Ensuring builders have the means

NST 13/08/2000 By Sheila Singam

Housing developers must have higher paid-up

The paid-up capital required of applicants for a housing developer's licence is expected to be increased under the forthcoming amendments to the Housing Developers Act.

Minister of Housing and Local Government Datuk Ong Ka Ting, in disclosing this, however declined to name the amount to be set under the amendments.

"The amount would be practical," he added.

The move is expected to affect not just the new players in the property market, but also those who renew their licences.

Currently, under the Housing Developers (Control and Licensing) Act 1966, an application for a housing developer's licence will be granted if a company has a paid-up capital of "not less than RM250,000".

The license is valid for three years in the case of landed residential developments and five years for stratified housing.

This condition has been criticised in the past by many consumer associations, which feel that it is too low an amount and allows just about any company that can scrape up the amount to venture into property development.

Consumer associations had also lamented that the lack of qualifications of those venturing into housing development, saying that it should be restricted to those having some knowledge of  building.

Ong said there would be no setting of conditions on professional eligibility for those wanting to embark on housing developments.

"We do not want to over-regulate the industry and cause it to come to a standstill. We must remember that many of the good housing developers now may have had no experience in the beginning."

The minister's revelation on the proposed increase in the paid-up capital has elicited positive response from a number of non-governmental organisations.

President of the International Real Estate Federation's Malaysian chapter Datuk Alan Tong Kok Mau said: "It is a timely move, as the amount of RM250,000 was fixed more than 30 years ago, when house prices were much lower."

He said the increase "would not harm the housing industry", but on the contrary, help improve it.

"A company which does not have a good sum of money in hand should not embark on property development."

However, he declined to comment on the quantum that should be set under the new amendments.

House Buyers' Association chairman Datuk Zainuddin Bachik was in favour of the move and said that the quantum should be increased ten-fold to RM2.5million.

He said the capital values of houses had increased by more than ten times over the past 30 years since the Act first came into effect and that the paid-up capital should commensurate with the price of houses today.