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Premier boost for build-then-sell
05/06/2004 NST-PROP By Salleh Buang

WHAT are the chances of the build-then-sell (BTS) method becoming law in the near future? I posed this question to Bakhtiar, a lawyer cum developer a day after Prime Minister Datuk Seri Abdullah Ahmad Badawi voiced his intention of introducing it.

"Very slim," said Bakhtiar, adding that while the PM might have the best of intentions to help out the rakyat without a home, the housing industry's "lobby" in the corridors of power should not be underestimated.

Two main reasons were given against the implementation of BTS. The first is money - BTS will lead to an increase in house prices. The second reason is the perceived adequacy of the revamped law that provides protection against abandoned housing projects. Proponents of BTS believe the first argument is no more than an assumption, while the second is a matter of perception.

Bakhtiar said: "The first reason is a red herring. The second a complete lie." He added: "No one has actually done the mathematics. The price increase is more of a conjecture than a scientific truth. In any case, house prices will always increase from one year to another. Buyers will gladly pay extra for the pleasure of buying something which is actually there physically.

"As for the law, the paltry sum which the revamped Act now requires the developer to deposit with the Controller of Housing is like a drop of water in the ocean. How far can RM250,000 go?". His next question took me completely by surprise. "Have you forgotten that the revamped law itself contains the seed of destruction, that of abandonment of a new housing project, even from the start?"

I replied I have not. We were referring to a new provision in the revamped law which enables the contract to be terminated if the developer fails to commence building work within a certain period after the standard Sale and Purchase Agreement (SPA) has been signed.

Unfortunately, according to Bakhtiar, the way that provision was drafted (and the procedure it entails) makes a complete mockery of the most fundamental objective of the law - the protection of purchasers. Every lawyer knows that the Housing Development Act does not afford the same measure of remedies for aggrieved purchasers as spelt out in section 74 of the Contracts Act 1950.

Reverting to the PM's statement of May 21, it was obvious his administration wants developers to have sufficient funds in hand before embarking on a project.

"We want developers to have adequate funds and not sell first to get the money to build," he had said.
He stressed that his primary concern is purchasers who have to secure loans from banks to pay for the yet-to-be-constructed houses but later discover the project has been abandoned, with the developers missing or wound up by creditors.

It was sweet music to purchasers when the PM said: "I think it is not right to pay money first before you get the house. When you pay, you must get the house."

When I brought up this statement to Bakhtiar, he said: "The PM is a religious person. He knows what he is talking about and is absolutely right. Taking money for something which has yet to be built may be legal, but it is immoral."

An English language daily commenting on the PM's views said what he had said was in line with his "policy of best practices in business", as well as his desire to ensure that purchasers will no longer be "victimised by financially strapped and unscrupulous developers".

Speaking at a news conference after attending the Public Sector Workers Day gathering at Intan Bukit Kiara recently, the PM said developers in neighbouring countries such as Taiwan are already bound by BTS, whereby purchasers are given the opportunity to inspect the houses before purchase.

What we should bear in mind, however, is what the PM said was his personal views, and he still needs the Cabinet ministers to agree before his "suggestion" can become national policy. He noted the Cabinet would have to deliberate on the issue before a final decision is taken.

The BTS idea had surfaced many times but was shot down. The reason is simple, said Bakhtiar. The idea did not get official support or blessing from the top. This time, things may turn out differently, he concluded.

"I will only be too happy to be proven wrong. The chance of BTS becoming a reality soon may not be slim after all," he added.Since the PM took office last October, he has surprised many with his bold new policies and follow-up actions. He may yet do it again with BTS.

Salleh Buang is senior advisor of a company specialising in competitive intelligence. He is also active in training and public speaking and can be reached at

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