Study approved plan before buying house

http://www.starproperty.my/index.php/articles/property-news/study-approved-plan-before-buying-house/

Study approved plan before buying house

Posted on May 25, 2013  |  281 Views |  Topic : Featured, Property News.

Buyers Beware By CHANG KIM LOONG

Provision of open and green spaces. The approval governs on how these open spaces allotted for the designated community activities such as playground for children, communal park, etc are to be used.

FIRST off is the regulation which is below.

It is mandated in the Preamble of Schedule G (landed property) of the standard sale and purchase agreement pursuant to Housing Development (Control and Licensing) Act 1966 and Housing Development (Control and Licensing) Regulations 1989, sub-regulation 11(1) that the vendor which is known as the “developer” to the masses has to provide as part of the legal documents, among others, the “approved” layout plan (to be annexed as the First Schedule) and approved building plan (to be annexed as the Second Schedule).

Similarly, Schedule H (Stratified Property) requires attachment of the “approved” 1: Site plan, 2: Layout plan, 3: Floor plan of the said parcel, 4: Storey plan of the said building (delineation of the said land comprising the said parcel), 5: Accessory parcel plan, and 6: Common facilities plan (to be collectively annexed as the First Schedule) and approved building plan (to be annexed as the Second Schedule).

This mandatory requirement has been entrenched within the Housing Development Regulations and the statutory sale and purchase agreement but has gone unnoticed by the regulatory body i.e. the Housing and Local Government Ministry and its enforcement agencies.

Why is it so important for these approved drawings to be made part of the contract obligation and condition?

There has been no shortage of complaints from the purchasers over the years on the deviations found in their end-products i.e. their completed unit of stratified apartment/condominium or landed residential house and their surrounding habitat from those represented in the sale brochure, flyers and even plans attached to the standard sale and purchase agreement signed between them and the developer.

The importance of these plans/drawings document are best described through the following scenarios.

·Development of open space/future development

Purchasers ought to be aware that modern living these days involves more than purchasing a piece of subdivided land/a piece of strata apartment/condominium in the air in a scheme. What one is actually purchasing is a concept of living style which apply to all ends of the market, from low, medium cost to the high notch end, which means its surrounding environments such as open parks/field, green lungs, community hall and clubhouse, i.e. all common property and facilities are actually an inseparable part of the neighbourhood you bought.

From time to time, you will read in the reported news that the purchasers/residents of a housing scheme taking the developer to task for developing some green lung/common open spaces which they deem to be their communal common property/spaces, something which the developer would contend otherwise and that these green open spaces are part of their land reserved for future development.

How can you tell whether the developer has the right to do so?

Just imagine a piece of green lungs – an open field – next to your house in which you do your daily jogging and which serves as a playground for your kids suddenly after a few years down the road make way for a towering condominium right at your door step! Not an uncommon sight in some housing scheme. Just imagine you pay extra RM10,000 premium for a fronting of a green lung (unintended for development) which subsequently turned up to be a retention pond, now infested with rodents, damped area ideal for mosquitoes breeding and occasional drain water ponding and smelly water discharge and slug.

This is when the approved layout plan annexed in the First Schedule will lend credence to the disputing arguments.

The layout plan (provided it’s an approved copy by the local authority) is the approved development proposal which contains, among others, the following vital information.

i) Density, in planning terms, refers to the number of houses or apartment units allowed to be constructed for a proposed development. For example, 60 units of apartment per acre has been approved for a scheme where such density quota has been used up, i.e. the exact unit of apartments per acre has been constructed. The developer is not allowed to build extra units even if there is ample land left in the scheme. The tabulation on the approved layout plan will be able to clarify the exact density and unit approved by the authority for development.

ii) Use of land and building. An approved plan will show the development mix approved by the local authority. When a scheme has been approved for a pure residential neighbourhood, for example, a developer is not allowed to build, say, an office block in an approved scheme of 50 units of semi-detached and 100 units of terrace houses without first applying and obtaining an approval from the authority for such a deviation.

Thus, a mix development comprising office towers, shophouses in a residential scheme will need to be tabled for the local authority approval before they can be developed and the same shall be required to be reflected in the approved plans.

iii) Provision of open and green spaces. The approval governs on how these open spaces allotted for the designated community activities such as playground for children, communal park and hall, places of religious worship … etc are to be used. Hence once these communal facilities such as an open park are designated for public use, they cannot be converted to say another block of condominium or office tower. Thus, the importance of the layout plan comes to bear.

