Pay-on-completing housing proposal

The Sun 18/09/2003 By Sharon Kam

Petaling Jaya: The National House Buyers Association has proposed a variant of the build-and-sell concept to allay developers' fears.

Its secretary-general, Chang Kim Loong, said yesterday this is the "pay-for-completed properties" concept where house buyers pay a 10% downpayment.

The balance is paid when the building is completed.

This will enable developers to gauge the demand for a particular project and have committed buyers while financial institutions will be convinced of the viability of the project.

Chang said the association has been calling for the build-and-sell approach for three years and feels the market should move towards it.

"This concept frightens many developers. They think they need a large cash flow before they can complete the product," he said is support of Jelutong MP Lee Kah Choon's proposal in Parliament on Tuesday calling on developers to sell only completed houses.

Chang said the concept is also practised in Thailand.

He said the build-and-sell concept will eliminate the problem of late delivery and shoddy workmanship which thousands of buyers have fallen victim to, as customers can choose not to buy the property if they are not satisfied with it.

For instance, many housebuyers find themselves shouldering burdensome loans when projects are abandoned.

As at the end of last year 82 housing projects had been abandoned affecting 22,658 buyers nationwide.

"Under the present sell-and-build concept, housebuyers are the ones financing the development and their money is wasted if the project is abandoned. Consumers are not businessmen who have to take risks on investments," Chang said.

The Real Estate and Housing Developers Association had previously said the build-and-sell concept was not applicable yet as the property market had yet to mature and demand for housing was still strong.

Only big and established developers with sound financial standing will be able to implement the concept while smaller ones will have to close down, its president Datuk Jeffrey Ng had said.

The cost of houses will also increase.

However, considering the amount buyers have to pay to service housing loans, the cost of paying for a completed property would come to almost the same amount, Chang said.