Developers want review of housing subsidy policy

Developers want review of housing subsidy policy

JAKARTA (JP): Private developers are pressuring the
administration to review its policy on low-cost apartment
funding, saying that they can no longer subsidize the cost.

The assistant to the City Secretary, Prawoto Danoemihardjo,
said Saturday that developers had urged the administration to
concentrate on houses or apartments for people whose monthly
salaries can support the purchase of apartments or houses.

To support the city's program to house slum dwellers, a
Gubernatorial Decree No.540/1990 requires real estate developers
to help building low-cost apartments.

The developers construct the apartments, but the prices of the
apartments are set by the administration.

For example, an apartment unit priced at Rp 13 million
(US$5,652), developers are asked to subsidize Rp 6.5 million.

This policy is meant to help poor people who want better
housing.

However, due to various factors such as land and construction
costs, only four out of 70 developers have fulfilled the
requirement.

Given this reality, Prawoto said, last Wednesday the
municipality decided that developers are now required to pay a
percentage of the value of their housing projects to the
administration.

The percentage is yet to be announced.

The developers' proposal to change the target market is
"interesting", Prawoto said, because in reality many original
owners of apartment units have sold or leased their units on.

But the Governor has not responded to the proposal, he added.

Earlier Yan Mogi, an executive of the city branch of the
Indonesian Developers Association, REI, said rocketing land
prices are the main problem.

Prawoto said developers have said they are willing to forgo
profit from apartments, but are unwilling to continue subsidizing
the program.

"By changing the target market to those with higher, stabler
incomes the developers hope to be able to sell the units at
higher prices, and thus at least cover construction costs,"
Prawoto said.

Prawoto argued that the sale or lease of low-cost units by the
former slum dwellers is caused by high demand for the units.
Former slum dwellers often say they won't be able to afford the
installments in the long run.

"Many of the original owners have moved out of their
apartments; and this shows that people with steady jobs who do
not have homes yet are interested in the units," he said.

The total demand for low-cost apartments in the city is 10,500
units per year, yet each year the city administration is only
able to build 3,150 units.

From 1985 to the present a total of 7,163 low-cost units have
been built, ranging from 18 square meters to 54 square meters in
width.

The municipality is still building more than 1,200 units,
scheduled for completion by next year.(yns)