Build-then-sell is the best way to go
13/03/2009 NST By : CHANG KIM LOONG for National Housebuyers Association,
I REFER to the letter on abandoned housing projects from S.K. ("Govt should
keep track of such projects" -- NST, March 10).
The problem of abandoned housing projects that leave a trail of havoc in
their wake is brought about by Malaysia's system of buying and selling
houses, called the sell-then-build (STB) system.
In this system, buyers make progressive payments as the developers build the
houses. If all goes well, the buyers eventually get their houses. But if the
developers are unable to complete the houses, the buyers are the first to
suffer: no house to take over; bank loans to service; and worse, no solution
In Selangor alone, tens of thousands of buyers who are in this predicament.
Multiply that number by the dependants who must be suffering with them and
it is not too difficult to see that the problem is indeed enormous.
The most pathetic aspect of this problem is that there already exists an
alternative system that would insulate buyers from the devastating effects
of project abandonment.
This is the 10-90 build-then-sell (BTS) system. The BTS is not wholly a
build-then-sell system but developers can commit buyers when they launch
However, buyers only pay 10 per cent upon signing the sale and purchase
agreement. The remaining 90 per cent is payable when the houses are handed
over with all the necessary certifications, title deeds, utilities and keys
with vacant possession.
The law on this BTS 10:90 has been passed and is within the Housing
Development (Control & Licensing) Regulations, 1989 (revised 2007). If the
developer fails to complete the houses, buyers can demand refund of the 10
per cent deposit paid.
In the worst-case scenario, they lose the 10 per cent, unlike with the
present system where the banks will come after buyers regardless of whether
the buyers get their houses or not.
There are two approaches to solving the problem. First, adopt the 10-90
Second, find ways to alleviate the problems of these innocent victims of a