Insurance cover for abandoned projects
The Sun 06/09/2005
 
THE Real Estate and Housing Developers Association of Malaysia (Rehda) has proposed an insurance schema for developers, to cover the risk of their inability to complete projects.

Association president Datuk Jeffrey Ng Tiong Lip said, last Friday that the insurance scheme would also protect house buyers.

"If the project is abandoned for whatever reason, house buyers will be protected. They will either get the final product or their money back,” he said at a news conference at Rehda secretariat in Selangor last Friday.

Rehda would write to the Housing Ministry, Finance Ministry, Bank Negara and the House Buyers Association to come up with a mechanism to address the issue of abandoned property projects, Ng said.

"This insurance plan does answer the question of abandoned projects. The levy will come from the developers and at the end of the day, if all the developers were to come in and subsidize the errant developers, then for the sake and betterment of the industry, we have no choice,' he said.

"The details and mechanism of the levy; and whether it would be passed on to house buyers, will be discussed with the relevant authorities,' Ng said.

Rehda also wants the government to revive the Tabung Perumahan Projek-Projek Terbengkalai (Abandoned Housing Projects Fund).

It hopes the fund would be given special powers similar to those of national asset management company Pengurusan Danaharta Nasional Bhd to circumvent legal barriers for swift resuscitation and provide adequate funds for the recovery  of abandoned projects.

Rehda immediate past president Datuk Chen Lok Loi said the insurance scheme would be a selling point to house buyers.

"I think house buyers would not mind that this comfort (insurance) could be obtained through a small premium," he said

Ng said Rehda believed that there was no need to change the fundamentals of sell then-build model that had served the sector well for the past 40 years.

"The private sector has been able to successfully deliver 70% of the housing needs of the country and at the same time meet the multi-pronged objectives of the nation in generating economic growth, creating employment, meeting social needs in terms of low cost housing quotas and discounts to bumiputeras, ”he stressed.

Ng reiterated the system of build-then-sell as practiced in other countries would not work in Malaysia. He added houses would cost more under the build-then-sell concept than the present system of sell-then-build system.

The build-then-sell model should not be a mandatory requirement, he added.