Gen (R) Datuk Goh Seng Toh elucidates:
“The version of BTS that we are referring to
is not the absolute BTS. In the absolute BTS,
developers can only sell their products when
the houses are fully completed, hence build-
then-sell. However, “BTS 10:90” is a hybrid,
a variant of the present sell-then-build and
the absolute BTS. Developers can sell their
products upon launch. Buyers just need to
pay the 10% upon signing the SPA (sale and
purchase agreement), similar to the current
practice Ω but the similarity stops here.
Where under the current system, buyers
will continue to pay progressive payments,
in BTS 10:90, the buyers do not pay anything
more until the houses are completed with full
certifications and titles, complete with water
and electricity supply. The understanding
of this is very important because industry
players with vested interests are
intentionally confusing BTS and BTS 10:90.”
ARE WE BTS10:90-READY?
HBAhas been lobbying strongly for the
implementation of this BTS 10:90 system to
replace the current STB approach for the
longest time. Goh says that this caused the
announcement by the previous housing
minister, on implementing the BTS 10:90
system in 2015. “BTS has been deliberated
and studied for scores of years. In fact, it looks
likewe’ll study it to death! In times of bad
“
Rightly, developers should raise
their own financing to do business but
the current STB allows themto use
customers’ money to fund their business
(during collection of progressive payments).
Engaging in a housing development project
is just like engaging in any other business; it
can succeed or it can fail. Inmost cases, they
succeed and bring attractive profits to
developers. But in the event of them failing
(as in project abandonment), the customers
(buyers) are the first ones to suffer the
devastating fall-out. So if you ask: “Are the
banks ready to finance the BTS 10:90 system?”
My answer is that they are already financing
thewhole of the housing industry through a
very disorderly system, whereby loans are
given to house buyers and themoney is then
paid to developers for houses that are still
uncompleted. It is an untidy and disorderly
systemwhereby buyers are put to great risks.
Not only the buyers, but those related to the
industry are also exposed. Consultants
(architects, engineers and others) will not be
able to get their fees. Buildingmaterial
supplierswill not get their payments. Original
land owners in those joint-venture projects
will have their land tied up in legal quagmires.
Talk to some victims of abandoned projects
and youwill understand the hardships they
go through. Some have been suffering for
scores of years; beenmade bankrupt for not
settling their housing loanswhen they do not
even have the house to live in, let alone call
their own; and some have already passed on
whilewaiting!”
BankNegarawas contacted for their
comment. A representative replied saying
that theywere unable to comment as no
memo or black andwhite instructions have
been handed out at press time. “We anxiously
await the government’s
‘Janji ditepati’
when
the previous housingminister, DatukChor
CheeHiong, announced that BTS 10:90will be
fully implemented come 2015.We hope
political will shall prevail,” saidGoh.
Watch our column next week for views
from the developers and the housingministry.
CUT AND KEEP
JUNE 6, 2014
Please email your feedback and queries
to:
X
T
HE
“Build-then-Sell” (BTS)
concept is one of the property
industry’s hot topics that have
been extensively discussed year
after year. It is considered the alternative
to the current progressive payment system
called “Sell-then-Build” (STB), which
has been the industry’s “norm”, the
modus operandi for house purchase in
property development. BTS is practiced
inmany countries abroad. It was never
the favoured systemhere although the
majority ofMalaysians are all for it.
Some developers have chosen to adopt
it and have already been using this
“standard operating procedure” (SOP)
in selling residential property. However,
there aremany views and different
opinions, whether or not this systemwill
be beneficial, and towhom.
theSun
gets in touchwith industry
players of relevant sectors for their
insights on this 2015-proposed property
industry regulation.
MECHANICS OF THE
PROPOSED SYSTEM
The government’s announcement on its
intention to implement the BTS system
in 2015 has caused a buzz in the industry.
However, National House Buyers’
Association (HBA) vice-president Brig
The
BTS10:90
concept
>Debating theproposition for the ‘Build-then-Sell’ modus operandi
economic situations,
the argument was
that the industry is
already suffering, so
don’t implement
anything that would
further aggravate
it. During the good
times, they say don’t
implement anything
that would
jeopardise it,”
shares Goh.
