THE Penang government today expressed hopes that the Budget 2019 announcement tomorrow will include a policy call to reduce property prices.

State housing exco Jagdeep Singh Deo said the federal government should make a commitment to ensure developers reduce the prices of all types of housing, considering that construction materials are not subjected to the Sales and Services Tax (SST).

Building materials were previously taxed under the Goods and Services Tax (GST) regime until the Pakatan Harapan government abolished the 6% consumption tax.

“The Finance Ministry has already asked the national Real Estate and Housing Developers Association (Rehda) to reduce prices.

“Logically, the SST exemption should cause a price reduction for properties,” he told a press conference at his Komtar office today.

The PH government is tabling its first national budget tomorrow afternoon at parliament.

Jagdeep also said Budget 2019 must address the long-standing problem of high loan rejection rates, namely for first time house buyers.

He said Penang has consistently lobbied Bank Negara Malaysia and all stakeholders to review its stringent loan application policies, where first-time affordable home buyers are concerned.

“We were the first state to hold meetings with the central bank on the matter. We hope the budget speech will touch on this matter. There are many ways to address this issue,” he said.

Jagdeep said Penang had suggested to Bank Negara that the loan repayment term can be extended to over 30 years and to the second generation.

“This is practised in other countries.”

He said banks can also offer more flexible loans in terms of percentage allowed, such as over the maximum 90%, reduce the interest rates for affordable housing, and allow tiered loan repayment where the borrower first repays the loan at a lower sum that is gradually increased.

He also said rent-to-own schemes can also be introduced with banks collecting rental for the first five years, which can be converted to the deposit payment at the end of the period.

“It is hoped that the high loan rejection rate issue be urgently addressed with the introduction of some of these mechanisms,” Jagdeep said. – November 1, 2018.