Urban Well-being, Housing and Local Government Minister Noh Omar said his proposal to allow developers to act as money lenders was meant to give home buyers a choice.

“This proposal is to give home buyers a choice, if they cannot get a loan from the bank, they can do so from developers.

“It is up to home buyers to decide. The choice is in their hands and this is just a proposal,” he said in a Facebook posting.

He pointed out that despite home buyers trying to buy affordable housing constructed by private developers, their applications for loans were still rejected by banks.

“For information, many affordable housing were being constructed by private developers.

“Some home buyers have even been offered to buy them, but they face problems with the banks,” he said.

Noh emphasised that the effort was two-pronged, which is ensuring there are enough affordable housing while home buyers can also get loans for them.

“This proposal was intended to give an opportunity to home buyers who cannot get financing from conventional banks while at the same time encourage developers to work with my ministry to provide affordable housing,” he said.

On Thursday, Noh said developers can now apply for moneylending licences to provide loans to home buyers who wish to buy their properties.

He had said the interest rate of the loan would be capped at 12 percent with collateral or up to 18 percent without collateral.

In the latest Facebook posting, Noh said the move was just a proposal and promised that his ministry will conduct a thorough study on the matter.

Finance Minister II Johari Abdul Ghani had opined that the plan was not sustainable, while several NGOs including the National House Buyers Association criticised the move.

Johari had pointed out that if home buyers couldn’t obtain loans from bank at an interest rate of between four to six percent, it was not logical to expect them to be able to cope with a loan that imposed interest of up to 18 percent.

He had also pointed out that developers had limited funds whereby they need to take out bank loans to finance their developments, and therefore questioned their capability in also providing loans to home buyers.