Bid to further protect buyers
NST 10/10/2005 By  Datuk Seri Yuen Yuet Leng, Ampang

Oct 10: THE National House Buyers Association (HBA) has been pushing for a pragmatic review of the outdated "Sell and then Build" (SB) system and its replacement with the "10/90 Build and then Sell" concept that Housing and Local Government Minister Datuk Seri Ong Kah Ting, had identified in Australia not just as a concept but very importantly, an applied operating system.

The crux of the matter is that housebuyers should not be expected to continue to borrow like their forefathers to advance money to the developer, not a contractor, to build houses for them.

If the developer absconds, as has happened, or fails through no fault of the buyer, is the irrevocable liability to repay the loan with the buyer, to the distinctive advantage of the developer?

That is why the present system has to be replaced or radically changed.

The present system provides scope for unethical, opportunist or rogue developers to exploit provisions for personal and devious ends.

Sadly, this has indeed been the bane of the system. Abuse has often been deliberate. For the buyer it has resulted in absconded developers, abandoned projects, poor or incomplete houses and even no houses.

The 10/90 system does not disrupt any online or downline logistics of developers. Networks remain intact. The only difference is that the developer must seek his own financing.

It will not drastically raise prices of houses because market forces will dictate. Unintelligent "upping" of prices to maintain previous profit levels will lose out to fair developers.

The 10/90 concept has to be the only operating concept. It could perhaps in principle apply only to housing, inclusive of houses for the lower and medium income groups who form the substantive majority of our population.

It may initially be necessary to have provisions for exceptions to the rule, which can be approved on the authority of the minister. This can be in respect of very high-end housing or a major housing development which is part of an urgent and specific government programme.

Buying a house is no different from buying a car. A car buyer does not have to borrow to pay the manufacturer to commence construction. He merely goes to the showroom, selects a car, checks its specifications and then test-drives it.

Only then he pays a deposit or, if necessary acquires a loan to purchase the car. Why should it be different for housebuyers?