PENAMPANG: The proposal to introduce the build-then-sell (BTS) concept on all housing projects starting 2015 is not practical, said Democratic Action Party (DAP) Sabah.
Sabah DAP chairman Jimmy Wong Sze Phin said the proposed policy, although meant to address the issue of housing projects of inferior quality, would only hurt the industry and could send the prices of houses in the state skyrocketing.
“The developers are already facing many stumbling blocks, apart from having to survive with what limited resources they have, they also have to go through lengthy processes of approvals that could take months or even years.
“Now the government wants to make the developers do the impossible task by not letting them to sell first. The proposal, if implemented, would eliminate up to 95 percent of the existing developers as they do not have the financial strength to complete their project without a bank loan, and surely cannot survive against the bigger companies that will end up monopolising the industry.
“That means you effectively eliminate the competitiveness of the industry and buyers would have limited option to choose from. You will leave only the giants who are financially strong to control the market,” he said, commenting the proposal to amend the Housing Development (Control and Licensing) Act 1966 (Act 118) and to include the BTS concept therein.
Jimmy said it was understandable that the government wanted to push for the new concept due to the many complaints from house buyers who were unhappy with the inferior quality of houses which they had purchased, but implementing the policy would not solve the problem and more likely would make it even worse.
He pointed out that most projects involved in the complaints received were government housing projects, citing Taman Semarak at Jalan Kuhara in Tawau as an example where the latest phase of the project to build some 1,000 units of homes has been marred by complaints of bad quality.
The government, he said, should instead emphasise on quality control by making sure consultants are held responsible for projects that are not up to standard.
“They must properly inspect every project before approving the certificate (OC). The government must also make sure value for buyers’ money, that means appropriate prices. But this will not happen if you take the competition out of the industry.
“Monopoly will cause prices to spiral up. Even now not many can afford to buy a house, and if the policy is implemented then even lesser people will be able to do so,” he said.
The Sri Tanjong asemblyman also highlighted the difficulties faced by developers in implementing housing projects, alleging rampant corruption taking place in departments involved in the issuance of approvals of projects.
He said land title conversion which is necessary before any housing project can be developed, usually takes one to two years and unless the developers are willing to pay “private royalties” they could not obtain conversion approval speedily.
“After the title conversion, you have to get your development plan approved, and this process involved some ten different departments. Again it’s a long wait unless of course you pay the “private royalties” to certain individuals to get it done faster than the usual.
“Then when it is finally approved, you will have to apply for financing, and this is where the biggest problem will arise, because the banks want you to achieve certain sales target before they give you the loan,” he said.
Housing and Local Government Minister Chor Chee Heung had said that all loan-related issues will be discussed with financial institutions and Bank Negara Malaysia first before the proposal is tabled to the Cabinet.
He said the Ministry will get the approval from the Cabinet to enable the concept to be implemented in 2015 but the decision will depend on several factors, including the preparedness of the financial institutions, like banks, to offer loans to house buyers according to the new concept.
DAP Kota Kinablu youth chief cum Api-Api Branch chairman Junz Wong meanwhile said, the party was against the proposal for fear it will widen the gap even further between the rich and the poor in the state, given that only the well-to-do would be able to own homes after the prices increase drastically following the implementation of the policy.
“With only giant construction companies left to control the market, and without any competition, they would have the luxury of selling at any price they wanted. The rich would own all the houses and the poor would end up as just tenants,” he said.
He added even if the remaining developers decided not to jack up the price, the buyers would still lose the chance to buy a house at a cheaper price by placing their purchase before the project is completed.
According to Junz, buying a house at the early stage of construction usually save the buyers 30 to 40 percent as compared to buying it after it is fully completed.
“We view this as a big burden, especially to the youths who dream of buying their own houses. More and more of the young working class would become just tenants, as they could never afford to buy their own houses,” he said.
Stressing the implementation of the policy would not bring any good to house buyers in general, he said the only logical explanation as to why the government is pushing for the policy was to indirectly strengthen the position of their cronies, by allowing them to have control of the property development sector.
Under the BTS concept, the buyer will have to pay a 10 per cent deposit to purchase a house and need to only settle the balance after the house is completed.
The BTS concept was earlier introduced in 2007 but received lukewarm response from the developers in the country, with only five housing developers fully adopting the concept so far.