House buyers, take note of
differences in systems
08/04/2009 The Star
WE at the HBA view with interest some housing project advertisements in the
newspapers recently. They prominently state 10-90 as the mode of payment and
went on to say, “Pay 10% and no payment until vacant possession.”
It would appear as if the mode of payment is similar to the Build-then-sell
(BTS) 10-90 that HBA has been lobbying for and for which the Government is
offering incentives to developers to adopt the system.
HBA feels that it is incumbent upon us to explain to potential house buyers
the differences between the advertised 10-90 and the BTS 10-90 promoted by
the Government under the amended Housing Act .
The advertised 10-90 system is actually a loan package deal whereby the
buyer pays 10% upon signing the Sales and Purchase Agreement and the balance
is progressively paid through the buyer’s housing loans. The loan is
progressively disbursed to the developer as he builds the houses.
Hence the “… no payment until vacant possession” is not wholly true because,
in actual fact, the buyer’s loan is used to progressively pay the developer.
However, the interest payable for the progressive payments during the
construction phase is shouldered by the developer.
In the BTS 10-90 system, the buyer pays 10% upon signing the SPA and does
not make any more payment until the house is completed, with all the
certifications obtained. Only then does the housing loan kick in and the
buyer then pays the remaining 90%.
The vital difference between the advertised 10-90 system and the BTS 10-90
is that in the advertised 10-90 system, should the developer abandon the
project, the buyer is left with a partially disbursed housing loan to
The primary borrower is still the buyer and it is his sole responsibility to
continue with the proper conduct of his loan from the financiers.
Banks have not been known to be sympathetic to victims of abandoned projects
and the loans still have to be settled, house or no house. This is the
predicament presently faced by tens of thousands of naïve and innocent
We would like to categorically state that we are by no means implying that
the advertised project is likely to be abandoned. This letter is only to
inform potential buyers the differences between the advertised 10-90 and the
CHANG KIM LOONG,
National House Buyers Association.