Give ’em more, says HBA
NST-PROP 15/07/2006 By Andrew Wong

Though the National House Buyers’ Association (HBA) is happy that the Government is providing the nation’s private developers with stimuli to encourage them to adopt the 10:90 Build-Then-Sell (BTS) mode of housing delivery, it feels additional inducements are needed to make the system really fly.

In an exclusive note to NSTProperty, the association said developers need more motivation to fully embrace the system, where buyers need pay 10 per cent of the purchase price as deposit and the balance only after their units have been completed.

Only then, it said, can the ultimate aim of making BTS the single source for housing supply be achieved, which would put an end to ownership woes as a result of project abandonment.

Currently, BTS is allowed to co-exist with the prevailing practice that allows developers to bill buyers at various stages of project completion – the custom for decades – for two years, after which both modes will be reviewed.

When announcing the introduction of the 10:90 BTS mode at the end of last month, Deputy Prime Minister Datuk Seri Najib Tun Razak said developers adopting it can look forward to faster development approvals; need not pay the RM200,000 deposit for every licence they have to apply for; and can build medium-cost houses in their schemes instead of the obligatory low-cost housing quota in certain localities.

However, HBA said the offer to fast-track the bureaucratic processes can “only be meaningful if all Local Governments are committed to doing it”.

“The cumbersome and time consuming process of land conversion and (obtaining) other approvals has been a perennial bane for the housing industry and there has been little progress, despite several calls for improvements,” said the HBA, pointing out that currently, the procedure can take between two and three years.

To make real its promise, the association suggested the Government create an “express lane” manned by a special committee comprising members of professional bodies such as Persatuan Akitek Malaysia, Institute of Surveyors Malaysia and watchdog representatives from the Real Estate and Housing Developers Association and HBA.

“This is to ensure transparency and accountability that the boldness to fast-track is not derailed by certain quarters whether deliberately or otherwise,” HBA said.

“We are of the opinion that with the ‘express lane’, approvals can be issued within six months … it is not something impossible if all agencies are committed to it.” On the incentive to exempt BTS developers from having to deposit RM200,000 with the Housing Ministry, the association said it “is not very attractive to big developers, especially when the money deposited is refundable anyway”.

“It may offer some incentive to small developers (to adopt BTS),” it said, but pointed out that BTS is actually aimed at large players as “from statistics, it appears that the majority of abandoned projects are incurred them”.

On the inducement to allow the construction of medium-cost houses instead of low-cost units in certain localities, HBA said it “will certainly make developers think long and hard”.

However, it cautioned that this shouldn’t disrupt the country’s agenda to house the masses, and suggested that the development corporations of various States abstain from competing with private developers by building affordable units instead of medium- and high-end properties.

“After all, their lands are free … they should not divert themselves from the very purpose that they were instituted,” HBA said.

Other incentives that it said the Government could offer developers would be lower premiums for land conversion.

“Currently, many Land Offices are already offering a 15 per cent discount to encourage expeditious payment of land premiums; with 10:90, this rebate could be more.” It also said banks could play a role in pushing for BTS as it would put their operating environment at lower risk (see accompanying story).
 

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