Making Sure All Can Have A Home

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The state’s grand plans for affordable housing are underway.

With land and construction prices rising, securing a home for many of Penang’s residents can be an uphill task. This is ever more so for public housing and affordable housing, where the demand greatly outstrips the supply.

Proactive measures like the inception of the Public and Affordable Housing Fund with an initial RM500mil grant and the formation of the Selection Process Enhancement Committee (SPEC) in Penang to streamline the selection process for public housing applicants in 2013 were undertaken with the aim of helping lower and middle-income individuals acquire a home.

With the first of the Affordable Housing Scheme (AHS) projects overseen by the Penang Development Corporation (PDC) completed and delivered in Bandar Cassia, Batu Kawan in May this year, the ideal for every Penangite to own a home of one’s own seems closer than ever.

Eligibility and Selection

In broad strokes, there are five categories of affordable housing in Penang, each with its own criteria:

  • Category A – commonly known as low cost (LC) homes – are priced at RM42,000 a unit, measure 650 sq ft and are open to those with a household income of RM2,500 and below
  • Category B – known as medium-low cost (LMC) – are priced at RM72,500, measure 800 sq ft and are open to households earning RM3,500 or less
  • Medium-cost (MC) homes are divided into three sub-categories – C1, C2 and C3 – and measure a minimum of 850 sq ft on Penang island and 900 sq ft on the mainland. All three come with ceiling prices: C1 – RM150,000, C2 – RM200,000 and C3 – RM300,000. They are open to households who earn not more than RM6,000, RM8,000 and RM10,000 respectively.

On top of income caps, applicants must also adhere to several other requirements – for example, be a registered voter in Penang, be aged 21 years or above and not own any other property in the country.

Left to right) PDC's Ang Seng Jin and Tan Yeow Song with the masterplan of Bandar Cassia.

To register, interested applicants fill in Form PN1, which is distributed for free by the state and can also be obtained online at the state’s eRumah website. Applications go to the state Housing Department that vets prospective buyers and supplies updated lists to SPEC – a 14-member committee that sits at least once a month.

Affordable housing projects are undertaken by both the state under PDC and private developers, though these projects are often not popular with the latter as the profit margin is minimal and many private affordable housing projects are only done to fulfill a state-sanctioned condition for developers to embark on other more high-end projects.

The senior manager of PDC’s Housing Development Division’s Sales and Marketing Section, Ang Seng Jin, says that after a project has obtained its advertisement permit and developer license (APDL), the developer can go to SPEC for a list of eligible buyers for its units.

“The developer will have to tell SPEC how many units are available and which category they are under. SPEC will look at the district the project is in and provide the developer with names from the current waiting list. There may be some priority cases like OKU (disabled applicants) and single mothers, and SPEC will take all this into consideration in preparing the list. From there, we will receive the list and the Housing Department will send out letters to the successful applicants,” Ang says.

Loan Woes and the Open Market

For public housing projects, PDC will then follow through with the buyers and advise them to proceed to apply for a loan – often the biggest stumbling block, Ang says, for those aspiring to purchase affordable housing. “If they can buy cash, that’s well and good. But if not, they need to get a loan before they can sign the S&P (Sales and Purchase Agreement). We do not take any booking fees, but they need to come up with 10% of the unit price when they come for the signing,” he says.

There are five categories of affordable housing in Penang, each with its own criteria.

As a norm, the higher the price of the unit, the more difficult it is for applicants to get a loan. “Say you are trying to purchase a Category C3 unit at RM220,000. First, you need RM22,000 and even after working for a few years, not many people can come up with that. That’s only the first point. Even if you are able to secure the 10% – either from your own savings or with parental support – the next thing is your eligibility for a loan for the remaining 90%. If you have been working for, say, five years, would you have the sufficient repayment ability to secure a loan of close to RM200,000? The bank may offer you a maximum loan of RM150,000 and the applicant gets stuck there,” Ang says.

This situation is reflected in Bandar Cassia’s Phase One public housing project, known as Suria 1, where all 149 LMC units have been snapped up while only 80% (78 of 98 units) and 55% (149 of 273 units) of C2 and C3 category units have been sold.

Alongside efforts to increase the supply of affordable homes, the state is pursuing other creative avenues to provide homes for all Penangites. A “rent-to-buy” scheme is already in the process of being implemented.

Ang says that developers of affordable housing – be they PDC or private developers – would continue to go back to SPEC for extra names of eligible buyers to fill the units. If they find that the number of successful applicants is drying up, developers can request that 30% of units from certain projects be opened to outside buyers.

“There is a bit of flexibility given. With permission, developers can release 30% of units from only Category C to the open market. There are still some restrictions in the open market – for example, the buyer must still be of age and be a voter in Penang – but the regulations are greatly reduced and there is no income cap here. Buyers in the open market are also only allowed to buy one single unit in any particular project,” Ang says.

Buyers in the open market are charged 10% more than the original asking price and this 10% goes back to the state, Ang explains, adding that all other sales proceeds go back into PDC’s fund for affordable housing to allow for future AHS projects to be undertaken.

A check with the Housing Department shows that as of June, there are 41,799 applicants on the affordable housing waiting list while according to reports submitted from various developers to the department, some 12,730 affordable housing applicants have been successfully provided with homes in the state from 2014 to May 2018.

Current Projects

With the aim of creating a healthier stock of affordable homes, the state government launched the Public and Affordable Housing Fund with an initial grant of RM500mil in 2013.

Currently, a total of 14 projects are linked to the fund, with PDC’s Housing Development Division overseeing the majority of them.

To date, one project – Bandar Cassia, Phase One or Suria 1 – has been completed, with the keys handed over to purchasers on May 7 this year.

