Housing: Approval in Principle for
Build-Then-Sell System
by Hamidah Atan, NST 23-Jun-2006
PUTRAJAYA: Houses in certain development
projects will be built first before being sold, under the much-awaited
"build-then-sell" (BTS) concept agreed to by the Government yesterday.
Under the arrangement, house buyers will have to pay a 10 per cent down
payment, with the remainder to be settled upon completion.
This "approval in principle", to be reviewed after two years, will
provide more protection for buyers and help reduce the number of
abandoned housing projects in the country.
Deputy Prime Minister Datuk Seri Najib Razak announced this after
chairing the meeting of the National Council for Local Governments at
his office here yesterday.
"This is just a ?in principle approval?, as in terms of implementation
we still have to discuss the matter on a case-by-case basis with State
Governments and the local authorities," Najib said.
"Other conditions and factors still need to be finalised, such as the
actual number of low-and medium-cost houses in the country.
Distribution (of houses) has to be based on localities and demand, so
we cannot come up with a general policy."
The BTS system will run parallel with the existing "sell-then-build" (STB)
system, which requires progress payments.
"I want to emphasise here that the conventional system is not being
abolished. Under STB, progress payments have to be paid. We are giving
developers the chance to choose which system they want. However,
details and conditions will be discussed on a case-by-case basis," said
Najib.
With the introduction of BTS, a minor amendment to the Housing Act
would have to be made.
Asked if the BTS system would eventually replace the STB system, he
said: "We will review the concept in the next two years.
"We must not forget that small-and medium-sized developers may have to
close shop as they do not have the strength and financial capability to
adopt the BTS system. We have considered all views. We will look at the
development and progress in the next two years before making any
decision."
Yesterday?s meeting also approved a new policy pertaining to the sale
of government low-cost houses to tenants.
"The houses were built to solve the problem of squatters. We have
received many applications and appeals to enable the occupants to buy
the houses, and this will be allowed," Najib said.
Such houses are priced at RM35,000 in the peninsula and about 20 per
cent more in Sabah and Sarawak.
The policy will be discussed with State Governments and local
authorities.
The authorities will identify low-cost housing areas where this policy
can be applied and other locations where rentals will continue to be
imposed.
Najib also said the council agreed that Certificates of Completion and
Compliance (CCC), currently issued by local authorities, would be
issued by professionals instead.
"Six Acts will have to be amended following this approval, and the
Housing and Local Government will table the amendments at the next
Parliament sitting."
The move, he said, would minimise bureaucracy and expedite the issuance
of CCCs.
Benefits of the build-and-sell system
Buyers are protected from projects abandoned halfway.
Buyers are protected from getting houses of questionable or
unacceptable quality.
Buyers pay only a deposit of 10 per cent of cost of house.
There is no progressive payment for buyers.
Risk exposure to banks is reduced as they lend directly to developers
to build the houses.
Banks are in a better position to monitor construction.
Source: National House Buyers Association
Fomca: New system a sensible one
KUALA LUMPUR: The Federation of Malaysian Consumers Associations (Fomca)
welcomed the build-then-sell (BTS) system as a sensible one.
President N. Marimuthu said yesterday the association had been asking
for such a system for a long time.
"Buying a house is a life time investment. It makes sense for buyers to
want to have a look at the finished product first before paying a hefty
sum for it."
He said that if countries such as Vietnam and Sri Lanka could operate
such a system, then so too could Malaysia.
Marimuthu felt that having the current sell-then-build (STB) system
running parallel with the BTS system would not work in the long run.
Rather, the developers should be given time to phase out the old
system.
"They should be given about two years to do so," he added.
He acknowledged that there might be resistance towards the
implementation of the BTS system from some developers.