THE National House Buyers Association (HBA) said Minister of Housing and Local Government Zuraida Kamaruddin’s recent explanation that construction cost deposit “exemption” accorded to several developers is not a full exemption, makes no sense.
Zuraida was quoted as saying firms need to have a good track record and sufficient financial capability before they are allowed to pay a rate of deposit below the usual 3%.
HBA secretary-general Datuk Chang Kim Loong believed that the scrutiny of the developer’s financial background is unnecessary.
“Why do we need to study the developer’s financial background? We know every developer sets up new companies to undertake new housing projects. This is to ensure that if a project fails, the mother company will not be affected. They will not put all their eggs in one basket,” Chang tells FocusM.
According to Chang, they are new companies without track records.
“This is only applicable to the mother company which has a track record. However, the mother company is not underwriting the success of a project. Perhaps, all future projects should be underwritten and guaranteed by the mother company,” he added.
Recently, the ministry exempted 122 developers from paying the requisite 3% deposit of gross construction cost between 2016 and November 2019 when undertaking housing development projects.
Chang said neither the affordability of the units nor the developer’s profitability should be a gauge.
“Developers must, and should, pay the 3% requisite deposit whether it is affordable units or otherwise. This is to ensure that developers for subsidised housing schemes complete the work on time, and with the quality, they are imposed with.
“That 3% rule should even apply to subsidised housing – particularly to subsidised housing – as the government needs to ensure developers deliver quality units as scheduled.”
Chang also said the 3% deposit is to ensure that only developers who have the financial and technical capability are given the work.
“Giving them exemption will have repercussions on the housing ministry itself later on. It may be required to jump in when these developers, for whatever reason, fail to deliver. In the end, the buyers of these units suffer, in terms of quality and delivery time,” he said.
The required 3% deposit was part of the 2012 amendments to the Housing Development (Control & Licensing) Act, 1966 which came into effect in June 2015.
But six months later, exemptions were given. That 3% replaced the previous one-size-fits-all RM200,000 deposit required of developers.
