Property Hunter Magazine October Issue 2014 | Page 44

/// Hot Topic

/// HOT TOPIC

Build-Then-Sell in 2015?
Credit must be given to the wellregulated regime of housing
development that include the
tight control on the disbursement
of the progressive claims under
the specially opened Housing
Development Account as well as
the responsible lending guided by
the one of the world best central
bankers proudly Malaysian.

Chris Tan, managing partner of Chur Associates
Chris Tan, managing partner of Chur Associates

W

e are close enough to 2015
that the market is already
speculating on Budget
2015. April 1, 2015 will see the
introduction of the consumptionbased goods and services tax (GST).
While we are hopeful of a reduction
of the corporate and personal
income tax rate and even more
hopefully for the adjustment to the
real property gain tax in light of the
imposition of the 6% GST, there
are something else looming in the
backdrop of all real estate investors
and home buyers alike.
Guided by the then minister’s
speech in the parliament, 2015 is
suppose to be the year where the
build-then-sell (BTS) model shall be
made mandatory for all housing
developers to replace the everpopular sell-then-build (STB) model
that has certainly played a significant
role in the rapid nation building in
the last two decades.

population.
The newsworthiness of PR1MA
and the various efforts by the
State Governments in constructing
affordable housing seems to suggest
that Malaysians can no longer own
the roof over their heads without
governmental interventions. It
seems like a natural progression
in joining the rank of developed
nations where public housing is
common.
Many would argue that there is still
merits in implementing BTS as it
will stamp out completely the risk
of incompletion and abandonment
by incapable housing developers
to offer the ultimate protection for
genuine homebuyers. The question
remains whether such risk that
BTS aim to address is one that is
manageable.

In fact, the STB model of housing
development is so significant to the
extent that real estate investment
has captured the imagination of the
nation and abroad as the preferred
tool in gaining wealth, hedging
against inflation and shielding
against any potential economic
downturns.

Granted that the frequencies of
such news were high in the late
1980s, late 1990s as well as some
isolated cases of mismanagements,
it seems no surprise that the
frequencies coincide with the global
recession in the 1980s and the
Asian financial crisis in the 1990s.
On top of that, house purchase
and development can never be
separated from the financing regime
at the material time.

Even with the allegedly less secured
STB, a lot of liquidity has flown
into real estate that drives up the
house prices and effectively drive
out the BTS to the back burner
with affordability becomes a
more pressing issue of our young

Learning from these painful but
valuable experiences, Malaysia
seems to “survive” the global
financial crisis in 2008 where real
estate remains the most resilient
sector in comparison with its pale
relatives worldwide.

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BTS as a model is nothing new and
has always been there, driven by the
market forces. Under the Housing
Development Act, there are two
instances where you do not require
a developer licence to build and
an advertising permit to sell. It is
either the negligible development of
four units of houses and below or
when no payment is to &R6