UDA to kickstart new housing concept in 2013

KUALA LUMPUR: UDA Holdings Bhd is among the four government- linked companies (GLCs) spearheading the build-and-sell housing concept.

“We’ll be having a meeting with UDA next week. They are scheduled to kickstart this initiative next year,” Housing and Local Government Minister Datuk Seri Chor Chee Heung said.

“From now until 2015, we encourage all property developers to adopt build-and-sell. We’re aware there’ll be teething problems as we transition from the current system to the 10:90 concept,” he told reporters here after officiating at the launch of ERA Malaysia real estate business system pilot programme late yesterday.

“For one, the banking sector needs to reform the end and bridging financing arrangements with property developers. The build-and-sell concept is more riskier for developers and there’s a chance bankers may ignore smaller ones. We’ll need to address this issue,” Chor said.

The build-and-sell concept, already implemented in Australia and Singapore, only requires a buyer to place a downpayment of 10 per cent of the purchase price while the balance is paid after the house is completed.

He noted that Islamic banks have so far agreed to provide syariah-compliant financing and undertake construction risks, with installments only commencing after the house is completed. This scheme is meant for houses costing RM600,000 and below.

Early this year, Chor said the government had tightened laws through an amendment to the Housing Development Act (Control and Licensing) 1966 (Act 118).

Among others, the deposit was increased from RM200,000 to 3 per cent of the cost of physical development, including professional fees for the Housing Development Account, and a maximum penalty of RM50,000 has been set compared with RM20,000 previously for offences under any provision of Act 118.

Asked if the government is offering incentives for property developers, Chor said: “For build-and-sell properties, we can waive the deposit. There’s also a dedicated green lane for faster approvals”.

By Business Times