News: Affordable housing in Malaysia needs a complete reset

Sep 18, 2020

Alpha REIT Managers Chairman Datuk Stewart LaBrooy believes the concept of affordable housing in Malaysia is in need of a complete reset. 

In fact, he said the term affordable housing is an oxymoron, reported The Star.

“How do you sell a house to a person who does not have money?” he asked during a panel discussion at the 2020 National Housing and Property Summit.

“If you look at the level of wages for the B40 group, which make up the bulk of the population, they cannot afford to buy.”

Learn how to calculate your affordability here! 

As such, the concept of affordable housing must be substituted with the concept of affordable rents, said LaBrooy.

He noted that rent-to-own (RTO) schemes can be an effective way of improving the lives of those in the B40 group.

Introduced in 2016, the RTO programme enables those earning a monthly income of below RM3,000 own the unit they are staying in after paying the rent for a certain period of time.

“It’s pointless to keep bashing down on minimum wage and forcing people to work 12-hour shifts, seven days a week, just to earn enough to stay alive. How can you build affordable housing when the people you’re trying to target just can’t afford them? There’s no market. Zero demand,” he explained as quoted by The Star.

LaBrooy said the government can deal with the situation by taking the excess demand, subsidise rent for the B40 group and place them into decent accommodations where they can start to pick themselves up.

“That’s the starting point. When they start earning more money, they may have an option to buy a unit or move out and buy their own place. You can’t ask them to apply for a loan and buy a house. They’ll default. It’s a given!”

“So, this whole thing about affordable housing is not even a debate. It needs a complete reset and we need to go back to the drawing board.”

Rahim & Co International Bhd Executive Chairman Tan Sri Abdul Rahim Abdul Rahman also noted that Malaysia’s property sector has too much political interference.

“Even in affordable housing, there is too much political interference. Land is a state matter. When a political party falls in one state, the policies that were done before are changed because of new politics,” he said as quoted by The Star.

“Therefore, there needs to be less politicking and more focus on the rakyat. If we concentrate on what the rakyat wants, the better it is for all of us.”

The B40 group represents Malaysia’s bottom 40% income earners. In 2019, households in the lowest tier had a mean income of RM1,849.


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