Bar Council okays build-then-sell
25/02/2006 New Straits Times

HOUSE buyers can look forward to quicker delivery, better protection for their investments and improved quality should the country adopt the 10:90 Build-Then-Sell (BTS) model of housing delivery, says the Malaysian Bar Council.

"The 10:90 model is the way forward," its president Yeoh Yang Poh said."The present system does not work as the sell-then-build model does not adequately protect consumers. So a new system must be put forward in order to improve the industry."

At present, Yeoh argued, purchasers could lose what they have paid and could be left without effective recourse when projects are abandoned.

Those who have procured housing loans would still have to pay up, despite not having the product they have paid for.

Under the proposed 10:90 model, buyers need only pay 10 per cent of the purchase price into a trust account when signing a Sale and Purchase Agreement and the remaining 90 per cent when the house is completed.

"This matter can only be resolved if developers are required by law to adopt the build-then-sell model," Yeoh said.

He took this position at a joint press conference with the Federation of Malaysian Consumers' Associations, the Consumers' Association of Penang and the National House Buyers Association (HBA) last week.

Asked about the council's interest in the issue, Yeoh said: "The law is supposed to take care of problems faced by society, especially when it concerns something as basic as having a roof over one's head."

According to HBA, the Bar Council's endorsement of the proposal is the first step in a long process to garner support for BTS among industry players.

"Getting its support is a momentous achievement for us, as the Bar Council will lend tremendous weight to our cause," HBA Secretary-general Chang Kim Loong said.

"However, there is more to be done and we need more support from other institutions and major bodies involved in the industry," Chang said, adding that HBA's next approach will likely be the financial institutions.

The move to gather support for BTS arose from a statement made by Housing and Local Government Minister Datuk Seri Ong Ka Ting late last year that "firm commitment is required from all involved in the industry" before his Ministry can present a paper on this mode of housing delivery to the Cabinet.

However, the Real Estate and Housing Developers' Association (Rehda) - which opposes the move - said buyers should "have a choice" when it comes to choosing the housing delivery system.

According to its president Datuk Jeffrey Ng Tiong Lip, the proposed 10:90 concept and the current sellthen- build method should co-exist.

"Currently, there is no country in the world that practises BTS as its only system," Ng said.

"Making the proposed system mandatory will effect the country's home ownership agenda as well as the economy, because 60 per cent of the developers will go out of business."

Ng also pointed out that the present system has successfully helped in the construction and completion of 675,000 housing units by the private sector under the Eighth Malaysia Plan.

However, legal adviser to the HBA, Derek Fernandez, disagrees with Ng's claim that BTS will put many developers out of business.

"On the contrary, I believe it will compel them to take on greater financial responsibility, which in turn will ensure that projects are properly conceived, planned and carried out," Fernandez said.

As for the economy, he said improving the system of housing delivery would only result in improved quality. This would be a catalyst for attracting more foreign investments, which would boost the national economy.