The Star: Not affordable housing

MY First Home Scheme basically provides housing to income earners of less than RM 3,000 a month to own houses of value up to RM 220,000 when initially launched.

Under the recent Budget it has been increased to RM 400,000. Whether or not the joint incomes of husband and wife (if married) would be used as a criterion for qualification of the loan, which in this case should not be less than RM 6,000 a month, is not mentioned. Normally, without a large upfront payment, it would be virtually impossible for anyone in this income bracket to qualify for a bank loan to buy such a property.

No financial institution will accommodate such an amount (if 100%) against a RM 3,000 to RM 5,000 income unless it stretches the loan to over at least 25 years to reduce the monthly instalments to a more manageable amount.

Of course, giving a loan over 25 years would usually involve an applicant aged 35 or thereabouts as he would be 60 before he settles his debt with the bank.

Although owning one's first house is on everyone's priority list, it would be financially irrational, not to say irresponsible, to expect these income earners to cough up half their salaries (or more) each month to repay their loans and get on with their other financial commitments for the next 25 to 30 years.

Acceding to the request by REHDA "Mixed reaction to increase in ceiling price of houses under scheme" (The Star, Oct 9) to provide more expensive houses to buyers under My First Home scheme would seem self serving.

Any government policy outlined and proposed, if it is in the interest of the public, should be relevant and beneficial to all parties involved. It should consider the wider social implications of the policy as well.

Allowing for properties of RM 400,000 to fall under the scheme defeats its very objective. For one, anyone who can buy a RM 400,000 house cannot be considered to be in need of affordable housing. It is understandable to own your first house but surely there are housing units that need not be that expensive.

Also, a matter for caution, are those first time home owners under this scheme exempted from Real Property Gains Tax as duly provided by law?

If they are, perhaps they further enjoy the privilege of flipping their present homes even though they are provided under partial government support.

We need affordable housing at sustainable prices. Right now this home scheme doesn't seem to be sending out the right message. I hope that first time housebuyers (and houseowners in general) will not interpret it as expecting house prices to rise in the immediate future and react accordingly.

Perai, Penang.

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