GEORGE TOWN: The Penang government has decided to hold off a requirement to impose higher fines on developers who fail to build affordable homes.
This follows an appeal by many developers affected by the new rates that took effect on Jan 1, said state executive councillor in charge of housing Jagdeep Singh Deo.
He said the government will now revert to the earlier lower fines imposed last year.
The new rates will now only apply to new projects of developers approved from 2018, Jagdeep added.
The fines go into an affordable housing contribution fund, used by the state government to build affordable housing and also to maintain state government housing projects.
Penang’s housing rules dictate that developers must build 45 affordable homes for every 150 normal housing units in urban areas.
In rural areas, 30 affordable home units must be built for every 100 normal housing units.
From next year, Penang-based developers must pay RM150,000 for each affordable unit not built, while out-of-town developers must fork out double that amount at RM300,000 per unit.
Currently, the fees are fixed at RM120,000 per unit for Penang developers and RM180,000 per unit for those not from Penang.
Penang-based developers must prove at least half of their board of directors are Penang-born to qualify for the lower fee.
Jagdeep said the hike in fines was due to increased costs to build homes, especially the hike in steel prices and the after-effects of the goods and services tax (GST).
“The developers must understand why this contribution is there in the first place.
“It is a penalty on developers who do not build affordable homes as a component of their respective projects,” Jagdeeep told reporters at Wadda Gurdwara today.
In an immediate reaction, Toh Chin Leong, chairman of the Penang chapter of the Real Estate and Housing Developers’ Association, said developers were happy to hear that the new rates have been put off until next year.
He said due to the current weak market sentiment, this delay was welcome.
Toh said out-of-town developers would be badly hit as the increase for them is two-fold — from RM150,000 to RM300,000 per unit.
“By doing this, we are afraid that big out-of-Penang developers would run away.
“We will continue to engage with the state government on this matter,” he said when contacted.