RESIDENSI Wilayah Keluarga Malaysia (RWKM or formerly RUMAWIP) scheme was introduced to address the issue of affordable housing shortages in Kuala Lumpur for middle-income households.
RWKM is built in prime areas and priced between RM150,000 and RM300,000 for approximately 850 square feet (sqft).
This is substantially cheaper than the market value of comparable private home that sells for more than RM850,000.
While affordable housing scheme is beneficial to society, it is detrimental to the value of its mixed private high-end homes and surrounding properties.
Legasi Kampong Bharu, a distinctive affordable and high-end condominium mixed development has revealed a downward pressure on property value, rental rates and investment desirability.
Although it was originally designed for the development to be in separate blocks, the decision was later changed for an unknown reason.
206 RWKM units were built in Wing 1, along with 235 condominium units starting on level 26 upwards and 198 premium units facing KLCC built in Wing 2.
All amenities are shared, despite many of the condominium buyer’s claims that their salespersons verbally explained otherwise prior to signing the contract.
In March 2021, many Legasi condominium middle-income buyers faced a sudden mortgage burden when they took possession during the COVID-19 outbreak.
Throughout their struggle to find renters due to the pandemic, these buyers failed to protect their sale and rent value.
Unaware and/or opportunistic real estate negotiators advised the condominium buyers to market the rental value low – nearly half less than the monthly mortgage payment – to compete with RWKM units.
Legasi Kampong Bharu is a transit-oriented development built on a historical Malay heritage enclave.
The premium units in the condominium have unobstructed views of KLCC, Saloma Bridge, other significant skyscrapers and a touristic attraction cemetery. These iconic structures and attractions may very well be reached by foot in 5–11 minutes.
What is more, the LRT station is a 1.5-minute walk from Wing 2 while the Kuala Lumpur General Hospital and National Heart Institute are around a seven minute drive.
The rental rate for such location and high-end homes in the surrounding area is double that of what Legasi condominium buyers are currently offering.
Nonetheless, to avoid financial bleeding, many condominium buyers bite the bullet and accept the low rate, as evidenced on the websites of several real estate agents, such as iProperty and PropertyGuru, with approximately RM2.60/sqft fully furnished in contrast to the average market value of RM4/sqft.
“We should maintain the monthly rate of about RM4,000 for condo units to attract the right tenant who matches Legasi’s target market – professionals, so as to maintain Legasi’s prestige. You can rent RWKM units for less than RM2,000 per month, which is comparable to the old PKNS units next door or flat units on Jalan Raja Alang.
“So, how do we maintain the prestige of Legasi?” asks Mr Rashid, one of the premium unit buyers at Legasi condominium.
The issue escalates when RWKM buyers undertake vacation homes, diminishing the daily rate and prestige of Legasi condominium while also raising concerns from neighbouring properties near KLCC.
“The RWKM affect the condominium’s vacation homes when they start doing it and then putting the rental rate low”, says Azmir, a Legasi condominium vacation home entrepreneur whose house been published in magazines.
This has prompted people to question about the true purpose of RWKM. It also raised inquiries regarding the categories of buyers who purchase Legasi’s RWKM.
There is a lack of transparency on defined standards for regulating RWKM other than the fact that it should not be sold within 10 years and should not be rented (which has now been altered to rent exclusively to locals).
If not specified comprehensively, the directive may be altered from time to time. When it comes to RWKM rent restrictions, there is a gap between the federal government and the city council.
According to Ana Najam, the representative of Legasi Kampong Bharu Condominium buyers’ vacation home, “In general, we know that RWKM should not operate a vacation home as the real purpose of affordable housing would not be met.
“I wrote to the Ministry of Federal Territories about RWKM vacation home, but I was told that it was outside of their jurisdiction and that the issue and guidelines were under the authority of JMB/MC. On the other hand, the city council advised me to refer to the ministry. Regulations are not clear.”
While it is acknowledged that a housing shortage in the city centre is a perennial issue, mixing RWKM with high-end condominium homes such as Legasi Kampong Bharu may be the least effective path to address the affordability concerns.
If the goal of policymakers is to help as many middle-income households as possible, then a strategy of interventions based on RWKM rules and enforcement must be established immediately. – MalaysiaGazette
Ts. Dr Hafizah Mohd Latif,
Senior Lecturer Department of Built Environment Studies and TechnologyUniversiti Teknologi MARA (UiTM), Perak Branch.