PETALING JAYA: Sarawak’s proposed trust fund model for affordable housing should be accompanied by a five-year leasing model that reviews the recipients’ economic status to ensure sustainability, says a housing expert.
Former Melaka Real Estate and Housing Developers’ Association chairman Anthony Adam Cho said the leasing mechanism would prevent people from taking advantage of affordable housing initiatives.
“As they climb further up the income ladder, they will no longer qualify for it (affordable housing) and the vacated property will be leased to another qualified individual,” Cho said.
He said reviewing the recipients’ economic status would remove the government’s burden to keep building new affordable houses as land resources become scarcer.
On Nov 20, Sarawak premier Abang Johari Openg said he was considering replacing the 30% affordable housing requirement for projects on lots of 10 acres or more with a trust fund contribution model by private developers.
Without disclosing its mechanism, Abang Johari said he would bring the matter to the state Cabinet for approval soon, adding that this would ensure affordable houses of better quality.
Cho said to ensure efficacy, there should be a committee comprising various government agencies and NGOs to monitor and advise the task force managing the fund.
He said the initiative would eliminate cross-subsidisation in state house developments, enabling buyers to acquire property at their true market value.
In housing cross-subsidisation, developers strategically price market-rate units higher to bridge the gap between government-mandated ceiling prices for affordable housing and actual development costs, as the ceiling prices set for affordable units are typically lower than their actual costs.
Meanwhile, Socio-Economic Research Centre executive director Lee Heng Guie said the proposed trust fund system had been implemented in many countries. He urged the state government to list the mechanisms used in the proposed system.
“The state government has to clarify the formula in terms of how much developers have to contribute to the proposed housing trust fund system, and who will manage the fund,” he told FMT.
Lee also reminded the state government that a policy might look good on paper, but would not yield results without a proper mechanism, citing the mismanagement of the 1Malaysia People’s Housing Programme (PR1MA) public housing initiative.
Introduced in 2011 by the Najib Razak administration, the PRIMA initiative only completed 16,682 units between 2013 and 2018, or 1.6% of its promised one million homes by 2020.
Lee attributed the failure to PR1MA’s land acquisition decisions, where many properties remained unsold due to their distance from cities and public facilities.
“There are inherent inefficiencies when the public sector is involved in a property sector that is already competitive and market-driven,” he said.