Cross-subsidy ‘unfair to medium-cost home buyers’
17/06/2007 The Star By Anthony Tan

PENANG: Some buyers of low-cost homes spend more on home redecoration and furniture than buyers of medium-cost units, said Fiabci (International Real Estate Federation)-Malaysia chapter's Penang branch chairman Datuk Khor Teng Tong.

He said he had noticed in his 30 years as a developer that medium-cost home buyers who purchased property which cost between RM150,000 to RM200,000 were usually on a “tight budget”.

“The amount they spend on moving in very seldom exceeds RM30,000. But I have come across cases of low-cost home buyers who spend RM50,000 to RM100,000,'' he said after chairing Fiabci branch’s second annual general meeting here yesterday.

Khor, who is Hunza Properties Bhd executive chairman, said the low-cost home buyers could spend more because they got their houses cheap.

He said this was unfair to medium-cost home buyers who had to cross-subsidise the low-cost units.

Khor added that developers whose projects exceeded 150 units now had to allocate 30% for low-cost units.

He urged the authorities to allow developers to allocate 10% for low-cost units and contribute the remaining 20% in cash which could be used to upgrade existing low-cost projects to improve their living environment.

Branch vice-chairman Datuk Faudzi Naim Noh claimed that some low-cost units were occupied by foreign workers.

He also said the cross-subsidy method used to build low-cost units caused other units such as shop lots to be pricier, thus making it more expensive for others to buy them.

Branch secretary Michael Geh said Malaysia was the only country in the world which made it mandatory for private developers to build low-cost homes.

Geh said developers should be allowed to build more service apartments in Penang to cater to foreigners under the Malaysia My Second Home programme.