2020 – The Year of Affordable Homes and Rental Income?

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2020 – The Year of Affordable Homes and Rental Income?

Affordable housing is not something new. The city hall has plan to build 50,000 affordable homes in federal territory. Based on the information published on RUMAWIP as many as 10,000 affordable homes to be built by year 2020. Most of the properties are to be completed before then.

What is RUMAWIP?
Rumah Mampu Milik Wilayah Persekutuan (RUMAWIP) is established to outline the direction and to provide a basis for local authorities and developers to design and develop affordable housing.

syarat-kelayakkanSource: RUMAWIP

Will affordable housing affects property prices?

Unlike commodity, where prices are the same per unit. However for property, there are many distinct types and design of housing. When demand for housing rises in an area, rents will rise, regardless of the type or quality of the housing. Some areas might have old 3-storey shop houses, 70’s buildings, and brand new luxury buildings like we have near jalan Ipoh. If the demand is rising in that area, rents for all types of these units will rise eventually.

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When there are no vacant lands for development to supply rising housing demand, a solution is to reclaim the leasehold land by the local authority and to build higher density properties.

See also How To Calculate ROI On Rental Property

Back to the question whether these affordable housing would affect property prices around the area they are built? The chances for these homes to affect the prices are relatively low even though affordable homes are mostly high dense. The reason is because the requirement to buy such properties are very strict. Not everyone is eligible to buy such properties. Some of the projects are allocated for certain income bracket buyers, whether they are bumi and to some extents – they are only offered to buyers that are working as civil servants. Furthermore, the buyers cannot sell their properties within 10 years. This prevents speculators to make a quick profit from flipping. All we can see after good 10 years in the future is the issue with state consent for transferring of ownership.

Source: RUMAWIP

If affordable homes unlikely to affect property prices, then what’s the impact?

The direct impact of such great numbers of affordable homes is the rental income. With more properties out there in the market, people have the options to shop around for best rental. One of the conditions for buying these homes is that the owner shall not rent the property out without the consent from RUMAWIP management. The rules are in place, but are they really enforceable and will the enforcer be able to look into thousands of homes? This is something that the enforcer could not control and indirectly affecting the rental prices around the area where the properties are built. The owners can simply rent the property out without the need to stamp the tenancy agreement (get free tips if you are renting out your properties here).

The assumption above are only based on thousands of properties in selected areas. What about other non-RUMAWIP conventional properties? Taking account all these projects for both conventional and RUMAWIP, the numbers can reach more than twenty thousand if not more. Most properties are to be completed between years 2017 – 2019.

By 2020, there are more of these properties to be built and the rental can only sustain if the economy is growing (e.g., businesses are growing, wages are rising, new business are starting, new jobs are created, and people move in to the area to fill those new jobs), the growing demand will bid up rents. The scenario above will only realise when the government’s initiative to provide more affordable housing is achieved as plan. This is something for investors to look into before investing in certain areas.


8 responses to “2020 – The Year of Affordable Homes and Rental Income?”

  1. Lynn Avatar
    Lynn

    Hi

    I need to ask How to buy this house at Pantai Sentral Park Kuala Lumpur,Apartment 432* at RM300,000.00 it’ still available?

    1. Danny K. Avatar
      Danny K.

      Hi Lynn, the Pantai Sentral Park KL apartment is an affordable housing project initiated by the government. In order to buy these kind of properties, you will need to register an account so that when the project is launched, you will be notified. Further to that, you will need to be eligible to buy such properties. For further info on the eligibility, visit here https://rumawip.kwp.gov.my/permohonan.php. Also, you will find the application link beside where you can create an account. Oh by the way, the project is yet to be launched.

  2. Jing Avatar
    Jing

    Hi Danny, just want to confirm something.. I’ve heard about developers with upcoming residential projects must be completed with Rumawip starting from 2017 onwards. Was wondering what are your thoughts on this?

    1. Danny K. Avatar
      Danny K.

      Hi Jing. Where did you hear about the developer must complete their projects with Rumawip from 2017 onwards? To be honest, I didn’t hear about this. Perhaps if you read it some where, maybe you could share the source here. I bet other readers are keen to know as well.

  3. azfar Avatar
    azfar

    Hi Danny, great guide you have here! Thanks for the sharing

  4. Cynthia Avatar
    Cynthia

    Hi, may I know if you would suggest those who are eligible to get one rumawip?

    1. Dk Avatar
      Dk

      Hi Cynthia, there are four main criteria to be eligible to buy rumahwip. They are: Must be 18 year and above, Malaysia citizen, work or reside in federal teritory and monthly income less than RM10k for single or RM15k for married. For more information or guideline, can visit https://rumawip.kwp.gov.my/permohonan

  5. Willie Teo Avatar
    Willie Teo

    Dear Danny,
    Next to Sentul Point Suite apartment, will b 300, 28 floors rumawip.
    1. The developer & their agents fail to inform buyers.
    2. What do you think, if it will affect the Sentul Point which is selling at RM450 psf

    Rgds

Danny Ko

Hi, I’m Danny

I’m a passionate author and investor, sharing my thoughts and experiences on property investment.







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