THE price of low-cost and affordable homes can be reduced if Putrajaya scraps the Goods and Services Tax (GST) on building costs, including construction materials and labour, Penang’s housing Executive Councillor said.

Jagdeep Singh Deo said the exemption should be made for low- and low-medium cost homes under RM300,000.

“The prices of such units can be further reduced if there is no GST. It will lessen the burden of the people,” he said today.

Jagdeep was speaking at the sales-and-purchase signing ceremony between Penang Development Corporation (PDC) and buyers of the Jiran Residensi affordable housing project in Kampung Jawa, Butterworth.

The new scheme offers 707 low-medium cost units going for RM72,500 each, 150 affordable units priced at RM200,000 each and another 204 units priced at RM250,000.

The high-rise project is one of 18 affordable housing projects the Penang government is building. All together, the state government is building 27,306 units.

Jagdeep said the state government would have to pay an estimated RM162 million in GST for 11 projects.

He said in any housing project, over 120 sectors would be involved – from building materials to labour – and all have to pay GST.

“For the interest of those who have not bought their first homes, I urge the federal government to consider exempting these units from GST, so the additional cost would not be transferred to first-time buyers,” he said.

Jagdeep said in September last year that the Real Estate and Housing Developers Association (Rehda) had also urged the federal government to review the GST on housing projects.

The housing exco also raised the high loan application rejection rate among first-time home buyers.

“The rejection rate is high. Seven out of 10 applicants will be rejected. We have raised this many times, asking the central bank to relax the loan requirements.

“On Tuesday, I wrote to Bank Negara governor Muhammad Ibrahim to ask for a roundtable session involving all stakeholders in the housing sector to discuss and resolve the matter.

“For the interest of the people, I hope this request will be considered,” he said.

Chief Minister Lim Guan Eng, who was present, said even with the state government building affordable homes priced between RM42,000 and RM300,000 for the people, it meant little if they could not get loans.

He said state investment arm PDC had built the Suria affordable housing project in Bandar Cassia, Batu Kawan.

“The state’s Selection Process Enhancement Committee offered the 520 units to 1,065 applicants. But only 320 managed to secure loans,” he said.

Lim said the Penang government and the state Barisan Nasional opposition recognised the problem faced by housebuyers, and both urged Putrajaya and Bank Negara to look into the high loan application rejection rate in February last year.

“But until today, we have yet to meet or discuss to solve this issue,” he said. – February 23, 2018.