Govt removes 60% salary limit for civil servants housing loans

The MoF has received the directive to be more flexible in issuing housing loans to public servants that will take effect immediately


CIVIL servants can now apply for housing loans beyond their 60% salary limit as part of the government’s effort to encourage home ownership among its employees.

Chief Secretary to the government Tan Sri Dr Ali Hamsa (picture) said the Ministry of Finance (MoF) has received the directive to be more flexible in issuing housing loans to public servants that will take effect immediately.

However, the amount of how high the salary limit could go has not been decided yet.

“We have directed the unit in charge of loans under the Treasury to be more flexible because houses are a basic need. Now, those in civil service can go beyond the 60% exemption,” he told reporters at the launch of the World Bank’s latest report on “Enhancing Public Sector Performance: Malaysia’s Experience with Transforming Land Administration”, in Kuala Lumpur yesterday.

Ali said the move was aimed to remove financing barriers for home ownership among civil servants.

“Under the 1Malaysia Housing Projects for Civil Servants (PPA1M), the government will provide 200,000 housing units.

We do not want loans to be an obstacle in this regard because every civil servant should own a home of their own,” he said.

In a circular issued by the Public Sector Home Financing Board, which came into effect on Oct 1, it was stipulated that the estimated repayment of home financing and deduction should not exceed 60% of the applicant’s gross salary — tightening housing loan eligibility requirements for civil servants.

Malaysian Property Legal Association deputy chairman Salkukhairi Abd Sukor was earlier quoted as saying that the move contradicted the government’s policy of encouraging people to own a house.

Permanent housing continues to be a pressing issue, as many among the government’s 1.6 million civil workforce still find it difficult to afford a home, despite the introduction of PPA1M and 1Malaysia People’s Housing (PR1MA).

The government had allocated RM2.2 billion in the recently tabled Budget 2018 to support various home ownership initiatives, such as the construction of more units under PPA1M and PR1MA.

Other measures include tax incentives, wider financing options and the enactment of a new Residential Rental Act.

However, this has also raised concerns of ballooning household debt within the civil service.

Data from the Congress of Unions of Employees in the Public and Civil Services (Cuepacs) revealed that over 49,000 civil servants in the country are at risk of bankruptcy.

Between 2013 and 2016, 3,276 civil servants were declared bankrupt with the figure estimated to rise every year.

Ali said the issue of household debt among civil servants must be clearly defined to determine the cause of the problem.

“There must be a differentiation between housing and consumption debt. Some do borrowings to buy furniture and handphones. In this case (easing loan requirement), the government is of the view that housing is a priority. We would like to see every civil servant owning their own houses,” he said.