Authorities mull renting out low-cost housing

Published on 1 June, 2015 at Myanmar Times NewspaperWritten by Tin (Rubynar) Yadanar Tun

THE Yangon housing market may be cooling, but homes are still well beyond what the average worker can often afford.

Authorities are attempting to provide more government-funded housing but faces difficulty in getting the homes to those who need them.

U Win Naing, a director at the Ministry of Construction’s Department of Human Settlement and Housing Development, said it is also difficult to keep costs low enough during construction that all people can afford.

“We researched what people can buy, at what amount, and found the minimum is around K3 or K4 million [US$2700 to $3600]. But we can’t sell houses at the price, so we should rent public housing long-term at a cheap price,” he said.

Government officials also often have challenges keeping prices down. A project for 15 acres in Hlaing Tharyar township’s Shwe Lin Ban industrial zone, for instance, is aiming to sell units between K7.5 and K9 million by cutting out amenities such as elevators, though often units cost several times this amount.

Public housing for purchase is often awarded to buyers chosen by a lottery system, which are usually over-subscribed. However, often the winners will simply resell the property and pocket the difference. Those that do want to buy a unit in a low-cost project often have relatively strict financing terms, meaning they must put a large portion of its cost up-front, and pay off the home within a few years.

Rentals, therefore, may be more acceptable to a wider range of lower-income people than sales.

U Win Naing pointed to a few examples of long-term low-cost rentals in the past, including Yankin Housing, Pha Sa Pa La housing in Mingalar Taung Nyunt township, and Lan Thit housing in Insein township. He added that in many countries around the world, the state provides extensive support for low-cost housing, and advocated Myanmar could consider extending support.

Tenants also have responsibilities. They should fix up problems with their housing and repair damage, as the rental fees tenants pay in the low-cost projects are not enough to cover repairs, he said.

Still, the trend is toward more public projects. In January, Yangon Region announced it had earmarked K100 billion to build 10 affordable projects in the 2015-16 financial year.

At the time, officials said the aim is for no profit, but also no loss from the construction and sales.

The pace could accelerate as much of the existing public housing grows old, according to U Win Naing.

“Many old rental projects were built 60 years ago and are out of date. They need to be rebuilt,” he said. “More rental projects are needed.”

U Yu Khine, another director at the department, said it is a complex process to negotiate an upgrade to housing. If residents are in an outdated rental building, the Department of Human Settlement and Housing Development (DHSHD) can try to improve the project.

“We meet with residents in old rental housing and explain that the old buildings need to be rebuilt,” he said.

“But we give first priority to the residents’ desire. If the residents want our assistance with tearing down the building and putting up a new one, we will do it. If they don’t want this, we don’t rebuild,” he said.

Building a new building through the DHSHD involves negotiations over rental fees with tenants and negotiating costs with the construction companies. Despite the complexity, several projects have been built or rebuilt recently. Still, demand far outweighs supply.

In Yangon, there are about 10,000 public housing units under the DHSHD, while the city has a population of about 7.3 million.

Low cost apartments at the outskirt of Yangon