By the same token, if these open spaces have been designated as the green lungs, communal park, hall and facilities and even utility reserves for roads, drains, water retention and electrical works, … etc, then it is prohibitive to be developed.

So, you should get inquisitive when you intend to buy a landed property next to a open land marked “future development” either in the brochure, architectural model and development plan of the scheme at the showroom if you want to avoid a condominium tower built right at your doorstep as the worst scenario illustrated above.

As your first line of your standard checking procedure, ask the sales staff for the approved layout plan from the relevant authority and that they ought to have no reason to turn down your request as such approval would have been obtained by now, or else they would not have been allowed to launch a sale, for such an approval forms part of the requisite condition for their sales permit. Why should such approved plans be shrouded with secrecy unless one has ulterior motives to hide?

These approved plans/drawings attached in the schedule must be a duplicate copy of the actual approved plan bearing the appropriate authority’s seal of approval normally in the form of a stamp. Stamp like “Di Luluskan oleh Majlis Perbandaran Subang Jaya” should be visibly available on the top right hand corner of each of such plans.

Then run through these approved plans against those represented in the advertised medium and your expectation to ensure indeed they are duly “approved” for the development you have been led to believe. This will allow you to make an informed decision.

You ought to practise the same checking steps for the same plans that shall be annexed in the first schedule of the sale and purchase agreement, before signing the contract. When in doubt, please check with your own appointed independent lawyer.

This is a two-part series and the second article will appear in my next “Buyers Beware” column.

l Chang Kim Loong is the honorary secretary-general of the National House Buyers Association: www.hba.org.my, a non-profit, non-governmental organisation (NGO) manned by volunteers. He is also a NGO councillor at the Subang Jaya Municipality Council.

RPGT won't hurt genuine buyers

http://www.thestar.com.my/Business/Business-News/2013/11/09/RPGT-wont-hurt-genuine-buyers.aspx
Published: Saturday November 9, 2013 MYT 12:00:00 AM 
Updated: Saturday November 9, 2013 MYT 9:50:24 PM

BY CHANG KIM LOONG

Banning DIBS is the right move

FOR many years, the National House Buyers Association (HBA) has been urging the Government to take measures to stem the steep rise in property prices to avoid a “homeless generation” as current property prices are far beyond the reach of many low and middle-income families in urban and suburban areas.

This is a ticking time bomb that will result in many social problems if left unchecked.

Real Property Gains Tax (RPGT)

The announcement of the revised rate of tax on gains made in the disposal of properties, namely, the Real Property Gains Tax (RPGT), formerly known as the Anti Speculation Act, under Budget 2014 is far more superior to what had been proposed under Budget 2013 (See table above)

This is because, typically, if the property is purchased directly from the developer, it takes two years (for landed properties) and three years (for strata properties) to be completed.

Hence, under the previous RPGT, speculators could purchase properties from property developers upon their launch and then flip these properties on completion (after two years) and having to pay 10% (i.e. within the 3rd to 5th year).

It is hoped that the revised RPGT rate will deter speculators and, at the same time, not punish genuine house buyers who buy for their own stay or long-term investment. It is worth noting that buyers of residential property could seek a once-in-a-lifetime exemption from the tax.

Budget 2014 is best described as an “excellent mathematical formula” to curb the unbridled escalation of house prices, which has in the last three years skyrocketed. The Government has taken a step in the right direction with measures to slow down the steep rise in property prices due to false demand caused by excessive speculation fuelled by easy housing loans and the previously low RPGT.

Foreign purchasers to pay more

HBA applauds the move to increase the minimum price of property that can be purchased by foreigners from RM500,000 to RM1mil. Foreigners must be prevented from “snapping up” property meant for the lower and middle income.

This artificially inflates prices and creates a domino effect which can result in higher property prices across the industry. This is especially true for development corridors such as Iskandar Malaysia which has seen foreign purchasers arriving in droves and scooping up properties with their advantageous exchange rate.

Banning the Developer Interest-Bearing Scheme (DIBS)

DIBS is popular with speculators as they pay nothing to make a profit. Their initial down-payments and deposits are sometimes factored into the purchase price by the collusive developers, and some unethical financial institutions do not even require that the developer collect the deposit that has to be paid by the so-called purchaser.

This is one of the factors which induces “bogus” house buyers (which I have written about in this column on Aug 31 entitled: Of Speculators and bogus house buyers) who merely flip the property at the right time.

