The Sarawak government has rejected the proposal by Urban Wellbeing, Housing and Local Government Minister Tan Sri Noh Omar to allow property developers to act as bankers in providing housing loans.
According to the Borneo Post Online, State Deputy Chief Minister Datuk Amar Abang Johari Tun Openg pointed out that the move would cause financial complications.
Among others, he was reported as saying that it could result in developers increasing the costs of end-financing.
“One thing for sure is that the developers may not be as experienced as the banks when it comes to providing buyers with housing loans. They (developers) may experience problems in loan repayments.
“Collecting money from the buyers is not an easy task. The banks are more experienced in doing that than the developers, who are independent private companies. The developers should only worry about selling houses, not burdening themselves further by providing loans to their buyers,” he was quoted as saying yesterday.
Saying that the Housing Development Corporation (HDC) had similar experiences in the past, Amar dished out several alternatives to Noh’s proposal.
“To address end-financing problems affecting house buyers, the state government has in fact set up Mutiara Mortgage and Credit Sdn Bhd, a fully owned subsidiary of HDC, to provide loans to the low-income group.
“For the time being, it focuses on loan for public housing projects under the Program Perumahan Rakyat (PPR) and HDC’s own affordable housing projects,” he was quoted as saying.
The report also pointed out that the state has introduced the Affordable Housing Policy and Guidelines to ensure there were sufficient affordable homes for the lower and middle-income classes.
Earlier this month, Noh announced an initiative for property developers to offer bridging loans to consumers who could not come up with the higher down payments due to the lower loan-to-value ratio set by Bank Negara Malaysia.
However the proposal has been met with fierce opposition, including from his very own colleague, Second Finance Minister Datuk Johari Abdul Ghani, who deemed the proposal illogical and unsustainable.
The move was initially thought to be for the full loan amount and at interest rates of up to 18 per cent as allowed under the Moneylenders Act. It was later clarified that these would be for shortfalls in down payment and at interests marginally higher than bank loans.
The Malay Mail Online