Housing projects are abandoned due to a number of reasons. Economic downturn is only one of them. Others include poor management, poor feasibility studies (location, market demand, affordability, etc), and in some cases, fraud (such as the channeling of buyers' payments  towards other uses).

No amount of legislation can guarantee that there will be no more projects being abandoned. The risks of conducting business should rightly be borne by the proprietors in this case the developers and their financial institutions.

House buyers should be insulated from such risks. Yet the present mode of payment and delivery puts buyers squarely in the risk equation. Not only do buyers carry a large proportion of the finance required they also bear a large proportion of the business risks over which they have absolutely no control.

Our Prime Minister had talked about the build-and-sell concept to make sure buyers who pay money get their houses.

Industry players are vehemently against such a mode of house delivery. As much as we feel that this is the ideal situation we also believe this will present a drastic paradigm, shift; and the mindset is too big to breach.

However, an intermediate model is the 10-90 modes, where buyers pay 10% upon signing the sale and purchase agreement and the remaining 90% only upon completion of the houses.

In this way, developers can secure the number of buyers and secure their own bridging financing before they start building.

If there are delays, they carry the losses, not the house buyers.

They will be compelled to build quality homes because come full payment time, they will not want to risk getting into disputes with buyers.

The situation will largely be self-regulating and the Housing and Local Government Ministry can channel its efforts towards more productive and meaningful subjects instead of attempting to regulate and protect house buyers.

And certainly, public funds will not be needed to bailout-failed housing projects because buyers will be insulated against the devastating effects of such abandonment.

Only the developers and their financial institutions are involved. The eventual goal should be for the complete build then sell mode.

CHANG KIM LOONG,
Secretary -General, National House Buyers Association, Kuala Lumpur.
(via e-mail)