Alpha REIT Managers Chairman Datuk Stewart LaBrooy recently raised the notion that the concept of "affordable housing" is not reasonable and needs a reset. He believes the right way to go is with the "rent-to-own" (RTO) schemes as it is more tangible for the lowest income group (B40) nationwide.
He said affordable housing does not exist. “How do you sell a house to a person who does not have money? If you look at the level of wages for the B40 group, which make up the bulk of the population, they cannot afford to buy, ” he said during a panel discussion at the 2020 National Housing and Property Summit on Tuesday.
LaBrooy said the concept of affordable housing should be replaced with the concept of “affordable rents”.
“Here, the government can step in and subsidise rents for these people who can then live in furnished apartments and have quality lives, and can pull themselves up into a higher wage bracket. Because, when you’re sitting in the gutter, you can never get out of it."
“It’s pointless to keep bashing down on minimum wage and forcing people to work 12-hour shifts, seven days a week, just to earn enough to stay alive. How can you build affordable housing when the people you’re trying to target just can’t afford them? There’s no market. Zero demand.”
LaBrooy said the only way to deal with the situation is for the government to take the excess demand, subsidise the rent, place the people into decent accommodations and let them start to pick themselves up.
“That’s the starting point. When they start earning more money, they may have an option to buy a unit or move out and buy their own place. You can’t ask them to apply for a loan and buy a house. They’ll default. It’s a given!"
“So, this whole thing about affordable housing is not even a debate. It needs a complete reset and we need to go back to the drawing board.”