KUALA LUMPUR – October 24, 2017: There are many reasons why less Malays or Bumiputra are buying residential properties but stringent financing rules by banks are not one of them.
Had this been the case, MK Land chief executive K. Mohanachandran said the bulk of the company’s purchasers would not have been Malays.
“MK Land’s properties have a very high Bumiputra and Malay ownership. Over the years, we have launched about 30,000 units, of which 80 per cent were taken up by them,” he said in an interview with The Mole.
MK Land is a Bumiputra-owned developer founded by Tan Sri Mustapha Kamal Abu Bakar.
Three years ago, it was reported that the level of property transactions and ownership by Malays/Bumiputra stood at only 39.5 per cent, with industry experts claiming that the community lacked interest in real estate.
The claim that such buyers were having a hard time securing bank loans was heard again after Prime Minister Datuk Seri Najib Razak called on the community to own more properties, particularly in the urban areas.
The view was reinforced after the Real Estate and Housing Developers’ Association (Rehda), citing the findings of its survey, stated that loan rejection was the main reason why 85 per cent of its respondents were unable to buy homes.
But Bank Negara Malaysia two weeks ago rebutted Rehda’s claim, explaining that there was a high housing loan approval in the second quarter of this year, with the bulk of applicants being first time buyers.
On this ground, a former officer with a foreign bank in KL who did not wish to be identified had this to say: “Banks make money from financing and it’s simply ridiculous and unthinkable for a bank to reject a loan application if it’s certain the applicant can afford to service it.
“On the other hand it’s also silly and bad business sense if a bank goes ahead to give a loan to someone who it thinks is unlikely to be able to pay back.”
Mohanachandran has this view: “I don’t think banks are refusing to give out loans. I think they’re just reducing the margin of financing for repeated buyers and are catering to the needs of first time buyers.”
Another issue is affordability.
A study by the Khazanah Research Institute some months ago said that after considering the interest on a bank loan and the monthly repayments, an affordable price is a basically maximum of three times a person’s annual income.
Some sellers and potential buyers have stories that indicate a problem between the actual value of a property and what is usually claimed to be the market value.
C. Leslie, who lives in Taman Desa and was offered a leasehold apartment unit with a built-up of just over 1,000 square feet, related his experience thus: “When my landlord asked if I was interested in his unit, I referred to a certified valuer. Back came the valuation at RM450,00 while the owner quoted a real estate agent’s price of RM680,000. So I asked him where the big difference came from and he could not answer.”
Another person from an adjoining neighbourhood was happy to find a buyer prepared to buy his apartment at the market value, only for the buyer to be told by a bank that its valuation was about 30 per cent less.