New Regulation on Provision of Subsidized Housing Loans

Minister of Public Housing has issued Regulation No. 11 of 2010 on Financial Aid for Housing Procurement and Settlement in the Form of Subsidy Facilities for Housing Loans/Financing (‘Regulation’). The Regulation implements Article 6 of Minister of Finance Regulation No. 124/PMK.02/2010 on the Procedures for the Provision of, Disbursement and Accountability of Housing Subsidy Funds for Home Ownership Loans.

The government initiated financial aid for housing programs to facilitate home ownership by low and medium socio-economic class members of the public. The financial aid is granted in the form of subsidies to assist with interest payments, down payments, installment amounts, interest rate ceilings, and additional funds for home construction and renovation. Previously several regulations have been issued to address housing loans for the public (‘Housing Loan’). The Housing Loan is a loan or financing facility offered by a loan or financing institution, which can take the form of a: subsidized housing loan, a subsidized micro housing loan, or a subsidized simple apartment housing loan.

The implementation of housing subsidies is conducted by the Center for Housing Financing, which is responsible to the Minister of Public Housing through the Financing Sector Deputy Minister of Public Housing and the Ministry of Public Housing Secretary. Finally, in cooperation with the Minister of Public Housing, the implementing bank serves as the loan or financing institution. And, under Article 4, has to verify the details of the potential Housing Loan debtor who will receive the benefit of the subsidies.

The application for subsidy disbursement has to be submitted by the implementing bank. The payment of the housing subsidy is then paid directly to the debtor through the implementing bank by way of a reimbursement mechanism. Articles 6 and 7 provide the general procedures to submit the application for subsidy reimbursement for: housing loans, syariah housing loans, simple apartment housing loans, and syariah simple apartment housing loans.

The Regulation repeals its predecessors: Minister of Public Housing Regulation No. 03/PERMEN/M/2007 (as amended by Regulation No. 07/PERMEN/M/2008), Regulation No. 04/PERMEN/M/2007 (as amended by Regulation No. 08/PERMEN/M/2008), Regulation No. 07/PERMEN/M/2007 (as amended by Regulation No. 15/PERMEN/M/2008), and Regulation No. 12/PERMEN/M/2008.

The Regulation has been in force since 27 October 2010.