Housing without tears
27/06/2006 NST Editorial

THE 60,000 buyers since 1990 whose dreams of owning their own homes had been shattered because the developers discontinued construction — and the persistence of the problem of abandoned housing projects despite amendments to the laws — have been reasons enough for the Government to consider shaking up the property market by introducing the build-then-sell (BTS) system.

It has been, however, averse to taking the radical measure of dumping the conventional sell-then-build (STB) practice by making BTS mandatory. Instead of beating them with a legal stick, the Government is banking on a bunch of carrots to persuade property developers to switch to selling only finished homes.

The immediate question that springs to mind is whether the fast-tracking of building approvals, the waiver on the RM200,000 deposit for every housing development licence, and the release from the obligation to build low-cost units would be sufficient to tempt them. If the incentives have been generated from close consultation with the key players in the housing industry and meet with their expectations, there is every reason to believe that the two-year trial period for the BTS method would yield some positive results. However, given the disinclination of many housing developers to abandon a business model which allows them to use other people’s money rather than risk their own, it is to be feared that the inducements may not be attractive enough. If this were to happen, the idea of giving buyers a choice of two systems will not materialise.

Since too many developers have reneged too often on their promises to deliver, it would appear that there is no choice for new house buyers but to give their undivided support to BTS as a matter of principle. They may have to pay more — 20 per cent more, according to the Deputy Housing and Local Government Minister — but this would be a small price to pay for peace of mind. The BTS is already endorsed by the Bar Council, but what is needed is more professional associations coming forward to declare their support. It would appear that much remains to be done to convince all the players in real estate development — developers, banks, building professionals — that it is not desirable to maintain the status quo because it does not provide adequate protection to house buyers. Since some housing developers mistakenly think that there is nothing to fix in the home business, it would seem that the onus is on consumers to demonstrate their faith in the new BTS system.