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By Goh Ban Lee. PENANG state executive councillor in charge of housing Wong Hon Wai announced last week that developers who could not or chose not to build low-cost (LC) or low-medium-cost (LMC) houses would be required to pay premiums of RM30,000 for each LMC unit and RM40,000 for each LC unit they were supposed to build. Predictably, Datuk Jerry Chan, chairman of the Penang branch of Real Estate and Housing Developers Association (Rehda), responded by saying that this would lead to increases in property prices and push the developers to concentrate on high-end houses.
In an environment of rapid property price increases, such public exchanges can only cause jitters in the property sector. They also raise important questions. Were there discussions between Wong and the leaders of Penang Rehda about the amount of the premiums? How did the state government decide on the amount? After all, the idea of payment in lieu of building LC and LMC houses was initiated by Rehda itself. Are the developers facing serious problems in building or selling LMC houses in Penang Island? Are those who have registered for LMC housing having allocation problems? Why is the list of those who registered for LC and LMC houses not displayed in the department's website? Why are LC and LMC projects not listed so that those in the queue have some idea of their waiting period? Although the way Jelutong MP Jeff Ooi vented his frustrations about allocations of LMC houses in his area might be questionable, he did have reasons to feel frustrated. In fact, the whole issue of housing the lower-income households needs a revamp. It is useful to recall that historically, the responsibility of housing lower-income households was largely that of the government. It was only in the 1980s that private developers were initially compelled to help as the government found that it could not build the number of houses planned. Housing developers are not charitable by nature, and cannot be expected to comply merely as a form of "social corporate responsibility", a concept that is still uncommon. To ensure that they contributed, developers were required to build low-cost housing when they applied for permission to undertake housing development. The legality of such imposition has not been seriously challenged. In the beginning, the imposition of LC housing quota was not strict. Exemptions were given. Besides, many state governments also found ways to make the building of LC and LMC houses bearable. For instance, developers were allowed to build low-cost houses in areas where land prices are relatively low and away from the main development sites. They are also allowed to buy quota from other developers who only build LC houses. The price of LC houses was increased from RM25,000 to RM42,000. The LMC housing category, priced at RM75,000 each, was created in the 1990s. Finally, it is suspected that some state governments have "closed an eye" on developers who sell "enhanced" LMC houses that cost more than RM100,000 each. However, despite all the efforts in building LC and LMC houses, the quality of life of those who live in these living quarters are not up to expectations. Many low-cost housing areas, especially those built by developers, are not better than slums after a decade or so, as the owners generally do not get any additional help from the government. There are also complaints about government-built LC houses even though these are maintained using public funds. It is time to rethink the entire issue of housing for lower-income households, instead of tinkering with policies and procedures. It is unrealistic to expect that things will be better by continuing to do the same thing, even with some tinkering. There are good examples of housing for lower-income groups. Some governments tackle the issue by creating alliances with civil societies, such as housing associations, where the role of the government is largely reduced to that of passing regulations and providing financial assistance. Some use state agencies such as housing boards to provide reasonably priced and adequate housing for lower-income households. However, even if new institutions and procedures are set up, housing the lower-income households will continue to be a difficult challenge. The countries that have done a good job in housing their lower-income households also have clean cities. ** Republished with permission. This article first appeared in the August 16, 2011 issue of theSun. Datuk Dr Goh Ban Lee is a senior research fellow in Seri and interested in urban governance, housing and urban planning.
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