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‘Inter-generational loan’ plan a rip-off

 | September 22, 2011

Sarawak's 'misguided' plan for buyers of low-cost housing is just not tenable, according to PKR.

KUCHING: The state government’s proposal of an inter-generational housing loan to enable low income earning Sarawakians to own houses has come under attack.

Describing the plan as ‘misguided’, state PKR official Boniface Willy Anak Tumek said it was ‘grossly unfair’ to the buyers.

“Such a suggestion is not only misguided and grossly unfair, it will be clearly untenable in the long run.

“It not only unduly prolongs the burden of repaying the loan, but greatly increases the financial cost of the house,” said Willy who is also a member of the party’s election bureau.

He said the proposal for inter-generation loans was ‘forcing’ buyers of normal price houses to shoulder the burden of subsidy for the low cost houses .

Willy, who is a PKR potential candidate for the Mas Gading parliamentary seat, was commenting on a statement made by Abang Rauf Abang Zen, chairman of the state Housing Development Corporation.

Rauf, a former Demak Laut assemblyman, had said that low cost houses in Sarawak are outside the means of many families whose joint income is RM3,000 and below a month.

He proposed an inter-generation housing loan in which loans for low cost houses may be repaid over 50 years in order to make it easier for families in the low income groups to own low cost houses.

Only banks benefit

But according to Willy the proposal was a rip-off and only benefitted the banks.

“Assuming the principal loan is RM43,000.00 with repayment period of 50 years at an interest rate of 7.8% p.a., the monthly repayment is around RM270 per month.

“Total payment to the bank after 50 years is at RM167,400 and the total interets paid on the loan after 50 years is calculated at RM124,400 (2.64 times the cost of the house).

“But then the remaining lease of the house is 10 years. So how does the house buyer benefit from this arrangement?

“It seems that the only party that will benefit from this are the banks,” he said.

He also posed the question of what if a family had no children or did not have children old enough to be part of the arrangement with the banks.

He said subsidies in whatever form was “clearly is not the responsibility of the rakyat, but of the government.”

“This dilemma in the low cost housing sector has persisted for a long time now.

“We call upon the government to qucikly implement effective measures to reduce the cost of low cost houses in the state.


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