Build and sell concept beneficial to all

24/05/2004 The Star  RAVEEN RYAN SUNDRAM, Ampang.  (via e-mail)

I STRONGLY support Prime Minister Datuk Seri Abdullah Ahmad Badawi’s proposal to makedevelopers build houses first before selling them, “Build and sell”, (The Star, May 22).

This proposal will be a move to forming a consumer-based society, where the consumers can exercise their rights.

The benefits of the “build and sell” concept are:

BUYERS can view the finished product before buying. This will help to maintain the quality of housing projects;

BUYERS would not be concerned about failed housing projects, as the developers must ensure they have sufficient funds to complete the projects.

But if the inevitable happens, failed projects could be sold or auctioned off more easily, as the new project buyer would not have to fulfil the agreements made by the previous developer with its buyers.

This allows the new project buyer to demolish and start a new project or continue with the existing project;

HOUSE prices would be more stable and lower. Currently the developers only bear about 25% of the cost of development but enjoy a 200%-300% profit margin. To ensure that the houses are sold, they need to review the profit margins; and

SMALLER developers can be weeded-out, thus forcing them to form bigger consortiums by merging, hence increasing their capital for financing better and more quality projects.

Banks should also play a more active role now. Currently banks give out loans to a buyer on the basis of a “would be” completed house.

If the “build and sell” concept is implemented banks should give out loans to the developers instead, on the basis of a “would be” completed housing project.

Since most Malaysians cannot afford to buy houses now as the prices are ridiculously high, they are forced to rent.

This move by the Prime Minister will ensure house prices are reduced, hence allowing more Malaysians to own houses.