23/01/09 NST EDITOR'S LETTERS
We refer to news articles on Jan 20 quoting Minister of Housing and Local
Government Datuk Seri Ong Ka Chuan as saying the build-then-sell (BTS) concept
will not take off in full swing due to the global economic meltdown.
First, 10:90 is NOT a BTS system under which houses are completely built and
with full certifications before the developers sell them. Under our 10:90
variant, developers can commit sales when all approvals have been acquired,
even before they start construction work. Buyers pay 10 per cent upon signing
the Sale and Purchase Agreement (SPA) and make no further payment until the
houses are fully completed when they pay the remaining 90 per cent and complete
If the houses cannot be completed, buyers can demand back their 10 per cent.
It was implemented on Dec 1, 2007 vide amendments to the Housing Development
(Control & Licensing) Regulations but developers have been reluctant to adopt
it. Which businessman wants to do business using his own funds and on his
own risks when there exists a system that allows him to use customers' funds
and customers share/carry the business risks.
This is precisely what the present progressive payment system is creating.
To resolve that the 10:90 concept will not take off is but a retrogressive
step into oblivion.
Allowing the 10:90 system to run concurrently with the present progressive
system while the option is with the developers is a non-starter. Let's have
a road map towards its full and mandatory adoption. This is the most practical
way to insulate housebuyers from the hazards of abandoned housing projects.
The present progressive payment mode has created enough havoc to innocent
and unwary housebuyers. Today, there are still tens of thousands of victims
of abandoned projects who are suffering in silence with no remedy in sight.
Isn't this a strong enough reason for the powers that be to be serious in
phasing out the hazardous progressive payment system instead of concocting
all kinds of reasons (including the killing of the housing industry) as to
why the 10:90 system cannot be implemented.
In 1966 when the then housing minister, the late Tan Sri Khaw Kai Boh, was
tabling the first edition of the Housing Developers' Act in parliament, there
was massive opposition from interested parties and comments like the demise
of the housing industry was one of the arguments put forward. However, he
had the courage to push the Bill through and today it is proved that all the
predictions of doom were totally unfounded but were mere "frighteners" put
up by vested parties to defend their turf.
We refer to a May 10, 2008 news article whereby the current minister advised
victims of abandoned projects in Saujana Puchong, Puncak Jalil and Lestari
Puchong that marching and demonstrating at Parliament House would not help
the situation in any way. He announced that he was personally looking into
the issue and that if negotiation with a white knight was successful, the
housebuyers would get their homes soon.
That was eight months ago! Where are the houses to be handed over to the aggrieved
buyers? We believe the minister owes the affected victims an explanation.
The minister has just launched the 5:95 Home Loan Package initiated by a reputable
developer. Why doesn't he concentrate on the laws available and make the 10:90
system workable and attractive to developers rather than confuse the buying
public with fresh formulae?
Chang Kim Loong AMN
National House Buyers Association