The National House Buyers Association (HBA) applauded the government's move in rejecting calls from property developers to reintroduce the Developer Interest Bearing Scheme (DIBS) for first-time home buyers.
"HBA is glad that the government has continued to heed our call to ban the concept of DIBS or any permutation that entails interest capitalisation. Developers being entrepreneurs have to be responsible and bear the risks that come with their investment. They should not be allowed to enjoy profits at the expense of house buyers bearing the risks on their behalf.
"Thus, when developers claim that DIBS is good because they 'assist new purchasers', they should be asked to use the Built-then-Sell (BTS) 10:90 concept instead if they are sincere in not wanting to shift the risks to house buyers," HBA secretary-general Chang Kim Loong said in a statement.
He said the ban on DIBS in Budget 2014 has been effective in curbing the unbridled escalation of house prices and must continue to be prohibited and outlawed.
In the Budget 2015 which was tabled last Friday, the government announced a Youth Housing Scheme which is a smart partnership between the government, Bank Simpanan Nasional, Employees Provident Fund (EPF) and Cagamas.
The scheme offers a funding limit for a first home not exceeding RM500,000 for married youth aged between 25 and 40 years with household income not exceeding RM10,000. The maximum loan period is 35 years.
Under the scheme, the government will provide monthly financial assistance of RM200 to borrowers for the first two years to reduce the burden of monthly installments. The government will also give a 50% stamp duty exemption on the instrument of transfer agreements and loan agreements.
There will also be a 10% loan guarantee to enable borrowers to obtain full financing including cost of insurance.
Borrowers can also withdraw from EPF Account 2 to top up their monthly installment and other related costs. There are 20,000 units available under this scheme.
"Whilst the scheme is laudable as it aims to assist married youths to own their own property, HBA urges some caution as providing a monthly cash subsidy of RM200 may send the wrong message. The said family may start to spend beyond their means during the first two years and may end up in financial difficulty after the cash subsidy is over.
"In addition, HBA has always cautioned against so-called 'zero entry cost' properties whereby the buyer does not need to make any down payment as it encourages unnecessary speculation," said Chang.
HBA recommends that a restriction be imposed on properties sold under the Youth Housing Scheme whereby the properties cannot be sold for the first 10 years, similar to properties under the 1Malaysia People's Housing Programme (PR1MA).
"Additionally, the scheme must be for first-time house buyers and must be owner occupied," he said.
Other measures announced by the government include 80,000 units to be built under PR1MA and eligibility raised from monthly household income of RM8,000 to RM10,000; 26,000 units to be built under the People's Housing Programme (PPR); 12,000 units of Rumah Mesra Rakyat; 5,000 units of Rumah Idaman Rakyat; and 20,000 units of Rumah Aspirasi Rakyat.
HBA said the move to build more affordable housing is good but cautioned that the right implementation is needed to ensure the affordable housing reaches the right target market.
"The affordable housing must be built at the right place and priced reasonably (between RM150,000 and RM300,000, and not more than RM400,000 for prime locations) and only for first-time house buyers," said Chang.
He said the units should not be made available to second time house buyers, which is currently allowed under PR1MA with certain conditions.
"HBA further opines that the best agent of delivery for private affordable housing is private developers. The government can boost the delivery of affordable housing by giving incentives and rebates to private developers to build affordable housing such as lower corporate tax rates, lower land conversion premiums and fast track release of unsold Bumiputera units," he added.
