More low-cost housing planned

The Jakarta Post, Jakarta

The government is currently drawing up plans to provide more of the country's low-income families with affordable housing.

The new scheme will enable low-income families to obtain low-cost apartments, with down payments and interest on loans to be partly paid by the government.

"The scheme is being developed to help people who would otherwise have problems paying the down payment on a house," Tito Murbaintoro, the assistant to the deputy public housing minister for housing financing, told Antara on Tuesday.

The government will cover down payments, ranging from between Rp 5 and 7 million (US$530 and $745), depending on each family's financial situation.

As part of the scheme, the government will also cover interest payments of between 7 and 9.5 percent for the first four to eight years.

A 2007 public housing ministerial decree stipulates the subsidy amount to be paid to each family in accordance with their household income.

A person with a monthly income of between Rp 3.5 to Rp 4.5 million will receive a subsidy of Rp 5 million for the down payment on a house, while those earning Rp 2.5 to Rp 3.5 million per month will receive Rp 6 million. Those who earn between Rp 1.2 and Rp 2.5 million per month will receive Rp 7 million under the scheme.

Tito said the proposed scheme, which is currently being discussed with the Finance Ministry, was expected to be implemented next year in line with the government's vision to provide affordable housing to low-income families.

Potential buyers will be encouraged to rent their apartments first before applying for ownership.

"They will be allowed to rent the apartments for up to five years. Then they will be expected to buy them through credit facilities provided," Tito said.

The government's renewed commitment to providing affordable housing for low-income families was announced by Vice President Jusuf Kalla last month.

"The government will not suffer losses by providing these subsidies. The more we develop houses, the more the national economy will grow and the more income tax the nation will receive," he said.

The government has allocated Rp 800 billion for low-cost housing in the 2008 budget, a 160 percent increase from 2007's figure of Rp 300 billion.

The subsidies in 2008 are designed to help low-income families purchase either low-cost apartments or modest houses.