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What is the future of affordable housing in Malaysia?

Updated 06 Sep 2017 – By Loanstreet


In Malaysia today the demand for property remains strong even though property prices continue to increase. However, according to statistics from Bank Negara, it shows that applications for housing loans declined during the first eight months of 2015. Does this indicates that the Rakyat wants to buy a home but do not having enough money? High property prices coupled with the increasing cost of living have increased the demand for affordable housing. 

Let’s take a quick throwback of what Budget 2015 discussed regarding the issue of home ownership of affordable housing. The Government introduced the Youth Housing Scheme which provided assistance to first-time homebuyers as they provide a RM200 monthly allowance, 50% stamp duty exemption on transfer of documents and loan agreements as well as a 10% loan guarantee. Furthermore, a Rent-To-Own Scheme was introduced especially for those who are unable to get bank financing.  

The table below shows the changes in fund allocations for affordable housing:

changes in fund allocations for affordable housing

As for Budget 2016, it remains the same for real property gains tax, stamp duty and regulations imposed on foreign buyers. This is because the existing policy is working hence no further cooling measures are needed. However, thereis an increase in the funds allocated for affordable housing which shows that this is an area the government is concerned with.

  1. First House Deposit Financing

    You might be wondering what’s new in the property section of Budget 2016. The introduction of a new program called First House Deposit Financing, with RM200 million allocated funds which aims to help affordable home buyers with their down payments on their first house purchase. It is expected to benefit between 20,000 to 30,000 buyers. Without a doubt, a down payment of 10% of property price is the biggest barrier to house entries. This scheme is certainly a good thing for the first house purchasers.

  2. 20% stamp duty exemption

    Besides that, you get to enjoy a 20% stamp duty exemption on Shariah-compliant loan instruments to finance the purchase of houses from January 1, 2016 until December 31, 2017.  You might think that 20% is not a lot, but it still reduces the cost of home ownership.

    Next, Budget 2016 also discussed about 1Malaysia People’s Housing Programme (PR1MA), Programme Rumah Mesra Rakyat, People's Housing Programme (PPR) and 1Malaysia Civil Servants Housing project (PPA1M). More than 300,000 units of affordable homes have been planned under these programs. This will provide help to house ownership problems and will then ease the burden of the citizens.

  3. The 1Malaysia People’s Housing Programme (PR1MA)

    PR1MA is organized to help the Rakyat to purchase and own a house. Basically, the houses sold under PR1MA are relatively cheaper than a similar house on the market.  175,000 houses will be built and sold 20% below market price as stated in Budget 2016. Are you eligible for PR1MA house?

    The requirements are:

    • Applicants must be Malaysian citizens

    • Open to individuals or families (husband and wife) with a monthly household income of between RM 2,500 and RM 10, 000

    • Those who own no more than one property

    • Different guidelines set-forth by states

    Note:
    Allocation of PR1MA is through an open balloting process. If you get a PR1MA house, a 10-year moratorium is imposed and during which time the property is not allowed to be sold or transferred to another party without prior approval from PR1MA. Also, PRMA homes must be owner occupied. You may register online by visiting the PR1MA official website at www.pr1ma.my.

  4. Programme Rumah Mesra Rakyat

    Programme Rumah Mesra Rakyat is to aid the low income groups such a fishermen, farmers and lower income groups who wish to own a house.  A subsidy of RM20,000 for each house (a total of 10,000 houses) will be given under this programme. The house price is RM65,000. Successful applicants have to apply a loan and a 2% loan interest subsidy will be given by the government.

    The requirements are:

    • Applicants must be a Malaysian citizens

    • A monthly household income of RM3,000 and below

    • Those who does not own any house

    • Married or single mother or father

    • Age between 18-65 year old

  5. People's Housing Programme (PPR)

    This is a program for the resettlement of squatters and aimed at meeting the residency requirements of the low-income group. The construction of 22,300 units of apartments and 9,800 units of terrace houses was under this programme. PPR houses will be sold at prices between RM30,000 and RM35,000 per unit in Peninsular Malaysia and RM40,500 in Sabah and Sarawak. Do you fulfill the requirements?

    You are eligible if:

    • You are a Malaysian citizen

    • A monthly household income of RM2,500 and below

    • Aged 18 and above

    • You are a first-time home buyer

    Note:
    You can apply through the nearest district office as well as the nearest city hall office.

  6. Extras for property sector in Budget 2016

    • RM40 million is allocated for the rehabilitation of abandoned public housing projects

    • Stamp duty exemption for rescuing contractors and the original buyers of the abandoned houses.

    • RM60 million is allocated for the construction of housing for the Orang Asli community

    Conclusion

    The government has offered many affordable housing programs to help the lower income groups. However, if you do not have any proper financial planning to own a house, then it will still be difficult to purchase a house. It is crucial to plan your personal finance wisely as it will help you to save money and also help you to buy a house in the future. Click here to find out more about the affordable housing projects in 2016/2017. 

    Calculate your Home Loan Monthly Mortgage, Legal Fees & Stamp Duty now by using Loanstreet’s calculator and compare to apply for the best Home Loan to get a head start!

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