA :

4) Syarikat Perumahan Negara Berhad to build 10,000 houses in 2012

The seemingly current bridesmaid's company to the government's effort in providing affordable houses. May even be asking itself why is it sidelined while these news on My First Home Scheme and PR1MA filtered in. At the end of 2011 SPNB can be seen to be back in the news. As explained by the Prime Minister when the PR1MA bill was tabled in early December, PR1MA will concentrate to build affordable hosing in the urban area whilst SPNB will still build affordable housing in the rural area. The statement by the PM is supposed to solved the problem on the overlapping functions of these two government agencies.

It was announced at the end of 2011, SPNB had signed an agreement with Bank Simpanan Nasional (BSN) which will provide financing for the 10,000 units of houses which SPNB had been tasked to build in 2012. The cost was estimated at RM650 Million with the government subsidisind the building of the houses with a RM200 Million subsidy and the balance will be financed with the housing loans provided. This is with each house estimated to cost around RM65,000-00.

For the past few years, SPNB has been offering affordable houses in a various categories which overlap what PR1MA has to offer. Among them were Rumah Mampu Milik (Affordable Houses) and Rumah Mesra Rakyat (Rakyat-friendly Houses). An example of the former is Alam Prima which is located in Section 22, Shah Alam and the latter can be found in various small town in Selangor such as Kuala Selangor and in rural areas in Sabah and Sarawak. SPNB is also the agency in charge to revive abandoned projects around the country and to act as the contractor to build more government quarters.

Depending on how you see it, there is a lot of overlap between the government agencies in providing affordable housing to the masses. One other question which beg an answer is how will the government ensure that nobody will abuse the offer of so many affordable houses by various government-linked companies. There is also the issue about the term of 'affordable housing' when the government raised the limit of My First Home Scheme's house price to RM400,000-00 and even now contemplating to raise the household income eligible for the scheme up to RM7,000-00.

The links on SPNB :

SPNB official website

- Vote buying using affordable houses

- New understanding between SPNB and BSN

My blogpost on affordable offered by Federal government and the Selangor state

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