Government urged to cut red tape and development fees to make houses cheaper


To lower the cost of a house, the government and state authorities need to cut red tape and fees associated with housing developments.

National Housing Buyers Association (HBA) honorary secretary-general Datuk Chang Kim Loong said cutting bureaucracy by 50% would help developers bring down costs.

He said whatever extended time developers take in getting approvals would translate to holding costs that would eventually be factored into the sales price, that is passed on to house buyers.

“What happened in Ukraine was unforeseen and beyond our control. But what is within control is reducing red tape and expediting projects. Otherwise, it would increase the cost for buyers.

“Some of the approvals take years. If we can cut it by half, developers can offer a better price,” he said.

Chang was responding to a new framework that will be set up by the National Affordable Housing Council to address the increasing cost of construction.

He said the build-then-sell concept would be more beneficial to the B40 and M40 groups, as it is effective in reducing abandoned projects.

He also questioned the need for more new projects as there are currently plenty of empty units in the city.

Penang Rehda chairman Tan Hun Beng echoed Chang’s view on the need to cut red tape to keep costs down.

“Not only red tape should be cut, but also other costs associated with housing development such as fees paid to the government. For example, when a developer wants to convert agricultural land to housing, there is a hefty premium involved.

“To top this off, different states have different formulas in calculating the conversion premium that needs to be paid.”

Tan said when a developer submits a change of title use application, it could take several months in some states and up to a year in others. He pointed out that all this adds to the holding cost for the developer.

He said a developer would have to take a bank loan while waiting for the conversion title. In the process, the developer will have to pay interest on the loan, which will add to the project cost.

“If the authorities can cut down on the waiting time and fees, it would help bring down the cost of a house.”

He said all developers are businessmen, and they need to make a profit. But this is not huge for housing projects.

Tan added that because housing development is a competitive business, no developer would price houses above what the people can afford as nobody would buy them.

“Time is money from the point of financing and for a developer, the faster the approval, the cheaper the house,” said Tan, adding that the government needs to cut the red tape and fees if it wants houses to be sold at a lower price.

Source: TheSunDaily.my

  1. UseYourBrain
    May 11th, 2022 at 09:18 | #1

    “Penang Rehda chairman Tan Hun Beng………..He said all developers are businessmen, and they need to make a profit. But this is not huge for housing projects.”

    What? Now you say not huge lah coz all these developers have over built and prices have outrun their intrinsic values. 10 years back when speculative demand was good and oversupply was not so bad, every tom, dick and harry company which had the financial means also want to be a developer, for the simple reason that profits were HUGE.

    State gov should NEVER cut land conversion premium as that will only shift the profits from the pocket of state gov (which can be used for social housing) to the pockets of greedy developers.

    Penang claimed it has attracted biggest foreign investment compared to other states in Msia, providing world class jobs presumably, but yet the people here cannot afford simple homes at market price without any land conversion subsidy, given that PG homes are already one of the cheapest in the region? Or Rehda chairman is only talking crap here hoping for a “land conversion subsidy” windfall so that he and the other greedy developers can buy the new Merc 580e s-class, something flashier than ChowConYou’s? :)

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