Kudos to Bank Negara for heeding our call and banning DIBS. It may be worth noting that Singapore banned DIBS in 2009.

Considering the deep pockets of property speculators, the effectiveness of these measures remain to be seen. However, they are expected to make speculation unworthwhile. HBA praises the Prime Minister for putting a stop to DIBS, which is one of the reasons attributed to the steep increase in property prices for three reasons:

1. DIBS encourages speculation as the house buyer does not need to “service” any interest/instalment during the construction stage. This will “lure” and tempt many house buyers to speculate and buy into DIBS projects hoping to flip on completion and make a quick profit with little or no capital upfront. Connivingly, the interest element is “serviced” by the participating developers.

2. DIBS artificially inflates prices as all interests borne by the developer are ultimately imputed into the property price. This in turn creates a domino effect which pulls up property prices in surrounding locations.

3. Bank and financial institution staff conniving with developers using the DIBS model should be investigated on their “modus operandi” in financing those artificially inflated prices (DIBS + sales price) and ignoring guidelines on prudent lending.

Banks and financial institutions are to be prudent and only provide mortgage financing up to the fair value/market value of the property. In this respect, a benchmark of fair value or market value is the current properties available. Somehow, properties sold under DIBS are always priced much higher; 15% to 20% higher compared with those without DIBS.

For standard condominiums costing RM500,000 without DIBS, should the developer market such properties under DIBS, the selling price could be as high as RM650,000. This creates a potential property bubble should the developer default in “servicing” the interest and the borrower/purchaser also defaults. The bank would only be able to recover up to RM500,000 if the said property is auctioned at market value.

In the event of an economic downturn, banks saddled with too much DIBS end-financing could collapse as the losses from such DIBS end-financing will erode the banks’ capital.

The collapse of just one bank/financial institution could cause a systemic collapse of the entire financial industry.

Bank Negara should take action against such bank and financial institution staff who have provided both project financing and end-financing to DIBS projects under the newly-minted Financial Services Act, 2013.

With the RPGT increase, banning of the DIBS and the Government’s aspiration to supply more ‘ownership housing schemes’ at affordable pricing, it is hoped that speculative demand for properties will stabilise to a more realistic level. I have heard that many businessmen do not do business anymore but indulge in property speculation as a livelihood and for income.

It is akin to the stock market dealings that were rampant during a ‘bull run’. Certain things have to be stopped before they become worse like the sub-prime crisis in the US.

If readers were to take a drive around completed projects, they will find signboards advertising units for sale upon the delivery of keys. If the purchaser is purchasing for his own occupation, why is there this need to put up these signboards or appoint estate agents to dispose of the units? It goes to show that some purchasers are merely speculators (not investors) from day one and the banks and financial institutions choose to “close one eye” despite knowing this.

Have the banks ever gone to the ground to check whether the units purchased and financed are actually “owner occupied”? If the property is “owner occupied”, the risk rating is lower and thus, he enjoys a lower interest rate. But if it is non-owner occupied, it should have higher interest rates. Borrowers of “owner occupied” properties are normally required to make a declaration to that effect to enjoy a lower interest rate.

But does the bank participate in this booking of credit risk?

If the property is non-owner occupied, the lending will fall under ‘real estate classification’ and not ‘housing’.

So, there may even be misreporting to Bank Negara and subsequent national statistics.

This column continues next week.

> CHANG KIM LOONG is the honorary secretary-general of the National House Buyers Association (www.hba.org.my), a non-profit, non-governmental organisation (NGO) manned by volunteers. He is also an NGO Councillor at the Subang Jaya Municipality Council.

Perpustakaan Hipermedia MPSJ - Aktiviti Cuti Sekolah 2013

Salam sejahtera

Tuan/Puan;

Sempena musim cuti sekolah yang bakal tiba, Pihak Perpustakaan Hipermedia MPSJ (SJ/PUCHONG/SK) akan mengadakan aktiviti cuti sekolah yang bakal berlangsung pada:

TARIKH : 18 NOVEMBER - 31 DISEMBER 2013

HARI      : SELASA - JUMAAT

MASA    : 10:00 PAGI (SESI I)

                  2:30 PETANG (SESI II)

Bersama-sama ini disertakan poster, syarat-syarat pertandingan, jadual aktiviti untuk rujukan tuan/puan.

