Low-cost homes that are not low cost

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Contrast these homes to the expensive homes marketed abroad - Photograph: Choo Choy May/Malay Mail

The reality is developers refuse to sell if buyers do not agree to take the renovation packages offered, claims the Consumers’ Association of Penang.

Developers in Penang have to comply with a “compliance clause” that requires them to build 30% of public housing – ie low-cost (RM42,000) and low-medium-cost (RM72,500) housing.

Applicants for these houses who are qualified and registered with the state’s Housing Department are sent offer letters by the department when these units are available.

Happiness turns to sadness, even dismay, when they go to the developers named in the offer letters and find that they cannot purchase these homes unless they also buy “renovation packages” and car-park lots – which almost doubles the price.

The state authorities claim the car parks and renovation works are optional and buyers need not purchase these if they don’t require them or can’t afford them.

But the reality is different: developers refuse to sell if buyers do not agree to take the renovation packages.

The whole purpose of housing for the low-income group is lost if there is no firm control to ensure that buyers are able to sign a sale and purchase agreement at the controlled price – without arm-twisting by developers to make them buy renovation packages as a condition to buy a low-cost or low-medium-cost home and then claiming that the buyers voluntarily took up the “offer” to buy renovation packages.

We have received complaints about this from time to time. In a recent case, low-medium-cost homes officially priced at RM72,500 were sold by the developer at prices ranging from RM120,000 to RM189,000.

READ MORE:  Hidden cost of affordable home ownership in Penang

We wrote to the developer asking for the breakdown of a unit sold at RM130,000 and received it as follows:

The car park costing RM30,000 was not even stated in the sale and purchase agreement. According to the Housing Department, all homes on whichever floor are priced at RM72,500. In this case the developer charged RM1,000 extra for each floor upwards and an extra RM8,000 for a “corner unit” – which is exactly the same as the intermediate homes.

If the state government is serious about housing for the lower-income groups, then it must do more than merely issuing a letter of offer to the registered applicants. It must take proactive action to ensure that those offered these houses can buy them at the stated price without developers arm-twisting them into signing a renovation package agreement together with the sale and purchase agreement or not be able to sign the agreement only.

The least the state’s Housing Department could do is to arrange for the sale and purchase agreement to be signed at the department’s office in Komtar. Any buyers who want to take up the renovation packages or buy car-park lots can enter into separate agreements later.

This will ensure the developers do not arm-twist buyers into taking up overpriced “renovation” packages as a pre-condition to signing the sale and purchase agreements for their homes.

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