Budget 2018 – debate over DIBS
> Some say bring back developer interest bearing schemes, just for first-time house buyers; others want ban to remain
KUALA LUMPUR: Although the central bank has stressed that access to financing is not the primary issue for affordable housing, some quarters are still hopeful that the government will consider relaxing some of the lending restrictions in Budget 2018.
In addition, some are also calling for the return of developer interest bearing schemes (DIBS), which were banned in Budget 2014 following the sharp and quick rise in property prices as speculators took advantage of such schemes that were offered by property developers to “flip” properties.
“You have to look at bank financing and maybe relax some of the criteria in terms of lending restrictions that we have seen in the past. Especially things like DIBS and all that.
“Perhaps DIBS should be brought back, only for first-home buyers in order to assist them. Just a simple policy decision to allow DIBS for first home buyers... that would really help them and help to spur the housing market,” said Knight Frank managing director Sarkunan Subramaniam.
The Real Estate and Housing Developers’ Association Malaysia (Rehda) also said that home buyers’ ability to secure financing has been negatively impacted by the various cooling measures and financing guidelines introduced since 2010.
Rehda proposed a Home Ownership Assistance Programme (HOAP) to the Urban Wellbeing, Housing and Local Government Ministry aimed to address the affordability issue faced by first time buyers where developers will include the interest of the housing loan disbursed during construction period into the purchase price.
It added that the HOAP be restricted to houses priced RM500,000 and below, property under construction, household income RM10,000 and below, as well as to include interest on mortgage during construction period in the house prices.
However, the National House Buyers Association (HBA) secretary-general Chang Kim Loong said including interest on mortgage during the construction period into house prices is a “repackaged” or permutation of DIBS, where interest is capitalised.
“Developers being entrepreneurs have to be responsible and bear the risks that come with their investment. They should not be allowed to enjoy profits at the expense of house buyers bearing the risks on their behalf.
“Thus, when developers claim that DIBS is good because they ‘assist new buyers’, they should be asked to use the built-then-sell 10:90 concept instead if they are sincere in not wanting to shift the risks to the house buyers,” he said.
HBA in its Budget 2018 wishlist called for DIBS to continue to be prohibited and outlawed, as the banning of such schemes has been effective in curbing the escalation of house prices.
The Association of Valuers, Property Managers, Estate Agents and Property Consultants in the Private Sector (PEPS), Malaysia president Foo Gee Jen said that ease of financing in terms of cost and availability and low upfront commitment was one of the factors undermining affordability.