Will affordable housing in Penang remain a myth?

The Penang state government's proposed three per cent levy on property purchases above RM1 million by foreigners is said to be one way of cooling speculation on the state's already ridiculously priced properties.

Other recently-announced housing policies by Chief Minister Lim Guan Eng include a two per cent levy on properties acquired after February 1, 2014 and that are disposed of within three years of the date of signing the sales and purchase agreement.

The two per cent levy was not retrospective and did not apply to affordable housing (houses below RM400,000 on the island and RM250,000 on the mainland).

In October, the federal government had introduced, via the 2014 Budget, more stringent property gains taxes and banned the easy financing scheme which developers had used to attract buyers. It had also doubled the minimum residential purchase price for foreign buyers to RM1 million from January 1 next year.

Land is considered a state matter and states like Penang have come up with additional guidelines as well.

Previously, Penang had set the floor price for foreigners at RM2 million for residential landed properties and RM1 million for high-rise units on the island; and RM1 million and RM500,000 respectively, on the mainland.

Penang and Johor currently charge foreign purchasers a RM10,000 state consent application fee. Penang will replace the charge with the three per cent levy, while Johor with a two per cent levy beginning May next year.

On Monday, the Penang chapter of the Real Estate and Housing Developers' Association, (Rehda), in a media briefing, said that things are not going to look rosy next year for its members based on the above measures and several others like high land prices, shortage of skilled construction workers, and a cautious approach being adopted by lending institutions and property investors.

Other items on its legitimate list of grouses include the higher electricity tariff, goods and services tax and higher compliance costs.

While concerns were raised, what was glaringly absent was any acknowledgement or interest from those present that they would see to addressing Penang's acute shortage of low-cost and medium-cost housing.

No absolute figures were shared, although an exhaustive list of businesses which would suffer if the property sector takes a downward spiral was presented and this included media houses which would see less advertising revenue if there are no more property projects in the state to be marketed.

Save for a sweeping statement that the state government had announced housing projects for low-cost and low-medium-cost units, not a trace of concern could be detected among those present at the briefing that they were aware that there are a group of people who would most likely not be able to own a house in Penang, especially the plush types being sold by Rehda members and other property players.

The issue of whether corporate social responsibility (CSR) is not to be expected from property players in Penang is one which needs to be answered by the state authorities.

And CSR is not limited to sponsorship of arts and culture, the greening of areas where projects are coming up or extending financial assistance to communities which may be affected by a major property project.

What is a RM120,000 default compensation (for not incorporating low-cost housing units into their billion-ringgit projects) to developers ? That cost is simply passed on to property buyers of already-expensive housing units.

The question to be asked yet again is: How serious is the Penang government in addressing the shortage of social housing in the state and is it intent on continuing to make announcement upon announcement of such projects with nothing to show, or is it going to take the bull by its horns and be seen as sincere in wanting to address the issue by working with its partners in progress, i.e. property developers in the state?

Developers, especially those which are public-listed, are responsible to their shareholders, and to an extent, are at the mercy of the state authorities.

Somewhere and somehow, a happy balance is usually reached in ensuring that both parties find amicable solutions to any issues, including those highlighted by Rehda this week.

Is affordable housing in Penang going to remain a myth while the yawning gap between demand and supply for low-cost housing continues to widen and the social conscience of those who can effect change all but evaporates? - By Marina Emmanuel (Business Times)

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