Published in NST-PROP
A Buyer Watch Article by National House Buyers
Revamp of present delivery system long overdue
The National House Buyers Association (HBA) lauds
Prime Minister Datuk Seri Abdullah Ahmad Badawi's suggestion that
developers should build-then-sell and 'have funds in hand before
embarking on projects".
We are touched by his concern "that people who
have paid for houses later found the project abandoned".
It has been our suggestion that
build-then-sell (BTS) be the system of house delivery. Through the
years, buyers have been consistently disappointed with the quality
of their completed houses in addition to uncompleted projects, and
in the worst-case scenario, developers abandoning projects
altogether. It is unacceptable that prospective buyers have to rely
on developer's reputation, honesty, goodwill and financial security
to deliver their houses. It is time to take a proactive step to
protect future buyers.
Objections to and reasons for not implementing BTS
have been put up by some in the industry. This is only to be
expected as the present method of delivery immensely favours the
industry and it will fight 'tooth and nail' for the status quo.
There bound to be arguments and confusion. We hope the Government
has the will to see this through.
A revamp of the present system of delivery is long
overdue and because it is mooted by the nation's chief executive, it
deserves the full support of politicians and the rakyat.
Having said that, the BTS concept is probably too
big a paradigm shift. Hence, what we propose is a variant of the
concept to be adopted, leading to full embrace of the system.
The BTS variant
We propose buyers pay 10 per cent upon the signing
of the Sale and Purchase Agreement (SPA). The developer's lawyer who
is also the stakeholder will then hold this payment and the
developer will have no access to it. The buyer will not make any
further payment until the house is completed and issued with title
and Certificate of Fitness for Occupation. Only then will the buyer
be required to make full payment.
In the event that the developer does not complete
the project within the stipulated timeframe, the buyer will have the
right to rescind the contract and have the deposit returned together
with any interest that may have accrued.
With this system, we believe more people will be
attracted to buying houses and this will benefit developers.
We see this concept as an equitable and practical
variant of the absolute BTS concept. The vendors will be assured of
the number of buyers who have paid the 10 per cent and they can
concentrate on building good houses and delivering them in good
time. The buyers, on the other hand, will (not) be exposed to the
risk of getting a house with substandard workmanship or face buying
into an abandoned scheme after having paid the bulk of the cost.
The financing for construction is the
responsibility of developers. Buyers should not be dragged into the
financing aspect of the construction. They should not be made to
carry the financial burden or should any risk for developers. More
crucially, they should not be made to carry the risks of the project
not being successful.
The overriding principle is that developers should
not be allowed to collect payment and reap profit from a venture
before they even deliver the products. We believe the future of the
industry and the well-being of the house buying public lie in the
reform of the present mode of delivery.
We agree with the the Prime Minister's statement:
"It is not right to take money first before the house buyers can get