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HBA comments on Housing Revival Initiative (Sept 23, 2009)

PETALING JAYA: Abandoned housing projects have long been a major problem for the country. According to the Ministry of Housing and Local Government, there are currently 136 abandoned housing projects nationwide. This accounts for approximately 2% of the country’s total housing developments and affects 30,576 house buyers.

The situation is worrying enough for the government to form a Special Task Force (STF), which comprises key players and professionals in the various sectors of the housing industry to tackle this problem. One of the measures conceived by the STF is the Housing Revival Initiative (HRI) launched in September 2009. The HRI’s role is to identify the abandoned housing projects, study its feasibility for revival and work closely with developers who are willing to revive such projects.

National Housebuyers Association (HBA) honorary secretary-general, Chang Kim Loong believes that while the HRI is a sincere initiative by the Ministry, the former still feels that the road forward is going to be long, hard and expensive. The biggest problem is money, as the white knights will only take on abandoned projects that are viable, says Chang.

Despite the existing laws to protect house buyers, the problem continues to persist. Chang feels the crux of the problem lies with enforcement. “This problem is not confined to the Ministry of Housing and Local Government. The key difference is when housing projects get abandoned due to the Ministry’s inability to enforce the Housing Act. The resultant effects are dramatic because large numbers of house buyers do not get their houses after paying a lot of money, and most of them are committed to housing loans which they are still liable for, although they failed to get their houses. The country should not accept a system that so critically depends on strict enforcement, especially knowing that enforcement is not our forte, ” laments Chang.

Section 7 of the Housing Act is one of the rulings put in place to protect the house buyer. Under section 7, a licensed housing developer is required to submit a complete report on the progress of the housing development twice a year to the Controller of Housing. “The section 7 form is crucial because it allows the Controller of Housing to diagnose any sickness in a project before it is too late. This is just one example. If all the relevant sections of the legislation have been strictly enforced, will there still be abandoned housing projects?” questions Chang.

HBA sees the 10-90 variant of the Build-then-Sell (BTS) system as a practical way forward. The 10-90 BTS system allows buyers to pay only a 10% downpayment, with the balance payable upon completion of the project. “Unless this measure is taken, developers will remain in their present comfort zone whereby house buyers' funds are used to finance their business. With this backdrop, developers can continue throwing caution to the wind and will not hesitate to launch some of their questionable projects. This is totally unacceptable. Business risks should be shouldered by the developers and their financiers, not the house buyer,” insist Chang.

Chang believes that even if all the current abandoned projects are revived, it is likely more such cases will surface, based on the principle that nothing can guarantee the success or failure of any business venture. He says: “Unless the flood gate is closed, meaning no more progressive payment mode, the problem will never be eliminated. So, we say, close the flood gate now.”

 


 

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