No hire purchase for PPR homes

KUALA LUMPUR: There will be no hire-purchase option for those seeking to buy PPR (government housing projects) low-cost flats.
Federal Territories and Urban Well-being Ministry explained this was because City Hall, which is administrating this home-purchase scheme, is not a registered financial institution under Bank And Financial Institution Act (BAFIA).

As such, it is not authorised to offer hire-purchases of the PPR low-cost homes under the scheme, meant to help the poor afford their own homes.

The Minister, Datuk Raja Nong Chik Raja Zainal Abidin today said: "There are interested owners living in the PPR homes who have also demanded they won't have to pay anything as they have been renting for almost 20 years.

"This PPR home rental scheme has already caused a loss to us as their RM124 monthly rent is not adequate to cover the maintenance cost for every unit, which is RM 250 monthly."

Not only that, the ministry argued if the hire-purchase scheme were to be implemented, it could only add on to rent arrears of tenants.

"Right now, we have the rental arrears amounting to RM30 million. The rent arrears could increase to RM90 million if the hire-purchase scheme were to be realised."

This, he explained, would add more burden to the tenants as well as complicating City Hall's administration and financial management.

In addition, the ministry is also concerned by some tenants being unwilling to pay their rents as well as demanding favourable payment terms based on the length of their stay in PPR homes.

The Paper That Cares had highlighted just 10 days ago the plight of many PPR tenants, who had been unable to obtain bank loans for the home purchase scheme.

Industry sources had said the straightforward bank loan system was implemented instead of the hire-purchase scheme originally proposed in 2008. This meant low-income earners - most of whom took home an average of RM1,000 a month or less - did not qualify for the housing loans.

One source had claimed only 2,500 made the cut from the more than 30,000 applicants for the PPR flats - just eight per cent of the total.

This basically translated to a mere five per cent of residents from each parliamentary constituency being eligible.

Another industry source added among the major problems were the reluctance of banks to aid the process - the original problem the home-ownership scheme was aimed at solving.

Responding on The Malay Mail's query on the complaints made by PPR residents over strict regulations imposed by the bank, Raja Nong Chik responded: "I am very concerned about this issue myself and even raised the matter in Cabinet concerning the reluctance of the banks to provide loans to low-cost unit buyers."

He said Prime Minister Datuk Seri Najib Razak had then instructed Bank Negara to take the initiative to ensure the banks assist the interested buyers. He added a meeting was held between the ministry, City Hall and bank institutions three weeks ago on this issue.

So far, nine major banks have been willing to partake in the effort, as Raja Nong Chik also said: "There should be no cause of concern for the banks to provide financial assistance to the PPR flat buyers as this is a secured asset."

The ministry would also continue to monitor the development between loan-applicants with the banks on this matter.

The minister had further announced a special fund would be set up, backed by selected banks and that the Credit Guarantee Corporation was willing to act as a guarantor for their housing loans.

A bank carnival for sales of (National Economics Action Unit) NEAC units and Public Housing (PA) units would be held by the ministry on a date to be announced later.

It was also announced today eligible buyers need to make sure all the due necessities for their loan applications must be settled within three months from today.

The deadline is meant to ensure there would be no dilly-dallying by the interested buyers as compared to the last time, where there were no deadlines given.

As of July 15 this year, City Hall Housing Department statistics show there were 18, 201 eligible buyers and 11, 499 eligible buyers have returned their confirmation form to buy the units.

A total of 1,928 buyers have signed the sale and purchase agreements - 1,080 of them had made a cash payment and 848 have already submitted their bank applications.

Credit - AZREEN HANI from Malay Mail