The industry is
more than ready for
the change but many
developers (during
themany industry
players’ meetings, discussions, mini-labs,
workshops etc) have shown reluctance to
adopt the changes, says Goh. “Industry players
are still objecting to this and trying to derail
its implementation, for obvious reasons.
Whowould opt to do business using their own
fundswhen customers’ funds can be used?
Especially since one’s own funds include
whatever bank financing developers have to
obtain, for which they are responsible for,”
Goh reasons.
“TheAssociation of Bankers have been
very vocal and consistent in its stand. Banks
look at viability of a project and not the size of
the developer company. Of course, those
weak/bogus/fly-by-night developers
will be greatly disadvantaged but then
again, isn’t that a good tenet for the
industry? Industry playerswith vested
interests had even thrown the racial
card at the state, claiming that small-
scale bumiputra developerswill be left
out of the business. This is a favourite
tactic used by developers to scare the
government into not progressingwith
the implementationof the system in
2015,” says Goh.
He also says that it is not true that
the BTS 10:90 systemwill only benefit
the house buyer. “In fact, every party
in the industrywill benefit becausewe
will then be operating in amore orderly
and logical financing structure. Howcan
amore orderly and logical systemof
financing be detrimental to anyone?”
SURVEYING THE FINANCIAL SIDE
Whatever system the government
chooses to implement, funding for the
housing industry invariably comes
from the financial institutions i.e. the
banks. Fewbuyersmake cash property
purchases or even fully pay up using
their savings.When purchasing
residential properties, housing loans
are the norm. In fact, Goh says that
developers also employ little in-house
funds to finance their development
projects and businesses. “It has to do
with taxation, leveraging and distributing
risks,” says Goh.
Wherespacespells luxury
MAH
Sing Group recently announced an
increase in the gross development value
(GDV) for its Southville City
@
KL South
development, fromRM5.3 billion to a
whopping RM8.3 billion. The developer
attributed the increase to a 2kmcommercial
development stretch fronting the
North-SouthHighway, a new addition
to its masterplan.
The developer reports that take-up for
the four towers of Savanna Executive Suites
in Phase One at Southville City has been
very encouraging. With that, Mah Sing
recently unveiled its fifth tower, Tower C2,
which is nowopen for sale. Over the
weekend, the developer also released 80 of
its 112 units of Avens Residence for
pre-selection, pending the official launch
inmid-June. These residences come
as 2.5-storey link homes and targets three-
generation families looking to live together
on landed property in a suburban area.
Avens Residence falls under Phase 2 of
Southville City
@
KL South. Property here
comes with a freehold title in spacious
layouts andmeticulously planned designs.
Eighty percent of units had already been
taken up at the end of the preview.
Log on to the developer’s website or visit
the showvillage or sales gallery in Bangi for
more information on the holistic township
of Southville City
@
KL South.
Completed
Properties
Progressive
Payment System
(Sell-then-Build)
10:90 Payment
System
On signing of the
Sale & Purchase
Agreement (SPA)
Pay 10% of
purchase price
Pay 10% of
purchase price
Pay 10% of
purchase price
Waiting period
for completion
of construction &
notice of delivery of
vacant possession
None
Within 24 or 36
months or more
upon architect’s
certification of
completion
* Within 24 or 36
months or more
upon architect’s
certification of
completion
Buyer to complete
payment/s
3 months from SPA
Date (in normal
situations)
Progressive
payment system (10;
10; 15; 10; 10; 10;
5; 5; 5; 12.5; 2.5; 5
in % (from first 10%
payment or SPA
date) while waiting
for completion of
construction
90% of purchase
price at 24 or 36
months from SPA
date depending
on the regulated
contract of sale
Waiting period for
actual occupation
with Certificate
of Fitness for
Occupation (CFO)
None
Within 14 days from
vacant possession
or longer depending
on developers’
architect to procure
the issuance of CFO
*Proposed vacant
possession
with CFO
Waiting period
for transfer
of individual/
strata titles
Varies on whether
titles have been
issued at the time of
signing of SPA
Varies from
developer to
developer
*Proposed vacant
possession with
issuance of titles
Table1: Comparison on the delivery systems
* Proposals made by HBA
Source from iproperty.com
Some of Mah SingGroup’s board of directors, (from left) Datuk StevenNg, Datuk LimKiu
Hock and Tan Sri LeongHoy Kumat the previewof Avens Residence.
PART ONE