Diharap tuan/puan dapat memberi kerjasama dengan mewar-warkan aktiviti tersebut kepada anak-anak dan orang ramai untuk menyertai pelbagai aktiviti yang disediakan.

Hadiah yang menarik disediakan

Sekian, terima kasih


Pembantu Perpustakaan
Perpustakaan Hipermedia Subang Jaya
Kompleks 3C, Aras 2,Jalan PJS 11/2,
Taman Bandar Sunway, 46150,
Petaling Jaya, Selangor Darul Ehsan.
Tel : 03 – 5637 1704
      : 03 – 5638 7704
Fax : 03 – 5638 8704

Race profiling in housing 'irrational', says HBA

Taken from http://www.kinibiz.com/story/corporate/51546/race-profiling-in-housing-%E2%80%98irrational%E2%80%99-says-hba.html


Race profiling in housing "irrational", says HBA

STORY BY
KHAIRIE HISYAM
KHAIRIE@KINIBIZ.COM
The establishment of a Bumiputera Development Unit (BDU) in the Ministry of
Urban Wellbeing, Housing and Local Government to monitor issues related to
bumiputera housing quota has drawn flak from the National House Buyers
Association (HBA).

Yesterday, the Minister of Urban Wellbeing, Housing and Local Government Abdul
Rahman Dahlan said that the BDU will discourage housing developers from opting
out of building affordable homes for the community.

“There had been occasions where housing developers asked that they be allowed to
sell off unsold bumiputera-reserved units as ordinary units,” said Abdul Rahman.

“BDU will monitor and discourage such action; we will scrutinise whether they had
advertised about the houses and if they did, whether the adverts were placed in a
little corner that was hardly noticeable,” added the housing minister.

When contacted by KiniBiz, the HBA feels that it is an “irrational” move by the
government to profile races and disagrees with the government‟s initiative to profile
races when it comes to housing matters.

“Anyone who deserves a house under the affordable houses category should get a
house irrespective of race,” said HBA honorary secretary-general Chang Kim Loong,
who declined to elaborate further.

Real estate researcher Professor Ting Kien Hwa, however, points out that the agenda
has already been done before under various agencies such as the Selangor State
Development Corporation (PKNS) and Urban Development Authority (UDA).

“I am wondering how, this time around, we can achieve this objective,” said Ting,
who heads the Centre for Real Estate Research (CORE) at Universiti Teknologi Mara
(UiTM).

Ting further points out that based on past experience, the problem has been that
many Bumiputera house buyers are reluctant to purchase Bumiputera-allocated
units in housing developments despite the discounted price.

“They find themselves restricted when they want to sell the property as they can only
sell to another Bumiputera,” said Ting to KiniBiz, explaining that this leads to many
Bumiputera buyers preferring open market titles.

This preference is further augmented by the market wisdom that open market titles
usually command higher prices than Bumiputera-restricted titles, often by more than
the Bumiputera discount amount.

This is the underlying problem that needs to be addressed, said Ahyat Ishak, founder
of the Pejuang Hartanah program which aims to promote property ownership and
investment among Malays.

While Ahyat feels the housing minister is the right person to address the issues and
challenges in the housing industry including excessive speculation, he expressed
concern that this initiative may not necessarily solve the problem of Bumiputera
ownership of property.

“Personally, I feel that there is a deeper problem to solve based on my observation,”
said Ahyat to KiniBiz. “You have got to create the desire in Malays themselves to
want to buy property — the Chinese (for example) are already invested in the
property market and the next frontier (of market growth) will be when Malay
involvement in the property market reaches critical mass.”

“You can lead a camel to water, but you can‟t make it drink,” added Ahyat, explaining
that the avoidance of Bumiputera-allocated units is perhaps due to the lesser
participation of the Bumiputera themselves in the property market. “I always say in
my talks that one shouldn‟t call oneself a Malay in Tanah Melayu if one does not own
property.”

At press time, the Real Estate and Housing Developers‟ Association (Rehda) has not
responded to emailed queries from KiniBiz.

However, according to the findings of Rehda‟s1H2013 Property Industry Survey, 55%
of the survey‟s 150 respondents indicated that they have unsold units with 16%
saying that these unsold units are severely impacting their company‟s cash flow.

In addition, most of these respondents cited unreleased Bumiputera lots as the main
reason for these unsold units.

