The long-awaited Condominium Law passed in the closing days of the last parliament has failed to stimulate the housing market as expected, say industry insiders.
They are calling for a system of mortgage lending to be introduced to help would-be buyers. At present, the longest-term loan available is only three or four years, banking sources say.
Developers say a system allowing home buyers to borrow over a 30-year period, as is common in developed countries, is necessary to breathe life into the market.
“Although the Condominium Law allows the sale of apartments to foreigners, there hasn’t been much impact on sales,” said U Yan Aung, general manager of Asia Construction.
“What developers and customers need is longer-term bank loans to fund property purchases.”
Many hope the new National League for Democracy-led government will work with both local and domestic banks to introduce more flexible and long-term lending, which is of particular concern to the housing market, he said.
“A change in policy would allow foreign banks to offer long-term loans in collaboration with local banks. They do this in other countries, so I hope they will soon be able to do it here,” he said.
Myat Min Construction director U Aung Min said mortgage lending, coupled with the provision of more low-cost housing, was the key to increased sales.
“Providing long-term loans to customers is a big challenge for a developer. The best way is if the banks were to lend the money to home buyers at a low interest rate, like in other countries,” he said, adding that at present banks offered only short-term loans to buy fire insurance and other forms of insurance.
“Many buyers won’t apply for bank loans to buy an apartment because the term of the loan is too short and interest rates are too high,” he said.
But bankers say they will need government support and technical advice before being able to offer such loans.
“In the United States, banks offer 30-year mortgages to home buyers, with support from the government. How can Myanmar banks offer such a service without support?” said U Than Lwin, vice president of KBZ Bank.
In a three-way arrangement with construction companies, KBZ offers a three-year hire-purchase system for house buyers.
“At present KBZ cannot offer loans repayable over a longer period than three years. We would like to offer longer-term mortgages, but for that we would need a change in the law and cooperation with foreign banks,” he said.
No such law enabling long-term mortgage loans is currently on the books, he added.
“Once such a law is in place, we would also need foreign investment into the banking sector. The government does not have the budget to help with funding long-term loans at present,” he said.
An official at the state-owned Construction and Housing Development Bank that opened in 2014 said CHDB offered a four-year loan for the purchase of affordable and low-cost housing.
“We started offering this loan last May, but only for the purchase of government-owned units. Later we hope to work with developers to extend the service to other buyers, but not for condominiums,” he said.
U Kyaw Thu Ko, a manager at CB Bank, said his bank provided one-year hire-purchase loans for house buyers.
To bring in a longer-term loan, a change in the law and government help would be needed, he said.
Quoted from mmtimes.
