The rising cost of living and the need for more reasonably priced house options have resulted in a higher demand for affordable housing in Malaysia.

Fortunately, various initiatives have been made to encourage affordable housing development. This initiative aligns with the National Housing Policy, which aims to provide quality and affordable homes for all Malaysians.

But what exactly is affordable housing? And why should you consider buying it?

5 Affordable Housing Schemes in Malaysia

Perumahan Penjawat Awam Malaysia (PPAM)
- The PPAM scheme is an affordable housing scheme that prioritises comfort in size, design, quality, location, and housing price for civil servants. This scheme aims to enable civil servants, particularly young civil servants who don't own a house with a salary under RM 10,000 (individual), to purchase quality homes with sizes ranging from 850 - 1500 sqft in strategic locations at reasonable prices or below market price.
- Eligilbity Criteria:
  - Age: 18 to 60 years old
  - Property Price: RM90k to RM300k
  - For Malaysian civil servants only
  - Where to Apply: http://www.ppam.gov.my/
Perumahan Rakyat 1Malaysia (PR1MA)
- PR1MA homes are designed for middle-income earners, with developments located in prime locations with good access to amenities and public transportation. They can be purchased as your first or second home only. PR1MA homes are located across Malaysia, from small towns to big cities. They are convenient and comfortable and come in various sizes to suit the needs of different families.
- Eligibility Criteria:
  - Age: 21 and above
  - Monthly Household Income: RM2,500 to RM15,000 for single/joint applicants
  - Property Price: RM100k to RM400k
  - Where to Apply: https://www.pr1ma.my/
My First Home Scheme / Skim Rumah Pertamaku (SRP)
- This scheme is for first-time homebuyers earning a gross monthly household income of up to RM10,000. The scheme allows them to obtain up to 110% financing from participating banks, so they can purchase a home without having to make a down payment and is further supported by Cagamas SRP Berhad (“CSRP”), which will guarantee the loan amount for up to the first 20% on a ‘first-loss’ basis. Although there are additional criteria for properties that cost up to RM300,000 are only eligible applicants with a gross monthly household income of not more than RM5,000.
- Eligibility Criteria:
  - Age: 35 and below
  - First-time house buyer
  - Monthly Household Income: Max. RM10,000 for single/joint applicants
  - Property Price: Up to RM500k
  - Find out more: https://www.srp.com.my/
Residensi Wilayah Keluarga Malaysia / RUMAWIP
- To put it in simple terms, Residensi Wilayah Keluarga Malaysia (previously known as RUMAWIP) is an affordable home for individuals with a middle income who is born, residing, and working within the Federal Territory. The program is focused only in the Federal Territory of Kuala Lumpur, Putrajaya, and Labuan. This program offers affordable housing with three (3) bedrooms, two (2) bathrooms, a kitchen, living room, dining room, and yard, as well as in the form of stratified houses with priority on younger Malaysians from 21 years old and above with household income not exceeding RM10,000 per month for single / non-married applicants or does not exceed RM15,000 per month for married applicants.
- Eligibility Criteria:
  - Age: 21 and above
  - Monthly Household Income:
    - Up to RM10,000 for singles
    - Up to RM15,000 for couples
  - Property Price: Up to RM300k
  - Where to Apply: https://residensiwilayah.kwp.gov.my
My Selangor Home / Rumah Selangorku
- My Selangor Home - Rumah Selangorku is focused on low-cost homes, low-medium-cost homes, and medium-cost homes for low to medium-income households living in Selangor. This affordable housing program limits house application types (different housing price ranges) according to household income threshold. The breakdown is as follows:
  - Type A House Application: Household income (husband and wife) does not exceed RM3,500.00 - For homes, prices approximately starting from RM 42,000.00.
  - Type B House Application: Household income (husband and wife) does not exceed RM7,000.00 - For homes, prices approximately starting from RM 100,000.00.
  - Type C House Application: Household income (husband and wife) does not exceed RM10,000.00 - For homes, prices approximately starting from RM 195,000.00.
  - Application for Type D, Type E and Special Type E Houses: Household income (husband and wife) does not exceed RM14,500 - For homes, prices approximately starting from RM250,000.00.
- Eligibility Criteria:
  - Age: 18 and above
  - Monthly Household Income: Up to RM14,500
  - Property Price: RM42k to RM250k
  - Where to Apply: https://ehartanah.lphs.gov.my/

Benefits of Affordable Housing; Why would you consider buying it?

Budget
If you've been surveying around for houses, you'll discover the housing prices, especially in Klang Valley, can be relatively expensive, with just a studio unit starting from RM400,000. Hence, affordable housing is the budget option with 3-bedroom units with an average price tag of RM300,000.
Bigger Units; Lower PSF
You may want to start a family soon or just need more space. Regardless, a one-bedroom home of 300+ sqft won't be enough to fit your needs. Affordable homes typically come in the form of 3-bedroom units of approximately 900+ sqft at an affordable rate as it is part of the government's set requirements of an 'affordable home'. The total price of affordable housing can cost 2~3x cheaper than a unit of similar size within the same area.
Suitable For Young Adults & First-Time Homeowners
The beauty of affordable home programs in Malaysia is most of them are designed and prioritised for young adults and first-time homebuyers. Affordable homes may even be considered 'below market' rate homes, with some programs offering zero down payment so young Malaysians can have a space of their own.

Drawbacks of Affordable Housing; What would make you think twice about buying it?

Restrictions on the Sale or Transfer of Property
Affordable homes are not suitable for investment properties, especially during the first few years of buying them, because there will be lock-in periods where you are not allowed to sell or rent out your property for several years. In some cases, you will even need to appeal for approval from relevant authorities to sell your property. This restriction is due to the intention of affordable homes being built for Malaysians to own homes, not to make additional income from them.
Uncertain Application Process
When it comes to buying affordable homes, cash is not necessarily king. Even if you can afford the property, you may not be able to get what you applied for. After fulfilling all the requirements for the application, you will need to ballot for the development of your choice. If you are entitled to it, you will need to 'compete' for a unit or be placed on the waiting list with no definite waiting period.
Lower Quality of Materials
Affordable homes are not built to be 'profitable' developments as they are more of a requirement set by the government to build homes for low-middle income groups; they are made to be 'affordable'. Hence, the quality and outcome of affordable homes may not be as luxurious as the rest of the developments in the market. You will need to lower your expectations from the 5-star resort-style facilities or advanced multiple-tiers security features, as commonly advertised by some other developments.

Conclusion

Affordable homes in Malaysia can be a good or bad option depending on the circumstances and intention of purchasing. Affordable homes are an excellent starter home option for young Malaysians (typically between 21 - 35 years) with low-medium income looking to start a family soon or get a space of their own due to a low barrier of entry (low down payment requirement) and a reasonable monthly payment.

However, for property investors, perhaps buying affordable homes at prime locations does seem like a good investment opportunity for rental income. But it will be best to do due diligence on the restrictions, consider the challenges of renting out the property as it won’t be the same as renting out the usual residential/commercial property, and be considerate to those who can only afford to buy the property for their own stay.

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