The property sector’s wish list for new BNM governor

A new man is in charge. Datuk Muhammad Ibrahim took the reins from Tan Sri Zeti Akhtar Aziz as Bank Negara Malaysia (BNM) governor on May 1.

“Being part of our policy team at the bank will provide continuity and the much needed certainty in this prevailing period of great uncertainty. I have great confidence in his ability to lead the bank going forward into the future,” Zeti said in a statement on April 27.

These policies include responsible lending guidelines that all banks must adhere to, which has undoubtedly hit the property market hard since they were introduced.

We spoke to four stakeholders in the real estate industry -- Real Estate and Housing Developers’ Association (Rehda) president Datuk Seri Fateh Iskandar Mohamed Mansor, National House Buyers’ Association (HBA) secretary-general Chang Kim Loong, Malaysian Institute of Estate Agents (MIEA) president Erick Kho, and Association of Valuers, Property Managers, Estate Agents and Property Consultants in the Private sector (PEPS) Malaysia vice-president Foo Gee Jen, about some of the issues they hope will be addressed by the new governor.

Datuk Seri Fateh Iskandar Mohamed Mansor

We are hoping flexibility will be given to loan applicants buying affordable homes as loan rejections for this category of buyers are on the rise.

The financing package offered at 4% for Program Perumahan Rakyat (PPR) house buyers is definitely good news to the rakyat in view of the current situation where housing loan financing has become a main problem among house purchasers.

Such an initiative, it is hoped, will assist those planning to own a house, specifically those in the lower income bracket.

We also hope that the government will consider expanding this incentive to cover homes under the affordable housing category so that a larger group will be able to benefit.

Home ownership continues to be among the main priority, especially for the low income group and first time house buyers.

We also hope for the Developers’ Bearing Interest Scheme (DIBS) to be reinstated for genuine first time homebuyers.

This will ensure that there is no speculation in property prices, and the right people will benefit from these efforts.

Chang Kim Loong

The National House Buyers’ Association (HBA) hopes the newly-appointed Bank Negara Malaysia (BNM) governor will adopt a holistic view to encourage home ownership for genuine buyers and curb speculation on property market.

On encouraging home ownership, we recommend a special preferential fixed interest rate of 3.5% for first time house buyers purchasing properties priced below RM300,000. This rate will only be given once a life time and the buyer must hold on to the property for at least 10 years after purchase.

As for affordable housing, we would like to emphasise that an affordable home does not mean a small home that sells within a certain price range. We suggest that BNM redefines the criteria for affordable housing, which means that more parameters should apply to what can be termed as “affordable” houses – such as cost per square foot, ceiling price, basic finishing, fixtures, and so on.

Meanwhile, on PR1MA projects, we feel that the government should be the developer and not bring in another profit entity by way of private developers. With the developers out of the equation, the government can realise higher profits or lower the costs of the affordable units.

On curbing speculation, we hope that the new governor advises the Cabinet to not re-introduce the Developer Interest Bearing Scheme (DIBS) as it encourages impulse buying and speculation.

For borrowers who have two existing mortgage loans, we suggest that BNM fixes the margin of financing for the third and subsequent housing loan to be limited to 50%, with a maximum repayment period of 20 years to prevent speculation activities.

Erick Kho

MIEA hopes that banks will be more lenient with loan approvals for first time homebuyers to encourage more home ownerships. This is especially for those who are buying property for their own stay. We hope to see the margins of bank financing increased to 90% for first time homebuyers. We also hope that there are no restrictions on the margin of financing for property investors so long as they are qualified for the loan margin.

The RPGT is too high and discourages property investment, so we hope that the governor will look into that.

Currently, there is an excess of stock in high-rise properties. We hope that there will be a policy for greater foreign ownership to boost sales to overcome the excess stock issue.

We hope that the valuation of properties will be based more on current prices rather than the current reference on transactions that are almost six months old.

Foo Gee Jen

It is our wish that the new BNM governor focuses on easing the burden of the lower income households, small enterprises and sole proprietors. We also see the stagnation in manufacturing output as the government places greater emphasis on the development of the services sector.

We remain convinced that Malaysia’s economic growth to developed nation status is only possible through the production of goods as well as services. The increase in manufacturing output and exports in modern world trade is more about branding and not merely satisfying product demand and quality.

Therefore, our suggestions are that BNM focuses on policies that will encourage future expansion of the above sectors.

We wish that financing for affordable housing, small businesses and traders and also for small and medium-sized enterprise manufacturers be earmarked as Higher Priority Lending Sectors. We hope that with this policy, banks will be encouraged to direct more loans to these sectors and also at lower lending rates.

We also wish that BNM works with the Customs department so that all interest charges and other related charges for affordable housing loans be exempted from the goods and services tax.

In view of the current acute shortage of affordable housing and taking into account that many upper floors of shopoffices/shophouses are still unoccupied, these can be converted to residential usage. We wish that BNM will encourage such conversions by encouraging banks to consider loan extensions and allow the disbursements of additional loan funds/top-ups of existing loan mortgages.

To increase the supply of lower priced housing, we wish that BNM reviews the current procedures for housing foreclosures and auctions so that the time from loan defaults to property auctions is reduced. This will release more properties into the property market, thus maintaining downward pressure/preventing further price hikes. - The Edge Property

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