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>HOUSING PROJECTS: Build-then-sell is the best way to go
13/03/2009 NST By : CHANG KIM LOONG for National Housebuyers Association, Kuala Lumpur

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 sight.

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 their products.

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 system.

Second, find ways to alleviate the problems of these innocent victims of a flawed system.


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