MALAYSIA’S PRECARIOUS PROPERTY MARKET: BRACE FOR MORE ABANDONED PROJECTS – GROUP WANTS PROTECTION FOR BUYERS

PETALING JAYA – Twenty-six abandoned housing projects in 2016 and the current economic situation exacerbating conditions which could lead to more abandoned projects next year should push the government to enact legislation to safeguard house buyers.

National House Buyers Association (HBA) secretary-general Chang Kim Loong urged the government to consider pre-emptive measures to avoid more abandoned projects in the future and to provide some protection for house buyers, who face serious risks when purchasing under the prevailing system.

Earlier this month, Deputy Urban Wellbeing, Housing and Local Government Minister Datuk Halimah Mohamed Sadique said 134 abandoned private sector housing projects were recorded in Peninsular Malaysia from 2013 up till November this year. The number includes 26 abandoned projects recorded this year alone.

Halimah said the government has allocated RM20 million to revive abandoned private sector housing projects next year. She also noted that the allocation is less than the RM40 million allocated this year.

“For house buyers to get the houses they bought, several conditions must be met but these conditions are out of their control,” Chang told SunBiz.

He said the conditions include the developer securing enough sales for cash flow requirements, developers not having any problems with its business venture(s) and stable economic conditions.

Chang said while the majority of housing projects in Malaysia have been successful, one abandoned housing project is one too many as the impact is not only felt by house buyers and their families, but also by the bridging financiers, end-financiers and the government.

He said the government has many ways to regulate the housing industry, including legislations and rules under the Housing Development (Control & Licensing) Act and the Housing Development Regulations.

However, the housing market continues to see abandoned housing projects and Chang urged the government to consider pre-emptive measures to avoid future abandonments.

“One abandoned project is one too many. Where’s the mechanism of protection? Where’s our safety net?” he questioned.

One such measure is the Build-Then-Sell 10:90 concept which HBA has been lobbying for. Under the scheme, buyers pay only 10% downpayment and nothing else until the project is completed.

“In the past, property developers shunned it but now some are offering it. For example, SP Setia Bhd with its 10:90 scheme. Developers who offer it today are doing it for marketing reasons,” said Chang.

Meanwhile, on the review of the moneylending licence for property developers, Chang said there has been no updates from the ministry since the closed-door meeting held on Sept 21 to gather feedback from industry stakeholders.

“There has been no other meeting, no other updates,” he added.

The proposal, which was announced by Urban Wellbeing, Housing and Local Government Minister Tan Sri Noh Omar on Sept 8, met with strong objections from various quarters, including the HBA.

Last month, Noh told reporters that the proposal was still on the table and that the ministry was still studying the proposal.
A total of 42 developers have moneylending licences as of November.

Chang said the Moneylenders Act 1951 remains unchanged and developers who meet the criteria can still apply for the moneylending licence.

“Developers may apply for it now that the minister has given the ‘carrot’ but whether they use it or not is a different matter,” he said.

As at press time, the ministry did not respond to SunBiz’s attempts to obtain updates on the issue.

THE SUN DAILY

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