According to some property developers in the state, compliance cost has gone as high as RM460 psf but this has been reduced to RM390 psf earlier this year. Nevertheless, developers lament that the cost is still too high. Will compliance cost be reduced further?

Chow admits that the Real Estate and Housing Developers’ Association of Penang (Rehda Penang) and FIABCI Malaysia had previously requested the state government and local councils to allow higher density and plot ratio.

“Because the guidelines have been in place since the 1980s and some in the 1990s, they are no longer suitable for the current market as developers require higher density and higher plot ratio in order to overcome high land cost. We agreed to increase the density from 15-30 units per acre to 87 units per acre. But that came with new contribution [costs] and various charges.

“Developers can choose to use the old guidelines and pay the old rates, but if they opt for the new guidelines, they got to pay the new rates. It is both an incentive and disincentive in a way. If you want to use the new guidelines which allow you to have a higher density for units per acre, you can use it provided you pay the necessary contribution.

“Our purpose was to allow market prices to be controlled. Now that you get more units out of your land, with some contribution, you should be able to keep the prices at the affordable level. That was our main reason we agreed to the proposal, hoping that with higher density, they can keep prices to a level that buyers can absorb,” offers Chow. Nevertheless, at the beginning of this year, infrastructure contribution was reduced from RM15 psf to RM5 psf, which is essentially the old rate.

He also notes that developers had requested for a review of the contribution for public and social amenities and facilities such as hawker centres. Following their request, the contribution cost was reduced by close to 50%.

“For developers who choose to build affordable housing, some of these contributions have been waived altogether as an incentive for them to build. The category of housing that we want to promote is affordable housing, which we have capped to a range of RM200,000-RM400,000,” says Chow.

Source: EdgeProp.my