Monday, September 25, 2017

Reducing low-cost housing instalment in the works

Discussions are ongoing to reduce the initial 30-percent requirement to 20pc for low-cost housing instalments, said U Win Zaw, managing director of the Construction and Housing Development Bank.

“We started discussing the amount for down payments which a buyer has to pay. We are trying to reduce it to 20pc and to get finance for long-term loans. If lenders can give a loan for a long time, we can reduce the first instalment payment,” he told to The Myanmar Times.

Currently, buyers of low-cost housing units can take a loan for 10 years, he said.

“We can lend money for 10-year instalments to buyers. If we reduce the down payment from 30pc to 20pc, it will be difficult [for people] to pay back the remaining 80pc in 10 years. Only if we lend [money] in long period, can we reduce the down payment.”

In addition, they are also arranging to sell the apartments with K10 million for those who earn an income of K300,000 per month, he said.

The regional government is coordinating with the Central Bank of Myanmar to provide long-term loans to people who do not possess ownership of properties.

If the permit goes through from the Central Bank, long-term housing loans can be given to buyers, Yangon Region Chief Minister U Phyo Min Thein said during a meeting held at the Union of Myanmar Federation of Chambers of Commerce & Industry (UMFCCI) in April.

For low-cost housing purchases, people must have saved between K100,000 to K200,000 on a monthly basis and units will be sold to those who have savings, which is equal to the initial down payment, U Win Zaw said.

“We will lend for long periods without taking any collateral. But we need trust between the bank and money borrowers.

“They have to save between K100,000 and K200,000 per month and they are free from taxes as the amount is less than K400,000 and K500,000,” he added.

People who saved up money to buy a house will get an interest of 8.5pc per year.

The Construction and Housing Development Bank opened in 2014 with K10 billion from the Ministry of Construction with the aim of creating housing development for low-income citizens.

Currently, it is offering loans for 10-year instalments to buy houses and for construction companies and businesses.

Translation by Khine Thazin Han