The current Home Ownership Campaign (HOC) spearheaded by the government has seen approximately RM285 million worth of properties booked on the back of tax waivers and discounts offered by participating developers.
The government should be lauded for acting with such decisiveness in combating the current overhang issue but also, and more importantly, in initiating a public-private partnership.
Unfortunately, the reality remains that not everyone looking for a home can actually afford one. With house prices largely seen as unaffordable at a multiplier of 5.0 to income in 2016, it is no wonder that the government has stated as part of the National Housing Policy a desire to grow the rental market.
However, for rentals to be widely accessible, particularly among the B40, the government will need to ensure adequate supply of affordable rental stock.
With the current state of overhang, rental rates have certainly faced significant downward pressure with some areas falling by as much as 20% in 2018. Unfortunately, vacancies and overhang have tended to sit in price brackets beyond the reach of the B40 and, to an extent, the M40.
Like with the HOC, the government should consider implementing a public-private partnership. This could be done through the setting up of a National Rental Affordability Scheme (NRAS) where investors are provided favourable tax incentives in exchange for the purchase of homes specifically to be rented out at, say, 20% below market rates.
Such a scheme could encourage investors to absorb excess housing stock, directly increasing supply of rentable homes at more affordable rates.
If implemented properly, NRAS would serve as an alternative to government-built social housing, PPRs, and assist in reducing the burden on the government to fund and manage social housing developments.
Now, it certainly wouldn’t hurt if developers could extend discounts and rebates seen at the HOC to the scheme, paving the way to better yields and, more importantly, bringing us another step closer to sustainable growth of the property industry.
Thor Joe Hock is CEO of MyProperty Data
The views expressed are those of the author and do not necessarily reflect those of FMT.