Shed light on proposed hike for low-cost units

The Urban Wellbeing, Housing and Local Government Ministry has been asked to clarify its recent proposal to increase the prices of low-cost (LC) and low medium-cost (LMC) housing units.

State Housing, Town and Country Planning Committee chairman Jagdeep Singh Deo (pic) said the ministry during a National Housing Council (MPN) meeting on Aug 21 chaired by Prime Minister Datuk Seri Najib Tun Razak had proposed that the cost of LC and LMC units be increased to RM65,000 and RM100,000 respectively.

Jagdeep said in his letter to its minister Datuk Abdul Rahman Dahlan dated Nov 24, he had sought clarification on the proposal and its implementation mechanism if the proposal were to be implemented.

“It’s already difficult for applicants of LC and LMC unit priced at RM42,000 and RM72,500 respectively in Penang to secure bank loans, what more to get the banks to approve their loans for units at a higher price.

“The proposal to increase the price of such units will burden the people further. We see a high rejection rate of bank loans of up to 70%,” he told reporters at a press conference in Komtar on Tuesday.

Jagdeep pointed out that there was already a system where developers were required to cross-subsidise their profits gained from other projects besides being required to build LC and LMC units priced at the RM42,000 and RM72,500 ceiling as a form of corporate social responsibility.

“There is no justification for them to say that they are raising the ceiling price because the prices of goods have gone up. That is not the reason because even before they want to raise prices, you must take into consideration that no developer can build LC or LMC units at RM42,000 and RM72,000 especially in urban areas like Penang, Kuala Lumpur and Johor.

“They are building at a loss but they cross-subsidise from the profit that they made.

“So we want to know what is the actual reason behind this, because if that is the reason, it is unacceptable. We must still make sure the developers build such units at the control price so that there is supply for the people who really cannot afford it,” he said.

Jagdeep stressed that if the proposal was to be implemented, the Penang government wants to be consulted to give its views.

“This has to be looked into as it will have an impact on these group of applicants. If it is going to be implemented, I want to meet and be consulted.

“We cannot allow the raise to happen without proper reasoning. We have to look at other aspects. What about bank loans? Are they going to loosen the criteria of bank loans? Is there a suggestion to ensure a higher approval of bank loans?” he added. - By The Star

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