Developers asked to pay fee for cheap apartments
JAKARTA (JP): The city administration has decided that real estate developers will no longer be obliged to build low-cost apartments in the city, but instead will be required to pay a percentage of the value of their housing projects to the administration.
Under this scheme, the administration will build the apartments instead of the developers.
The assistant to the city secretary, Prawoto Danoemihardjo, said yesterday that the decision was made in an effort to boost the development of low-cost apartments because many developers appear reluctant to build low-cost apartments as required by the administration.
The step was taken after the administration failed to enforce Gubernatorial Decree No.540/1990 which required housing developers to build low-cost apartments in Jakarta.
Under the decree, private developers were required to provide 20 percent of their commercial sites for the building of low-cost apartments.
However, only four of 70 developers have complied with the regulation to date.
"The administration has decided to accept funds from the developers in compensation for their obligation. But we are still assessing the percentage of funds to be paid," Prawoto said.
He refused to name the percentage, saying it should be reported to the governor first.
A source at the city administration who refused to be named said that developers will be required to pay six percent or seven percent of the value of their projects to the administration.
"A whole project consists of the cost of the land for the project according to the tax office plus the total cost of the project," the source said.
The source said the percentage should be reviewed because the Indonesian Real Estate Association has objected to the percentage, proposing that it should not be over five percent.
Percentage
The chairman of the Jakarta branch of the association, Nugroho Suksmanto, said during a meeting with the Minister of Housing Affairs Akbar Tandjung and officials of the city administration yesterday that the association could only afford to pay a five percent fee.
"We cannot provide more than five percent of the total price of the land according to the tax office," he said.
Nugroho said developers in Jakarta control 415.382 hectares of land worth Rp 2 trillion (US$869.56 million) and the association predicted that it can collect Rp 100 billion from its members to help the administration build 15,000 low-cost apartments over a period of five years.
He explained that the administration will need at least 36 hectares of land to build the apartments and the total cost for land appropriation is estimated at Rp 70 billion.
The city housing agency estimates that every year the city needs 70,000 homes, 30 percent of which should be apartments, including low-cost apartments and condominiums, due to land shortage in the city.
Fifty percent of the demand for apartments is fulfilled by private developers who build luxurious apartments for the middle and upper classes, while low-cost apartments are built by the city administration.
However, due to financial problems the city administration can only afford to build 3,150 low-cost apartments per year, or 30 percent of the demand of 10,500 apartments per year.(yns)