PETALING JAYA: As one of the only two countries worldwide that practises Sell-Then-Build (STB) as the only method of supplying homes, experts say more Malaysian developers should consider the Build-Then-Sell (BTS) concept.
“STB is only practised in high-end developments (with less than 1% of incoming stock) in some developed countries where buyers are seen as joint investors due to the inherent high risks of STB,” said Khazanah Research Institute director of research Dr Suraya Ismail.
“In Malaysia, STB has created problems such as buyers affected by abandoned, delayed and ‘sick’ housing projects (with an average of 30,000 house buyers being affected every year), with government spending to revive abandoned projects reaching an average of RM33 million annually, with a total of RM219 million.”
She said STB also allowed developers to sell the units first, using the purchasers’ money to lock in profits and have two to three years to build the houses.
“This delivery method therefore disincentivises shorter building periods with the utilisation of better technology (such as the Industrialised Building System and other modern building techniques).
“This practice would result in less defective houses. The migration to BTS would induce developers to put greater effort into providing good quality houses. This would encourage technological adoption and innovation in construction processes and building materials development.
“Additionally, developers would also have the discipline to limit the number of units based on their feasibility studies with financial institutions, consequently leading to a more responsive supply sector and preventing the creation of property gluts.
“So far, there have been no reports that licensed BTS projects were delayed, sick or abandoned and there has been no claim made by the buyers of these projects against the developers. The practice of BTS would also result in less defective houses,” she added.
National House Buyers Association (HBA) president Brig-Jen (Rtd) Datuk Goh Seng Toh said the subject has been deliberated thoroughly by a special task force chaired by former chief secretary to the government Tan Sri Mohd Sidek.
“There were discussions, workshops and mini workshops and the final unanimous decision was that the industry should progress to BTS 10:90 (10% downpayment during booking and 90% via progressive payments).
“The sole disagreement was from the Real Estate and Housing Developers’ Association Malaysia.
“Even a timeline for its implementation was drawn up. However, due to immense lobbying by vested parties, it was never implemented. We believe if it had been implemented, the housing industry would be on firmer ground and not in its present predicament,” he said.
