THE Penang government is reviewing development charges imposed on property developers so that house buyers will not shoulder the higher costs.

Local government and housing exco Jagdeep Singh Deo said the state was aware of developers’ concerns over the charges, and was looking into the matter.

“I have told Rehda (Real Estate and Housing Developers Association) Penang that we are studying and reviewing all the charges.

“We will review them across the board, so they are not passed to the consumers,” he told The Malaysian Insight.

Jagdeep said the review would take the state “maybe a month or two” and he would make an announcement on the matter in due time.

Development charges are fees collected from developers to help pay for infrastructure costs required to provide municipal services to the new development, such as roads, transit, drainage and sewer infrastructure and other facilities.

It was previously reported that the increase in development charges in Penang had caused construction and development costs to go up, leading to the higher property prices.

“As a result, they are passed on the consumer. That is what they (the developers) are saying, or that we (the administration) are the ones contributing to the high prices,” Jagdeep said.

The lawyer-turned-exco was asked to comment on Rehda Institute chairman Jeffrey Ng’s statement on Saturday that approvals based on quotas and price controls did not bode well for B40 and M40 groups.

Ng reportedly said the government’s responsibility was to lower public land costs and the private sector should deliver affordable homes without price controls.

“I say no. We have our policy to cool the prices (of residential properties) in Penang. We also give incentives for more affordable homes where we see the (demand) for the stock is there,” said Jagdeep.

“I can understand their concern over properties that are not subjected to price controls. They have problems with those, which is why we have told them we are reviewing the development charges.”

Jagdeep said it was necessary to set price controls for affordable housing, because without it, the market prices might become very inaccessible.

“The system works. We have the numbers (to show),” Jagdeep said, referring to the situation in Penang.

Due to the high property prices in Penang, the state government introduced a price control guideline in 2014 for low cost homes (RM42,000), low-medium cost homes (RM72,500), and affordable homes (RM400,000 maximum for Penang island, and RM250,000 for the mainland).

Those who want to buy homes of these categories must apply to the state housing department and be vetted according to their eligibility.

Jagdeep said the state believed that the price control policy was working as the state had managed to stabilise the principle residential transaction market.

“As of the first quarter of last year, some 75% of the transactions in Penang were for homes priced RM500,000 and below, with half for homes priced at RM300,000.

“Before that, the prices of the majority of residential property transactions were about RM800,000 and above. We have seen a downward shift in the market, where pricing is concerned.”

Earlier, Jagdeep told a press conference that the Penang government was on its way to fulfil and even outdo its two election pledges to install 20,000 LED streetlights by 2020 and 1,000 closed circuit televisions (CCTVs) statewide.

He said the Penang Island City Council (MBPP) and Seberang Prai Municipal Council (MPSP) were now working with Tenaga Nasional Berhad to replace all existing streetlights with LED ones.

By 2020, there would be 33,198 LED streetlights on the island and 57,655 on the mainland, he said.

“I think Penang will be the first state to fully change to using LED streetlights. The move will help us reduce the electricity bill by 60%.

“Currently, MBPP and MPSP pay RM6 million and RM7 million respectively to power streetlight in a year,” Jagdeep said.

Meanwhile, he said by May next year, Penang will have 1,041 CCTVs up and running statewide. – July 16, 2018.