Rehda calls for win-win approach
30/09/2005 The Sun

THE build-then-sell method should not be made mandatory, but could coexist with the present sell-then-build method, says Datuk Jeffrey Ng, president of the Real Estate & Housing Developers' Association (Rehda) Malaysia.

The existing system is a proven one and has successfully delivered more than three million completed homes, Ng says in a statement. Housebuyers must be given the right to choose to buy completed homes in the primary or secondary market, or homes under construction, based on their needs and affordability. Under the present system, thousands of completed homes are made available for buyers to choose from, which essentially, is build-then-sell is all about!" he adds.

The coexistence of both systems and the success of anyone system will be determined by market forces, Rehda believes.

Ng says under the proposed 10:90 variant, the construction industry will shrink further in terms of business activities and employment, with demand for materials, professional services and downstream businesses falling. Rehda also anticipates house prices will rise between 30% and 50% and annual housing production will be reduced by at least 60%.

Many industry players and trade associations such as architects, engineers, contractors, developers and others have voiced their opposition to making the build-then-sell method mandatory.

On the issue of abandoned projects, Ng notes that amended housing legislation is sufficient to act against errant developers. The activities of developers are now more regulated and more amendments to legislation will afford greater protection to housebuyers.

Rehda also says the proposed 10:90 variant is a copy of the Australian system. It argues that conditions here and in Australia are not the same and that developers here are subject to conditions like subsidising low-cost projects, making contributions for utilities, building infrastructure and complying with quotas and discounts.

The association calls for a "balance between our country's economic interest and a small group of vested interests" and agrees that housebuyers should not be made to suffer hardship caused by errant developers.

"It is important to acknowledge that there are many thousands of housebuyers who are satisfied with the outcome of the present system delivered by good and responsible developers in terms of product satisfaction, price affordability and lifestyle creation," Ng said.

The House Buyers' Association (HBA) has proposed a 10:90 concept to replace the sell­then-build model practised by most developers. The proposal is a variation of the build-then-sell concept broached by Prime Minister Datuk Seri Abdullah Ahmad Badawi to reduce the number of abandoned projects.

Under sell-then-build, investors buy a property off the plan, with the risk that the project could be abandoned or not built to specifications. "What we are proposing is for housebuyers to be insulated against the risks of buying a house," HBA vice-president Brig-Gen (B) Datuk Goh Seng Toh said.

HBA has presented its proposals to the Public Accounts Committee (PAC). PAC chairman Datuk Shahrir Abdul Samad has criticised the Ministry of Housing and Local Government for being too defensive of developers. The minister Datuk Seri Ong Ka Ting said the decision over which method to implement would be taken by the Cabinet and not the ministry. Ong also said that the ministry was compiling feedback and information from various quarters before presenting a paper to Cabinet.

Aside from protecting housebuyers, the build-then-sell model has several other advantages, the HBA argues. It would mean developers would undertake launches of properties they are confident of, conduct stringent visibility studies and produce better-quality houses.