The Malaysian Reserve

HBA: Initiate BTS 10:90 concept to ease housing woes

KUALA LUMPUR, JULY 04, 2017 : The National House Buyers Association Secretary General, Chang Kim Loong delivers his speech during "Dialogue on Sustainable Development of Affordable Housing" held at Sasana Kijang Bank Negara(Pic by Afif Abd Halim/TMR)

Concept is more friendly towards buyers, while easing fear of losses should projects be abandoned


HOME ownership would be made easier if the government promotes the build-then-sell (BTS) 10:90 concept, while providing tax incentives to developers that are involved in affordable housing projects.

National House Buyers Association (HBA) honorary secretary general Datuk Chang Kim Loong (picture) said the BTS 10:90 concept is a better solution as it is more friendly towards buyers, while alleviating the fear of losing out should the projects be abandoned or incomplete.

“During Pakatan Harapan’s (first) 100 days, Housing and Local Government Minister Zuraida Kamaruddin visited a few abandoned projects, including sick and delayed projects, so the government has experienced the suffering of the buyers of such projects.

“As a way to mitigate the issue, HBA would suggest the government to initiate the BTS 10:90 concept, which means buyers have to pay a 10% down payment, and will only pay the rest once the house is completed,” he told The Malaysian Reserve.

Currently, most developers practise the sell-then-build (STB) system, with buyers paying 10% and then continue to pay the progressive payments as the developers build.

In the absolute BTS system, developers can only sell finished products that are ready for buyers to take over to occupy.

Under the BTS 10:90, which is not an absolute BTS concept and deemed a hybrid by HBA, developers can sell only once approvals have been obtained and upon launching.

Buyers pay 10% upon signing the sales and purchase agreement (SPA), while the balance 90% is payable only when the houses are completed with separate titles, Certificate of Compliance and Completion, water and electricity connected and keys to the house.

Chang said the BTS 10:90 concept is not new to Malaysian developers, but there is no political will to implement it.

“It was on a voluntary basis, so if the developers have the choice, they won’t do it. HBA would like to urge the government to start enforcing it,” Chang added.

He also said the association acknowledges that it will be hard for the government to immediately make the BTS 10:90 concept compulsory for deve- lopers. Hence, HBA has suggested the government to do it in phases as homebuyers are in desperate need of protection from abandoned projects.

According to HBA, the previous government planned for the migration to BTS from the STB system in 2015.

The Housing Development (Control & Licensing) Regulations Act was amended subsequently to include the new Schedule I and J to cater to the BTS 10:90 standard SPA. However, the plan was cancelled for unknown reasons.

Chang also said the new government should introduce a new tax bracket for developers embarking on affordable housing projects.

“You must have incentives for developers to build affordable housings, for them to maintain their profits. Do something that will cost them no losses, then they will do it,” he added.

Although HBA is fighting for home ownership, Chang said relaxing banks’ lending criteria is not the solution to address the issue of access to financing.

“Banks are there to make a profit. They can’t simply lend money to the people who cannot afford it in the first place. The relaxation of lending will be bad for them.

“I would suggest the government to allow the Employees Provident Fund to extend financing for home purchases, particularly of affordable units,” he said.