“There is no timeframe for the release of these Bumiputera quotas, so the developers
are hard-pressed,” said Anthony Cho, chairman of the Malacca branch of Rehda,
earlier this month when speaking at the media briefing of the 1H2013 Property
Industry Survey‟s findings.

“That is why I (have) advocated very strongly to the state government that by having
a rigid Bumiputera quota, you are forcing the developers to move away from the
affordable housing (segment),” said Cho. “Because of the Bumiputera quota, if they
cannot sell then they‟ll go to the higher end market to make better profits.”

It is worth noting that the BDU in the housing ministry would fall under the federal
government whereas land and property matters are for the most part under the state
governments‟ control.

Therefore the BDU would “still need to work with the state governments”, said
property lawyer and author Khairul Anuar Shaharudin.

“The BDU does have legal power because as part of the ministry, they are responsible
in implementing federal government policies,” commented Khairul Anuar further
when asked whether the unit would have the necessary legal framework to empower
it.

Abdul Rahman‟s announcement came as Deputy Finance Minister Ahmad Maslan
stressed the urgent need to establish such units in every ministry to support
Bumiputera economic development.

“We (the Bumiputera) are the majority and if the government assists the majority,
others will also benefit,” Ahmad Maslan was quoted as saying. “We need to be
proactive in forming the (BDUs) as Bumiputeras had been left behind for the past 50
years.”

Ahmad Maslan was further quoted as saying that the BDU‟s organisational structure
will be detailed by the Economic Planning Unit (EPU) and the Bumiputera Agenda Steering Unit (Teraju) while the upcoming Budget 2014 will take into account
allocation for BDU.

The establishment of these units is part of the recently announced Bumiputera
economic empowerment initiative unveiled by prime minister Najib Abdul Razak on
Sept 14, 2013, which economists had criticised as lacking foresight and not
addressing fundamental issues at the core of the problem.

NEED OF BARRIER GATE SURVEY

Dear residents, friends, neighbors and RA Committee Members,

The recently reported enforcement actions of Majlis Perbandaran Ampang Jaya ("MPAJ") in dismantling the barrier gates had been a concern to most of the RAs and the gated community and stirred widespread controversy.

In view of this, we have initiated a Survey Form for which we request your kind indulgence in circulating to all other RA(s), friends and neighbors to gather feedback in order for our YB Ng Sze Han to raise this issue during his Dewan Sitting in early November, 2013.

We believe that the Barrier Gate is a necessary evil in this current state of security and ought to be allowed as an additional measure of deterring crime.

We hope our united voice will convey a strong message to the Local Authority and their constructive role in ensuring security of the community.

Please be pro-active in this petition to help ourselves. Visit Online Register Form:

http://goo.gl/3s96aY

Also please help to circulate this information to your friends, neighbours and other RAs too.

Let’s help YB to help us with a strong mandate.

Thanking you for your kind attention, cooperation and support!

Sincerely,

Alice Choo

o/b YB NG SZE HAN

p.s. YB NG WOULD LIKE TO HAVE A FORUM WITH ALL OF YOU PREFERABLY ON 19 OCTOBER, 2013 (VENUE TO BE ADVISED), THEREFORE PLEASE CONFIRM YOUR ATTENDANCE AND SUPPORT TO alice@dapkinrara.com ON & BEFORE THURSDAY 17 OCTOBER FOR US TO MAKE NECESSARY ARRANGEMENT.

TQVM Alice

MESRA RAKYAT, GO GREEN IN CONJUCTION WITH FUNDRAISING EVENT ORGANISED BY JKP ZONE 11 & 16

This event has been successfully carried out on 22 September, 2013 from 8am until 10pm.

More than 5 thousand of the people from all over Puchong came support this event.

Lots of activities have been carried out for the whole day with numerous stalls selling foods and drinks.

This event has been supported by MP Puchong YB Tuan Gobind Singh, ADN Sri Serdang YB Puan Noor Hanim , ADN Kinrara YB Tuan Ng Sze Han, MP Seputeh Pn Teresa Kok and MP Serdang YB Dr. Ong Kian Ming.

Event starts off with a Zumba Warm out by Gorgeous Fitness Instructor…….

In the morning, Mesra Rakyat, which is the Q & A session between the communities and MPSJ has been carried out successfully where the people have been voicing out their concerns and suggestions contributively and amicably.  This definitely will help MPSJ in improving their services.

