Banks must play role, if build-then-sell is to succeed
13/09/2006 The Star By Royce Cheah

PETALING JAYA: Banks have to play their role if the build-then-sell concept is to take off, said Housing and Local Government Minister Datuk Seri Ong Ka Ting.

Describing the current situation as a chicken and egg problem, Ong said banks need to make some commitment towards providing adequate funding to projects under this concept.

The build-then-sell concept, which is also known as the 10:90 concept, allows buyers to pay 10% of the price first and the rest upon completion of the property, which includes a permanent certificate of fitness being issued.

The Government approved the concept in June and stated that it would be implemented for two years, after which it would be reviewed to assess its effectiveness.

Ong said banks had said that funds would be available if the developers could prove that their projects were viable.

“But how can a developer say a project is viable without the funds?” he said during his keynote address at the National Property and Housing Summit 2006 here yesterday.

“Only very large and rich developers would be able to fork out the 90% that is needed to fund the project.”

Ong pointed out that sentiments on the ground revealed that some parties were unhappy with the 10:90 concept, fearing that it would be the only way property would be developed in Malaysia.

He added that the build-then-sell concept would not take over the current concept of sell-then-build, but would instead run parallel with it.

“Malaysia has a need for low- to medium-cost houses. There are many young families who would like to have their own houses and this should be provided.”

Ong expressed the hope that developers would do this, especially with the incentives provided.

Some of the incentives that have been agreed to in principle are fast-track approvals and flexibility in the stipulated quota for developers to construct low-cost houses.