21/09/2002 Published in NST-PROP A Buyer Watch Article by National House Buyers Association

It is an age-old tenet of business practice that businessmen have to shoulder the capital for whatever activities they undertake. More significantly, they also have to carry the risk of either success or failure. However, the property industry appears to be the only exception to this well accepted and universal tenet.

Various reasons have been cited for the reluctance of the property industry and the authorities to implement the build then sell concept. However, the House Buyers Association is convinced the advantages easily and overwhelmingly outweigh the present system.

If implemented, the onus will be on the developers to be more committed and to ensure that their projects are completed, and completed on time, because there will no house buyers to shoulder their financial burden.

Shoddy workmanship, the present bane of the housing industry, will become a thing of the past if the build then sell method is implemented. Developers will be less inclined to produce sub-standard houses simply because they will have difficulty selling them.

The build then sell system will also ensure that bridging financiers carry part of the risk, and rightly so. Property buyers should not be made to play this role because they have no right of access to the developers' financial management. Bridging financiers will be prompted into becoming extra vigilant in guaranteeing that whatever funds they release are used for the right purpose so developers do not have a free hand to siphon or divert funds elsewhere and leave projects in the lurch.

If, even with such precautions a project still fails, it still leaves a tidier situation as only the developers, landowners and financiers are involved. The present system creates a very muddled scenario that involves developers, financiers, landowners, house buyers and end financiers. The build then sell concept clearly demarcates the business proprietors (developers and bridging financiers) from the customers (house buyers) and the latter will not be dragged into any failure such as project abandonment.

The end financiers would be happier to finance completed buildings. They in turn may want to share such advantages gained with the house buyers in the many ways possible.

Another advantage of the build then sell method is that the Ministry of Housing will not have to spend so much time and effort in attempting to enforce the present Housing Development Act.

For the house buyer it will be a case of "what you see is what you get" in contrast to the present scenario of "pay and hope for the best"