Moving Away from Mortgages

Monday, 7 December 2015

Moving away from mortgages

 

WHEN I read the news reports about Muhammad Azree’s container home (pix, Bernama), I was excited. This young man was brave enough to think out of the box to get his own home without tying himself to a long-term mortgage. 

Owning a house is becoming a luxury instead of a necessity in Malaysia due to the increase in property prices. In Klang Valley, prices have increased by at least 17% between 2009 and 2011. 

The reasons often cited for the hike in price are that demand is more than supply, and rise in construction costs in terms of material, land and labour. The high mortgages offered by banks, which is up to 90%, could also be a contributory factor in this price increase. Since some people can afford to buy property at higher prices through housing loans, the price would surely increase. This is a common phenomenon where the rich own multiple homes while the poor are not able to afford any. Mortgages ensnare most people for life, and they are unable to have enough to enjoy a better life. 

People need to have alternatives to owning a home, and for this we could look at Sweden for a good example. JAK Members Bank in Sweden is a cooperative owned by its members who pay a membership fee. Members accumulate “savings points” and then use these when applying for a loan. The bank does not charge interest on the loan and no interest is paid for the savings. All administrative and development costs are paid for by membership and loan fees. It is a community effort to cultivate an interest-free economy. Islamic banks especially can look into the feasibility of starting a similar business model in Malaysia. 

Other alternatives would include using different modes of accommodation, and Azree has given us an example. The Tiny House movement in the US has been gaining traction and is now becoming very popular among the young and old. The tiny homes complete with a functioning kitchen, shower and compost toilet are quite comfortable. 

In the US, one does not need to own land for their tiny home. The community of tiny homeowners has various options to park their homes. They have many websites where the community gets feedback on rental spaces in other people’s backyards, land for rental and mobile home parks, thus giving them many options. 

There are two things that tie an individual to debt – a vehicle and a home. So it makes sense to have a two-in-one – live in your vehicle. Vans and buses can be converted to homes. Young professionals can park their van-cum–home in their office parking lot. 

There are many public parking lots that are empty at night and individuals can use these for their mobile home.

These ideas can generate new businesses and at the same time solve the housing problems – building tiny homes, converting vans into homes like a recreation vehicle, and collecting rental from car parks, backyards, unused land and mobile home parks. 

They can also help to reduce the cost of houses and speculation in the housing market. The policy makers can enable these alternatives by passing laws for mobile home parks, or making it easier for those who choose these alternative options. 

These options give an opportunity for young people to own homes without tying themselves into debt. 

KULSANOFER SYED THAJUDEEN

Petaling Jaya