Mixed views on extension of Special PR1MA End Financing scheme to private housing developers

PETALING JAYA: Real estate companies are positive on the move to extend step-up financing to private developments, while the House Buyers Association (HBA) is warning that it could lead to a further increase in prices.
The extension of the Special PR1MA End Financing (SPEF) scheme to private housing developers is a very positive move, said CBRE-WTW managing director Foo Gee Jen.
“I see this as a very positive move as it will definitely be able to assist the M40 group. The scheme will not only be limited to PR1MA (1Malaysia People’s Housing Programme) projects and will open up the market to more choices,” he told SunBiz.
Last Friday, Prime Minister Datuk Seri Najib Abdul Razak announced in the Budget 2018 speech that the SPEF scheme will be extended to private housing developers subject to certain criteria, to encourage the construction of more affordable homes.
However, Foo cautioned that the government must ensure that the mechanism is not abused by private developers and speculators.
“The registration and verification of buyers who apply for the scheme must be done very thoroughly. In addition, the scheme should be limited to those buying their first home; not for speculators and investors,” he said.
However, the National House Buyers Association (HBA) has maintained its stance and reiterated its opinion on the scheme being detrimental in the mid- to long-term.
“HBA had previously opined that although such ‘step-up financing scheme’ appears to help the rakyat to buy their dream homes by relaxing the lending criteria and giving higher end-financing, such ‘step-up financing scheme’ is detrimental in the mid- to long-term as housing developers will be encouraged to increase house prices knowing that the buyers can take higher end-financing,” said HBA secretary-general Chang Kim Loong.
He said this will, in turn, also push up prices of completed properties and suggested that the government slow down the escalation of property prices by increasing the entry and exit cost of owners of multiple properties for example, by increasing the stamp duty and real property gains tax.
The SPEF scheme, which was limited to buyers of PR1MA homes, allows the house buyer to take higher end-financing as the loan instalments will be lower for the first five years and then “stepped-up” after five years.
The scheme was first announced under Budget 2017 and works on the assumption that the borrowers’ income levels would have increased after five years and will be able to afford the revised loan instalments.