KL to help first-time home buyers from lower-income groups

Malaysia's Pakatan Harapan announced in its budget yesterday that it will spend RM1.5 billion (S$495 million) on public housing next year - more than double last year's allocation - to encourage home ownership, especially for first-time buyers from lower-income groups.

Finance Minister Lim Guan Eng said that a RM1 billion fund will be set up by Malaysia's central bank to give out home loans with an interest rate of 3.5 per cent per annum to help those earning less than RM2,300 a month to buy properties priced at RM150,000 and below.

"This will significantly reduce the monthly instalments for borrowers... and make it easier to qualify for financing. The RM1 billion fund is available for two years, or until the allocation is exhausted," he said.

Runaway home prices were a major grouse during the former Najib Razak administration despite extensive efforts to provide affordable options.

Bank Negara Malaysia on Sept 26 said the country's housing glut was worsening as more units remained unsold, with 80 per cent of these priced above RM250,000 and seen as unaffordable to most Malaysians.

"There is an existing overhang of RM22 billion worth of residential properties as at March 31, 2018, a 65 per cent increase as compared to RM13.3 billion last year. To address this, the government will, for a limited time of six months only, starting Jan 1, 2019, waive all stamp duty charges for first-time purchases of homes valued between RM300,001 and RM1 million," Mr Lim said during his budget speech yesterday.

For first-time home buyers with a household income of RM5,000 or less, the government will allocate RM25 million to the National Mortgage Corporation to provide mortgage guarantees, enabling borrowers to obtain higher financing from financial institutions, inclusive of down payment support.

These measures are expected to give between 7 per cent and 11 per cent cost savings to house buyers, before taking into consideration any promotional discounts that may be offered by property developers.

The government also announced measures to help civil servants buy homes, with the Public Sector Housing Financing Board extending the loan repayment period from 30 to 35 years for the first loan, and from 25 to 30 years for the second loan.

Under the 2019 budget, RM400 million will be spent on upgrading, and the repair and maintenance of housing quarters for the police, armed forces and teachers to improve living conditions and ensure their fitness for occupation.

Mr Lim said that pending approval from the Securities Commission, the government plans to use a property crowdfunding platform to bring together first-time home buyers and investors who will benefit from capital appreciation or revenue generated by the property.

A version of this article appeared in the print edition of The Straits Times on November 03, 2018, with the headline 'KL to help first-time home buyers from lower-income groups'. Print Edition | Subscribe