As to inaugurate the Go Green Puchong, YB Ng Sze Han, YB Noor Hanim and YB Teresa Kok were invited to Plant a Tree together-with the Chairman/Councilor Mr. Chang Kim Loong AMN,  Mr. Chik Chan Chee (Vice Chairman) and Ms. Alice Choo (Secretary) of JKP 16.  Cr. Pooi Weng Keong could not make to join this eventful activity as he has another important invitation at the same time.

The day was covered with all kind of activities throughout the whole day for children and teenagers.

There were Tanglung Contest, Drawing & Coloring Contest, Eating Contest and Basketball Tournament for different age groups.

Interestingly children have to make their tanglungs with given recycle materials hence this no doubt has given them a chance to instill and to inject their imaginations and creativity. 

Astoundingly many youngsters participated in the basketball tournament instead of idling around the house during the weekend.

The ambiance in the evening  was boosted up with the speed eating contest and talented kids performances organized by Master English who was one of the Main Sponsor of this particular event, whereas MBSB were the main organizer/sponsor for the drawing and coloring contest.   All winners were given cash prizes ranging from Rm 100 to Rm 50 plus cheeky hampers.

MP Serdang Dr. Ong Kian Ming whose schedule has been extremely tight also spared his time to support our event.  He is particularly impressed with Tzu Chi in building a Dialysis Centre in Penang to provide free medical services to the poor.  He is most glad if Rakyat can help in either a one time or monthly donations to Tzu Chi for them to complete this Dialysis Centre. 

YB Ng Sze Han and YB Teresa Kok personally contributed one unit of Lenovo Think Pad each as the grand prize for the lucky draw.

Apart from this, there are Rm 300 cash vouchers sponsored by Master English, Rm 799 worth of Land Packages for China by Malinja Tours, Rm 200 cash vouchers by Avalon, 3 months membership pass by Gorgeous Fitness, Rm 300 worth of Skincare products by WXY, Rm 100 worth of hamper by National Health Farm (NHF) and Rm 10,000 scholarship contributed by Asia Metropolitan University.

YB Ng is really a man with a great community heart returned at 8pm as a judge to all the contests and giving out prizes.

JKP Zone 11 and 16 are thankful to the 4 main sponsors namely Master English, Gorgeous Fitness, Avalon and Asia Metropolitan University as well as other sponsors likewise MPSJ,  IOI Properties, SP Setia, NHF, KMX, WXY beauty products and Malinja Tours and all the VIPs to have helped support this event that have allow us in managed to raise approximately Rm 7,000 which it will be donated to Dual Blessings, NKF and 5 anak yatims from Kg. Tengah.

This event is co-organized by Tenexpo Communication.

The Green Puchong Day 2013 In Conjuction with Mesra Rakyat

Event: The Green Puchong Day 2013 In Conjuction with Mesra Rakyat

Date: 22 Sept 2013 (Sunday)

Venue: Taman Tasik Wawasan, Pusat Bandar Puchong

Time: 7.30am to 9.30pm

Of speculators and bogus house buyers

taken from the Star:

http://www.starproperty.my/index.php/articles/property-news/of-speculators-and-bogus-house-buyers/

Of speculators and bogus house buyers

Posted on August 31, 2013 - Featured, Property News.

BUYERS BEWARE BY CHANG KIM LOONG

Immediate government measures are needed to tackle issue

“Harga Rumah Melampau” – that’s the desperate cry of the rakyat against skyrocketing house prices as headlined by one of the widely-read Bahasa Malaysia newspapers. In English, it translates to “House prices are ridiculous”.

The National House Buyers Association (HBA) has consistently called for government intervention to prevent a “homeless generation of young adult Malaysians” from emerging, especially in urban and sub-urban areas, who, if not for wild speculation, would be able to buy their own houses.

In time, Malaysia will face a “social crisis” with serious political implications if the majority of the lower and middle-income groups do not have affordable houses.

The matter is of grave urgency because the homeless hail from the lower middle class, usually graduate couples or the self-employed earning reasonable income and expecting to buy a house to commence their family life in a fixed abode.

In the Government’s drive to home ownership, low stamp duties have been imposed to encourage first-time house buyers to own a house.

But speculators have taken advantage of this to accumulate multiple properties and manipulate property prices with conniving cash-strapped housing developers. There are three types of purchasers, namely:

> Necessity: Those who buy out of need (owner-occupied),

> Precautionary: Those who buy to hedge against inflation and for long-term investment, and

> Speculative: Those who buy to “flip” and make money against everyone’s interest except their own.

