A plan by the government to provide housing for the underprivileged has been welcomed as "timely" by the Real Estate and Housing Developers' Association (Rehda).

"It will not only help the citizens, but also promote homeownership and drive the economy," Rehda president Ng Seing Liong said.

The move is particularly significant as it comes especially at a time when private developers are worried about the escalating cost of building materials.

Deputy Prime Minister Datuk Seri Najib Razak unveiled the plan earlier this week, under which single mothers, senior citizens and the handicapped will be able to buy affordable housing earmarked for the underprivileged.

The government will provide the funds to build 40,000 housing units throughout the country for those in dire need of shelter, and offer endfinancing via Syarikat Jaminan Kredit Perumahan Bhd (SJKP or Housing Credit Guarantee Company Bhd), which has been allocated an initial capital of RM1 billion. SJKP will offer housing loans of up to RM60,000 and repayment periods of up to 40 years.

The proposed 40,000 units will be part of the 270,905 low- and medium-cost units to be built under the Ninth Malaysia Plan.

"Although the cost of building a low-cost house is between RM65,000 and RM75,000, the government has capped the selling price at between RM30,000 and RM42,000," Najib said.

Rehda's Ng said the setting up of SJKP to offer loans for an extended repayment period will greatly assist underprivileged people in the lower income groups to own homes.

However, he cautioned, red tape in the approval and allocation process should be eliminated, and the process of applying for the loans by the underprivileged should be made simple and hassle-free.

With the government playing a prominent role in supplying low-cost housing through the National Housing Department, he said, private developers will be able to concentrate on meeting general housing needs based on the market forces of demand and supply.

The low-cost housing quota imposed on private developers should eventually be phased out and consigned solely to the federal authority, Ng said.

"Rehda is optimistic that with the incentives and relaxation in financing through the creation of SJKP, the affordable housing sector of the property market will be given a big boost."