Selangor: Up to 30% of SOHO, serviced apartment projects must be affordable uunits

SHAH ALAM: Property developers will have to allocate up to 30% of affordable units for their serviced apartment and boutique office projects, depending on type and location, according to the Selangor Housing and Property Board (LPHS).
Its executive director Norzaton Aini Mohd Kassim said developers who build serviced apartments and small office home offices (SOHO), small office versatile offices (SOVO), small office flexible offices (SOFO) are required to allocate 10% for affordable units for projects that have 500 units and below; 15% for 501 to 1,000 units; and 20% for more than 1,000 units.
However, allocations for serviced apartments and SOHO located in transit-oriented development areas will be even higher at 20% to 30%.
Transit-oriented developments refer to areas that have mass rapid transit, light rail transit or bus rapid transit stations with a 400-metre radius.

Under the new guidelines effective Sept 1, selling prices for affordable serviced apartments and SOHO/SOVO/SOFO are capped at RM270,000 and RM230,0000, respectively. As these are controlled prices, there will be no more discounts for bumiputras who purchase serviced apartments and SOHO/SOVO/SOFO, as the prices are already subsidised by developers via non-affordable units.
Nevertheless, Norzaton acknowledged that there will be a difference in furnishings for affordable and non-affordable units.
The minimum unit size for SOHO/SOVO/SOFO has been set at 450 sq ft and serviced apartments at 550 sq ft.
“We don’t care how big or small they are (non-affordable units), but the size of affordable ones must be 450 and 550 square feet,” Norzaton told SunBiz in an interview last Friday.
Norzaton said the new guidelines differ from the Rumah Selangorku scheme. Under these guidelines, those with household income of up to RM15,000 are eligible, whereas Rumah Selangorku caters to those within the RM10,000 household income bracket. Both schemes however are strictly for first-time home buyers only.
Having affordable units for property projects is not something new in Selangor as residential projects have been implementing it for years with an allocation of about 30%, depending on the locality, noted Norzaton.
The bumiputra quotas of between 30% and 70% for projects remain, with the percentage allocation decided by the local council concerned.
Applications for affordable units in Selangor have to be made through LPHS. Developers will be fined 10% of the selling price if they don’t sell affordable commercial apartments/boutique offices to buyers approved by LPHS. An additional 5% will be imposed if they don’t follow the bumiputra quota.
Buyers can only sell their units five years after taking vacant possession.
Worth noting is that 70% of the affordable units have been sold to bumiputras under Rumah Selangorku, which started in 2014.
Norzaton said the new guidelines came after LPHS held discussions with the Real Estate and Housing Developers’ Association Malaysia (Rehda) over the past few months.
“They might be a little bit unhappy with the price cap as Rehda had expected RM300,000 for serviced apartments, but at the end they’re still okay,” she said, noting that the new rules on boutique units and serviced apartments will only impact developers’ earnings by about 2% to 3%.
Rehda Selangor Branch chairman Zulkifly Garib acknowledged that the new guidelines will have an impact on project planning and bottom lines. “However, we can only advise on the extent once we’ve studied the full set of guidelines,” he told SunBiz in an email reply.