Levy reduces overall cost of houses

KUCHING: The shift towards imposing a levy on private developers in Sarawak, starting in the first quarter of 2024, is a progressive policy aimed at managing the supply of affordable houses in the state.

Sarawak Housing and Real Estate Developers’ Association (SHEDA) Kuching Branch Head Datuk Sim Kiang Chiok said the collected levy from developers would be deposited into a trust account.

The trust account will then be utilised by the state government through appointed agencies such as Housing Development Corporation (HDC), Land Custody and Development Authority (LCDA), or Sarawak Economic Development Corporation (SEDC) to construct affordable houses.

“For private mixed development in Sarawak, affordable houses must be built on land exceeding 10 acres, with a proportional requirement increasing from 15 per cent to 30 per cent for land greater than 20 acres, sold at a preset price by the state government.

“In strata residential development, affordable housing starts on 4 acres of land, ranging from 3.5 units to 6.6 units per acre,” he said in a statement.

Following this, he noted that the selling prices for Spektra houses were revised in 2016, varying from RM100,000 to RM120,000 for Spektra Lite, RM135,000 to RM168,000 for Spektra Medium, and RM120,000 for affordable flats.

He pointed out that these prices have not been reviewed since, despite escalated construction costs post COVID-19, low ringgit exchange rates, increased minimum wages, and rising land costs.

“While the policy change to levy imposition may impact house buyers similarly, it’s advantageous for the government to impose a low levy amount to minimise cross-subsidy,” he asserted.

Sim emphasised that this presents an opportunity for the state government to reduce compliance costs and, consequently, the overall cost of houses in Sarawak.

In light of this, he also expressed his hope that the levy would contribute to schemes like Sarawak’s First Home Deposit Scheme (HDAS), benefiting B40 individuals in their quest to own their homes.

“The timing of levy imposition on a development is crucial; if too early, it could raise the capital cost for developers, affecting cash flow.

“Therefore, ideally, the levy should align with the issuance of subdivided titles or at the stage of OP issuance by Authorities,” he said.

Furthermore, he also articulated the potential benefits of the shift stating that the imposition of a levy or construction of affordable houses by private developers in Sarawak will lead to cross-subsidy from medium/high-cost houses.

“There is hope that, with the increasing income of the state government, a model similar to Singapore can be adopted, where all affordable houses are built by the government without cross-subsidy from medium/high cost houses.

“This could contribute to reducing the rising cost and thus prices of houses in Sarawak,” he said.