PR1MA – a great plan but…
ViewPoint January 21, 2016 Property 360 Online
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Share this on WhatsAppBy: HBA (National House Buyers Association) PR1MA was promised by the government as its solution to the problem of (mostly) young...
By: HBA (National House Buyers Association)
PR1MA was promised by the government as its solution to the problem of (mostly) young people not being able to afford a decent house at current prices. They may be categorised as young married couples (some may have grown old waiting for something they could afford) who own no properties of any kind, either purchased or inherited, to start their families. In short, first-time buyers are expected to be given priority for the affordable homes.
In order to make prices affordable under PR1MA, the government promised to set aside land for this category of development. PR1MA lands represent a considerable value and subsidy to these buyers.
It is therefore the main responsibility of the PR1MA organisation, which has been set up by law to operate the PR1MA scheme, to ensure that PR1MA houses remain affordable. The organisation is also expected not to do anything which could cause prices to be increased. To achieve this, the PR1MA organisation has to be and is conceived to be a developer in its own right. As such, it may engage construction companies to build houses on the land given by the government.
Why join venture with private developers, when PR1MA should itself be a housing developer?
Instead, PR1MA has announced that it will parcel out PR1MA-lands to private developers to build the houses and sell them to the PR1MA category of house buyers. Naturally, these developers will add their profits to the house prices, resulting in PR1MA houses priced almost as much as market values.
In fact, recently a Penang politician criticised the Penang government for taking precisely such a step. As reported in one of the English newspapers, the politician went on to say that it may now be expected that with developers being invited to participate, PR1MA houses will be priced only slightly lower than market price to pull wool over the eyes of the people.
Who are these developers, how are they chosen and under what considerations are they given PR1MA undertakings and task? It is becoming like the all-too-familiar stories of privatisation of government amenities – no transparency, sudden wealth for the chosen few, immediate higher cost to the consuming public and with immunity of affirmative action to frighten off critics.
What are the benefits for the private developers involved? As anticipated, PR1MA houses are to be offered in a range of prices. Those at the higher end are not likely to be offered to the originally intended PR1MA buyers. It is the developer's way of getting the customers they had first driven away with escalated prices without benefit to the public again.
With developer involvement, it is unlikely that prices will remain at their lower levels for long. Various tried-and-tested excuses are aplenty – increased cost of building materials, shortage of workers and such. It can only be expected that prices will remain slightly lower than market levels.
We even heard that PR1MA will go into high-end market and commercial developments with PR1MA lands. Whether there is truth in that or not, time will tell.
Why should second-time house buyers qualify for PR1MA when the supply is not enough for first-time buyers?
Already the PR1MA organisation has been prepared to answer this. In a recent interview, PR1MA's CEO Dato' Abd Mutalib Alias, announced that some people would be allowed to buy second homes under PR1MA.
His reasons were essentially more for pampering rather than principle. He said nothing of the compelling need of those who have no homes at all or the affordability criterion as the essential qualification and whether there were any studies done to show that there were enough lands to satisfy the most deserving category in the first place rather than the commercial needs of developers.
Other pertinent issues have also been ignored. Build-then-sell or sell-then-build? What about safeguards against the notorious and as yet unresolved problems caused by developers such as abandonment and borrowing on the security of purchasers' properties, thereby pushing the risk of non-payment to the shoulders of purchasers?
Yes, some form of controls, which, to give credit where it is due, have been mentioned by Mutalib to ensure that purchasers become occupiers and not carpet-baggers out to make a fast buck.
However, it is hoped that the PR1MA organisation will work with opposition controlled state governments as these are where the urban poor are concentrated, where government policies have caused severe shortages of affordable housing, such as the abolition of rent control without offering any alternatives. The less welloff people of these areas do not deserve to be politically victimised.
Operating outside the current Housing Development (Control & Licensing) Act
An equally important question is the political accountability of the PR1MA organisation – why is it not under the Housing Ministry which has the appropriate experience? Instead, it is a unit under the Prime Minister's Department, operating in relative obscurity from public scrutiny and high-level protection for its affirmative action aspect. Why isn't PR1MA under the Housing Development (Control & Licensing) Act (HDA), 1966, the current legislation that regulates housing?
Why shouldn't there be safeguards like the imposition of mandatory Housing Development (Project) Account? Why should the statutory Sale & Purchase Agreement in Schedules G, H, I and J be used?
Free from the shackles of HDA, PR1MA developers need not be licensed (to build) and apply for Advertisement & Sales Permit. Thus, buyers who buy into PR1MA projects will not have the protections under the HDA. Thus, the "speedy, cheap and effective" Housing Tribunal will not be available for aggrieved and short-changed buyers and victims.
Going by the fact that distressed purchasers of market price houses have not been able to seek redress from the Court of Law, it can be expected that PR1MA buyers are not going to fare any better. It is simply a case of déjà vu.
NATIONAL HOUSE BUYERS ASSOCIATION [HBA]
No. 31, Level 3, Jalan Barat, Off Jalan
Imbi, 55100, Kuala Lumpur
Tel: 03-2142 2225 | 012- 334 5676 |
Email: [email protected] |
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