This is a “ticking time bomb” and immediate government measures are needed. The government needs to take proactive measures to stop the steep rise in property prices due to false demand and excessive speculation fuelled by easy mortgages and the low Real Property Gains Tax or RPGT.

The less affluent, who constitute the majority of the population, have been marginalised, with those having more than others accumulating property far in excess of their needs. Urban Well Being, Housing and Local Government Minister DatukAbdul Rahman Dahlan in his keynote address at the recently concluded 16th Housing and Property Summit reiterated: “Of greater concern is the fact that income growth has not been keeping in tandem with the increase in house prices.
Data from the Department of Statistics Household Income Survey, 2012, shows that approximately 80% of Malaysians are earning below RM6,954 per month. Based on the credit line of 30% of the net income for housing loan, at the current Base lending Rate (BLR) of 6.60%, the maximum price of houses which can be afforded by this group (ie, 80% of the population) is only those costing RM300,000 and below.”

The question is: What are the impediments to the success of a truly affordable housing scheme for the people?

PR1MA

The 1Malaysia Housing Programme or PR1MA is an important targeted government initiative with the promise of an affordable home for every couple that deserves it. The government’s main contribution to ensuring affordability is its land, which is a significant subsidy. It is necessary for the organisation to have a clear criteria on these affordable homes.

Already, there are some disturbing signs that the initiative may be petering out even before implementation. PR1MA has already advertised its products at RM400,000 (from the earlier RM450,000 that I had heard about!). With government land being made available, these prices do not reflect the “subsidy” element and are beyond the reach of the intended income group.

It’s already priced too high for the majority of genuine house buyers. PR1MA is a noble idea, but is it being properly implemented? Are they building the right product, at the right place, with the right pricing and of the right numbers?

Even more unsettling is the invitation to private developers to build PRIMA homes and sell them under the PRIMA umbrella. Why? This adds a commercial profit element without any gain to the purchaser.

PR1MA will have to be a comprehensive and discrete regime in all aspects of house purchase; criteria for qualifying; build and sell; types of houses; the exclusion of commercial properties; the grievance redressal regime between purchaser and PR1MA; controls over sub-sale, and of course, appropriate sanctions for dishonesty in dealings with PR1MA.

Investors Club

The situation has been getting worse with the self-glorified “Investors Club” mushrooming in the housing market. They manipulate the property market through en-bloc purchases, say 100 to 200 parcels in stratified properties, with some nearly dominating 50% of housing units and commercial developments.

The modus operandi of the operators of such a club is to negotiate as block purchasers with cash-strapped developers and bargain for a pre-launch block discount of, say, 25% off the sales price. The operators then circulate amongst their members for a “bargain” early-bird discount of 15%, thus making themselves a 10% clean profit. The members of the Investors Club will subsequently dispose off their “wares” upon delivery of vacant possession at a further profit, especially in this current inflated property market.

Seminars like “How to become a billionaire” and “Invest in properties without deposits” will trigger young adults into thinking of shortcuts toward great riches.

Naive and greedy investors get enticed into such antics and are ready to be baited. You need to attend one of these seminars or conventions or whatever to understand more.

You could also surf the Internet and key in the word “Investors Club” to know their modus operandi and the names of the housing developers they are in alliance with and who participates in their “schemes”. There are instances when one needs to join as members at prices ranging from anything between RM300 and RM5,000 to enjoy a lifetime of free seminars and tips. Some are automatic members without having to pay.

There are different business models with some pooling their financial resources to buy bulk into a project, exiting together when prices go up and splitting the profits. It makes sense to developers who merely want to sell as many units as possible to attain the pre-requisite margin sales imposed by their banks or financial institutions (FIs) prior to the drawing down of their bridging loans.
Some banks or FIs impose a mandatory sale of 50% before loans are available for drawdown.

DIBS

In the developer interest-bearing scheme (DIBS), the developer bears the interest otherwise payable by the purchaser to the purchaser’s bank during the construction period. In other words, the purchaser doesn’t have to pay anything to his bank until construction is completed. The catch here is that the purchaser is committed to buying the house as in any Schedule G or H of the sale and purchase agreement. This is not a build-and-sell scheme although it is often passed off as such. The second catch is that the interest that the developer has been paying has actually been factored into the purchase price.

On top of this, should the project be abandoned, the purchaser would still be saddled with the purchase loan, the interest on it and an incomplete house.

