An ongoing apartment project in Bandar Meru Raya. – filepic

As reported in The Star Online, the proposed policy to allow developers to apply for moneylender licences may not benefit developers in smaller cities.

Real Estate and Housing Developers Association Malaysia Perak branch chairman Tony Khoo Boon Chuan said developers here would not have the means to provide loans to buyers as they were already facing a shortage of cash flow for development purposes.

He added that the public-listed developers who have higher cash flow will probably be able to benefit from the initiative, but not developers in smaller states who depend on end-financing.

Recently, Urban Well-being, Housing and Local Government Minister Tan Sri Noh Omar said eligible developers could apply for moneylender licences to provide loan facilities of up to 100% to property buyers.

He said they are allowing developers to provide housing loans to overcome difficulties faced by buyers in securing bank loans.

Khoo, however, said the initiative would be an extra burden for developers who were already finding it difficult to finance their development.

The government, he said, should look into the stringent lending policy by financial institutions instead.

He said out of 10 potential purchasers, half of them did not qualify for the loans.

“The rules and regulations are so strict that they fail during the application process,” he said.

Total Investment Sdn Bhd executive director John Chong said some developers could take advantage of the initiative since banks have tight control on lending.

He added that it was a good move and a relief for developers.

In terms of the interest rates offered, Chong said the market would decide the rate.

“If the rate offered is too high, maybe some developers can lower the interest rates.

Click here in order to read the full article as published in The Star Online.