Time to review housing legislation

Pix for representational purpose only.

The writer Prof Dr Ismail Omar is the president of the Land Professionals Association of Malaysia (PERTAMA) and a senior lecturer in real estate management at Universiti Tun Hussein Onn Malaysia.

KUALA LUMPUR: The Housing Development (Control and Licensing) Act 1966 (Act 118) is outdated and has to be amended to meet the demands of the people and resolve their housing woes.

Issues related to affordable housing and unsold housing units have to be resolved. Also unresolved are issues pertaining to the supply of land, including Malay Reserve Land and wakaf land, to build houses for the B40 group.

The time has come for housing-related laws to be reviewed, amended and harmonised to keep pace with current requirements.

And in doing so, it is important to consider the aspirations of all parties — the house buyer, developer, bank and government agency tasked with overseeing the success of a housing project.

In Budget 2020, the government announced the Rent-to-Own financing scheme to make it easier for the people to purchase houses. Under this scheme, financing of up to RM10 billion will be provided by financial institutions with the support of the government via a 30% or RM3 billion guarantee.

The facility is being provided by a number of banks and agencies, including Prosma Homes Bhd which will prepare a financial portfolio for 2.5 million rent-to-own housing units worth RM400 billion in the near future.

However, there is a need to replace the conventional financing approach with a more contemporary one such as, for example, a wakaf funding model like sukuk and property unit trust.

Besides that, we also need to have accurate data on residential properties. Inaccurate data may lead to problems which cannot be resolved even with the use of the best techniques and practices.

The National Property Information Centre (Napic) collects data on the sale and purchase of properties. It also computes the Malaysian House Price Index that measures the demand and supply patterns of residential properties and their market prices.

Similar to the requirement for professionals such as architects, engineers and urban planners, we also need to have professionals who have expertise in housing administration and management.

For a long time, only Universiti Sains Malaysia produced graduates holding a bachelor’s degree in housing, building and planning. There are many universities overseas that produce various levels of graduates in the field of real estate.

The government and institutions of higher learning must look into this matter in view of the need for more housing professionals to beef up the Housing Development (Control and Licensing) Act.

The residential property segment’s demand-supply patterns influence market prices. According to Prof Barry Needham, a housing price researcher in the United Kingdom, housing supply plays a very important role in the market.

In view of this, the role played by government agencies tasked with planning and approving housing projects deserves due attention. The same goes for banks that provide end-financing to house buyers and bridging loans to developers.

It is generally assumed that the demand for houses is always on the rise which, in turn, sets market prices soaring. At the same time, however, it is reported that there are no takers for billions of ringgit worth of residential properties in the market. This could be due to the unsuitable location of the housing projects. Or perhaps most of the unsold units are luxury homes meant for foreign buyers.

It is, therefore, important to pay attention to data on housing supply and the total number of housing units to be completed in the future.

It is very strange that housing developers are not required to carry out a market study before the authorities concerned grant approval for their project.

The authorities proceed with activities involving land conversion, merging of land lots and subdivision of land without carrying out any in-depth study on what would happen to the property market if the housing projects are approved.

Nationwide, the Malaysian Housing Price Index stood at 193.6 points in 2018, compared with Kuala Lumpur’s 196.3 points.

In terms of the average house price in 2018, nationwide it stood at RM417,670; RM779,488 in Kuala Lumpur; and RM477,816 in Selangor.

There is a need to collect accurate data that wield influence over the residential property market, particularly data concerning job opportunities, cost of living, transport system, population, location and such things.

A detailed study on data related to housing must be carried out from time to time to avoid an oversupply of houses in the market.

In respect of this, a special institute — which can be called the National Housing Network Institute — should be created to carry out housing-related research and development activities.

To make it more effective, the institute should also involve the relevant government agencies and public universities. — Bernama

Thesundaily