In the event the developer cannot settle the loans he has taken, by charging the purchaser’s property, the purchaser’s house will be auctioned off.

The purchaser will still have to pay the loan he took, pay the interest and will not even have the incomplete house to look at!

DIBS is popular with speculators as they pay nothing to make a profit.

Their initial downpayment and deposits are sometimes factored into the purchase price by the participating developers, and some FIs do not even require that the developer collect the deposit that has to be paid by the so-called purchaser.

This is one of the factors making for “bogus” house buyers, who merely flip the property at the right time.

We hope that Bank Negara will come up with a policy change to curb DIBS. It is worth noting that Singapore had banned DIBS in 2009.

It has come to our attention that developers are already working on counteracting measures even before Bank Negara moves to implement anything.

After all, they are always one step ahead of the authorities.

Government initiatives and HBA’s proposals

The HBA was invited to present its 10 proposals to curb the escalation of house prices at the following recent forums: Budget Consultation, 2014 in Putrajaya chaired by the Prime Minister;
Providing Greater Access to Home Ownership chaired by the Deputy Minister of Finance II Datuk Seri Ahmad Husni Mohd Hanadzlah; and Initiatives to Reduce House Prices initiated by the Urban Wellbeing, Housing and Local Government Minister .

The government now seems to be serious about doing something. If it is so, then it has to make several hard decisions. The government must take immediate proactive steps to curb the uncontrolled escalation of property prices. Reducing speculation will translate into lower property prices.

HBA detailed proposals to raise stamp duties and the RPGT and the mechanism to lower the Loan-to-Value Ratio (LVR) as a means to stop price speculation, which has pushed property prices through the roof.

The three pertinent instruments amongst seven others that can be employed have been summarised in a table in the previous page.

Conclusion

Considering the deep pockets of property speculators, the effectiveness of these proposals remains to be seen, but, if passed, will make speculation unworthwhile.

> Chang Kim Loong is the secretary-general of the National House Buyers Association (HBA): www.hba.org.my, a non-profit, non-governmental organisation (NGO) manned by volunteers. He is also the NGO councillor at the Subang Jaya Municipality Council.

Have a green day in Puchong

taken from: http://www.thestar.com.my/News/Community/2013/08/20/Have-a-green-day-in-Puchong-Residents-Committee-to-organise-charity-event-on-Sept-22-to-build-close.aspx

BY OH ING YEEN 

INGYEEN@THESTAR.COM.MY

One for the album: (from left) Tenexpo Communication marketing manager Kino Ngiam, Zone 16 vice-chairman Chik Chan Chee (in blue), Dual Blessing Bhd volunteer team and public communication executive Goh Kuan Then, MPSJ councillor Chang Kim Loong, Masterskill deputy CEO Datuk Dr Jayles Yeoh, National Kidney Foundation of Malaysia CEO Chua Hong Wee and Zone 16 JKP committee member Mok W.O. with the posters of the event.

   

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DO YOUR bit for charity and Mother Nature while getting to know your community and local representatives at the Green Puchong Day on Sept 22.

The event will be held from 7.30am to 9.30pm at Taman Tasik Wawasan Puchong.

Organised by the Zone 16 Council Residents Committee, the objective is to create a platform for residents to give feedback for the betterment of MPSJ, to foster unity as well as build a friendly and conducive living environment in line with the motto “Towards Community Bonding”.

According to MPSJ councillor for Zone 16 Chang Kim Loong, last year’s event was well received.

“There will be a Q&A session by representatives from MPSJ’s infrastructure, landscape, engineering and enforcement departments.

“We will also be inviting Puchong MP Gobind Singh Deo, Kinrara assemblyman Ng Sze Han, Seri Serdang assemblyman Noor Hanim Ismail and Seputeh MP Teresa Kok, who is also the former Kinrara assemblyman,” he said at a press conference.

There will also be 10 scholarship awards from Asia Metropolitan University (AMU) up for grabs, food and beverage stalls as well as games and sports activities,

RM10 or RM20 vouchers can be purchased to buy food and drinks or participate in the games.

RM2 of every RM10 and RM4 of every RM20 voucher will be donated to the National Kidney Foun-dation, Dual Blessing Bhd and other selected NGOs.

Residents are also encouraged to bring recyclables or unwant- ed items such as T-shirts and aluminium cans.

There will also be a lantern walk at night.

For details, visit www.facebook.com/TheGreenPuchong- Day or call 017-991 0612, 017-991 0613.