In a key achievement, strata titles were presented on the same day with Suria 1 being the first project in the state, and may believe the country, to do so. (In 2013 the Strata Titles Act 1985 was amended to require strata titles to be issued upon vacant possession of the property).

Penang Island faces land scarcity. A myriad housing projects are being planned for the mainland.

PDC Deputy General Manager 2 Tan Yeow Song says that as of August 1, three other AHS projects in the state are more than halfway to completion. “Our AHS project in Kampung Jawa in North Seberang Prai involving 707 units is about 97% done and will be completed very soon. Another AHS project in Teluk Kumbar involving 694 units is 87% constructed with a completion date targeted at the end of the year. Finally, a project in SP Chelliah with 2,093 units, which has been awarded to a private company via a request for proposal (RFP), is over 60% completed,” Tan says.

A number of other projects are in the pipeline and are at various stages of planning. Among them is a 7.7ha site in Ampang Jajar that aims to build 1,200 affordable homes, an RFP project in Sandilands which will be carried out by a private developer to construct 803 units, and two small landed property projects in Kepala Gajah and Permatang Tok Subuh that will see 41 and 39 houses built respectively.

Overall, PDC and the state hope that a total of 25,077 AHS units will be built in the state over the next 10 to 15 years. Bandar Cassia, which involves 25 phases of construction, will see the highest concentration of affordable homes at 11,800.

Noting that the opening of IKEA, scheduled for March next year, will be a catalyst for development in Batu Kawan, Tan says PDC will monitor the demand for affordable homes in the area and roll out the construction phases accordingly.

“So far, the greatest demand for affordable homes is still in the north-east district on the island where there are five projects in the pipeline there. PDC’s AHS projects are also different from those of private developers in the sense that we build LMC and MC in the same housing scheme. For example, there will be blocks of LMC and MC in the same vicinity or even in the same building. This way, there is integration irrespective of income,” Tan says.

He adds that about half of the RM500mil grant given to PDC to kick-start AHS has been committed, though that does not include all the sales proceeds of units that will go back into the fund. “These are mainly CSR initiatives and many are loss-making projects, which is why the state has given us the grant. With LC and LMC, there is generally no way you can make money or break even. In certain MC categories, you can break even or make a bit of profit. So, at the end of the day, our shortfall or profit (in AHS) will be very little,” Tan concludes.

In the background is a low-cost housing project at Seven Streets Precinct.

Rent-To-Buy

Alongside efforts to increase the supply of affordable homes, the state is pursuing other creative avenues to provide homes for all Penangites. State Housing Committee Chairman Jagdeep Singh Deo says a “rent-to-buy” (RTB) scheme is already in the process of being implemented.

“RTB means that you pay rental and after a certain tenure, it becomes yours, rather than just a blanket rental where you obtain nothing at the end. We started looking into this idea years ago when we discovered that we were having a lot of problems with loan rejection among prospective affordable housing buyers. We had to shift and adjust and if we couldn’t deliver these properties to potential buyers in conventional ways, we had to think of other methods,” says Jagdeep, who also helms the Local Government as well as the Town and Country Planning portfolios for the state.

Two pilot projects were launched three years ago, and Jagdeep says the state bought over two newly completed private projects from developers in Jawi. “One is in Taman Sungai Duri Permai, where 104 units of townhouses will be built, and the other is Taman Seruling Emas, which has 54 stratified units. The tenure of the rent is 15 to 20 years and they attracted a fantastic response. The upside of RTB is that there is a sense of ownership to the unit. We’ve found that if people have access to homes by way of plain rental, there is no sense of ownership, so it always falls into disrepair,” Jagdeep says.

He adds that two other housing projects have already been identified to be launched under the same RTB scheme. “These two projects were built by the federal government as People's Housing Projects (PPRs) that provide rental for the hardcore poor. One is in Kampung Tok Subuh and has 70 units, and the other is in Mak Mandin with 231 units,” Jagdeep says.

This hardly means that housing for the acute poor would be sidelined, Jagdeep stressed, as efforts to launch more PPRs is also underway. “We are having big problems in the north-east district (due to land constraints) where housing for the acute poor is concerned. In the last term, we identified two housing blocks in Jelutong in the very strategic location of Kota Giam. So far, we have submitted the plan and the land has been approved for this purpose. This will provide a minimum of 2,000 PPR units and if I can get this done during this term, it will be the biggest feather in my cap,” he says.

He explains that in the cases of PPR, the state would normally identify land, after which the federal government would construct the buildings and hand them over for the state to manage.

Hardcore poor residents in the state would be allotted units on a rental basis and would need to vacate after surpassing the eligibility criteria, which includes earning less than RM1,500 a month.

Jagdeep adds that two other plots have been identified in Balik Pulau that would add an additional 2,000 PPR units, and are being considered for projects by the relevant decision-makers.

On the future, Jagdeep says he is optimistic about AHS as Pakatan Harapan (PH) now controls the federal government along with the state administration. “Out of all the PH state excos in charge of housing, I am the only one who has a previous one-term experience with the portfolio. Even the new Housing and Local Government minister, Zuraida Kamaruddin, is new to this portfolio and she has been great in listening to the issues we have faced and is swift in sending teams to the ground,” he says.

He adds that the minister's recent efforts with Bank Negara to ease housing loan requirements was a positive development, and better synergy and communication with the federal government could go a long way in alleviating affordable housing woes in the state.

“We are happy that in Penang, we have not only met but exceeded our election pledges to build more affordable housing and RTB schemes in just two months since the election. However, housing is not a static issue and we have to continue to look for more projects and plan for more units to house all Penangites,” he says.

Andrea Filmer is a freelance journalist who has lived in the US and Australia but, for reasons unknown to herself, finds it impossible to call anywhere but Penang home.



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