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Saturday, October 11, 2014

Putrajaya failed to keep promise on build-then-sell system, house-buyer group says

Budget 2015 fails to include Putrajaya's promise to introduce a build-then-sell system. – The Malaysian Insider file pic, October 11, 2014.Budget 2015 fails to include Putrajaya's promise to introduce a build-then-sell system. – The Malaysian Insider file pic, October 11, 2014.
The government has reneged on a promise to introduce a build-then-sell (BTS) system to curb errant developers from abandoning housing projects by failing to include it in Budget 2015, the National House Buyers Association (HBA) said.
HBA honorary secretary-general Chang Kim Loong said the BTS was first promised by then housing minister Tan Sri Chor Chee Hueng in 2012, who said the system would be made mandatory by 2015.
But the current minister, Datuk Abdul Rahman Dahlan, made a "U-turn" on the matter when he recently proposed that developers were allowed to choose between BTS or the "sell-then-build" concept.
"This has drawn the flak... (from) the house-buying public and consumer associations, especially the victims of abandoned (housing projects) and victims of unlicensed developers," said Chang in a statement reacting to Budget 2015.
Under the BTS 10:90 system, house buyers only need to fork out the initial downpayment of 10% when booking a house, and do not need to make any further payment until the vacant possession of the property is delivered to them, whereupon the balance 90% will be paid.
Chang said this was a safer home delivery system that would protect buyers from errant developers. It would also drastically, if not totally, eliminate cases of housing projects being abandoned.
"Besides causing a dilapidated environment, abandoned projects also cause unnecessary hardships to many people as they need to continue with their monthly bank installments for their housing loans, and in many cases unless the projects are successfully revived, there will be no end in sight as to how long they have to bear their ordeal, " he said.
Chang said that the only solution for abandoned housing projects has been government intervention, using tax payers' money and "white knights" to rescue such projects.
On the flip side, Chang said it was good that the government had rejected calls from developers and other groups with vested interests to reintroduce the Developers' Interest Bearing Scheme (DIBS) for first-time house buyers.
The banning of DIBS announced in Budget 2014, said Chang, has been effective in curbing the unbridled escalation of house prices, and should be continued with the BTS scheme.
"DIBS must continue to be prohibited and outlawed. Do not allow 'first-time house buyers’ to be sucked in... (by allowing developers) to enjoy profits at the expense of house buyers bearing the risks on their behalf."
In its statement, HBA also lauded the government's move to introduce more affordable housing and assistance to first-time buyers.
But it expressed caution in several areas, including concerns about the "political accountability" of the PR1MA organisation.
"Why is it not under the Housing Ministry which has the appropriate experience?" asked Chang, pointing out that it operated under a unit of the Prime Minister's Department "in relative obscurity from public scrutiny and high-level protection for its affirmative action aspect."
Chan also said that PR1MA was not under the current legislation that regulates housing such as the Housing Development (Control & Licensing) Act 1966.
He said PR1MA buyers will not have the protection under the act and would not be able to seek justice at the Housing Tribunal if shortchanged.
- TMI

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