KUALA LUMPUR, March 21 — Putrajaya should adopt the Penang’s Shared Ownership Scheme (SOS) and provide interest-free loans to help lower income groups afford low cost homes, Penang Chief Minister Lim Guan Eng said today.

He said inflationary pressure has made it virtually impossible for Malaysians who earn RM3,000 or less to afford buying their own homes, especially with the sluggish growth in wages.

“With such high rates of outstanding borrowings that is 7 times their annual incomes, it is difficult if not impossible for lower-income groups to get approvals of housing loans from banks or financial institutions,” he said in a statement.

“For this reason the Penang state government has introduced the Shared Ownership Scheme (SOS) for low-cost houses to help lower-income groups,” Lim added.

The DAP secretary-general explained that under Penang’s SOS, the state government hands out loans of up to 30 per cent of the property price — sans interest — to those who qualify, greatly increasing their chances to qualify for loans to cover the remaining 70 per cent.

Lim noted that those in the lower income bracket are already under pressure to keep up with the rising cost of living, having borrowed RM230.2 billion worth in household debt or 27 per cent of the RM854.3 billion in total household borrowings last year.

“Bank Negara should realise that the reason for is that our income levels are stuck in a ‘glacial trap’ with inflation outpacing wage rises.

“This has forced many households to rely on credit loans to make ends meet and even resort to loan sharks when they are unable to get loans from financial institutions,” he said.

He slammed the central bank as being “short-sighted and uncaring at best” for allowing household debt levels to hit an all-time high of 86.6 per cent of Malaysia’s gross domestic product (GDP) and for dismissing it as not having any effect on the nation’s financial stability.

The increase in household debt is a strong enough reason for Bank Negara to reinstate the recently outlawed Developer Interest Bearing Scheme (DIBS) to enable individuals to own their first home.

“There have been many complaints of banks not approving housing loans to lower-income groups because of their low repayment ability.

“For the sake of housing democracy, DAP urges Bank Negara to introduce a SOS for affordable homes and public housing to help first-time buyers qualify for loans to buy their own homes,” he said.

Last year when unveiling his 2014 Budget, Prime Minister Datuk Seri Najib Razak announced that the DIBS would be banned to clamp down on property speculation and the rapid rise in property prices in the country.

Under the scheme, developers incorporate interest rates on loans in house prices during the construction period, relieving housebuyers of the need to make progressive payments in exchange for higher property prices.

Najib also increased the rate of real property gains tax (RPGT) to 30 per cent for properties sold within the first three years of purchase, tapering off to 20 per cent in the fourth year and 15 per cent in the fifth year, in a bid to further rein in rampant speculation.