KUALA LUMPUR: To avoid becoming victims of developers who abandon their housing projects, property buyers have been advised to opt for subsale homes.
Checks on the Housing and Local Government Ministry website showed there are 198 abandoned projects involving thousands of home buyers.
National House Buyers Association president Datuk Chang Kim Loong said risks involved in purchasing a house in a project that is yet to be launched or built are much higher, especially now, due to the impact brought about by the pandemic.
Chang said many home buyers prefer to buy houses in new development projects instead of opting for subsale properties because of negative perceptions of second-hand homes.
“Don’t believe that buying a subsale home is bad or will bring misfortune,” he told theSun.
According to Chang, a subsale home could be a better choice, taking into consideration the infrastructure and public amenities available compared with a new development.
“Buy something you can see and touch instead of waiting for a few years and realising it may not come true.”
Chang reminded home buyers to check facilities such as hospitals, schools, public transport and shops close to subsale homes they wish to purchase.
In the post-pandemic economic situation, Chang said many who are affected are putting their properties up for sale.
“It is a buyer’s market now and auction properties or subsale homes are being sold five to 30% cheaper.”
Chang added that buyers should not fall for marketing tactics of developers.
“Would you risk your good credit report and be part of a statistic due to an abandoned project or be happy with a home that you can move into immediately?”
Chang said banks must also facilitate buyers to acquire such homes.
“Don’t be too stringent with your rules. For all we know, hawkers and small business owners may be better paymasters compared with salaried employees.”
He said banks should do their due diligence but be considerate by studying applications on a case-by-case basis.
Licensed financial planner Ian Wong, in agreeing with Chang, said the standard procedure for new development projects is that once a housing loan is approved, the bank disburses significant chunks of it to the developer according to different “checkpoints”.
“Examples of these checkpoints can be the signing of the Sale & Purchase Agreement, completion of the foundation, wiring, sewerage, and so on.
“Your bank could have disbursed 60-70% of the total loan amount to the developer before access roads are even built.”
Wong added that if the project is abandoned at this stage, for whatever reason, the buyer is left with a massive debt and no property to show for it.
He said this practice is in stark contrast to what is done in some countries where disbursement of loans is held until a development scheme is completed and buyers have inspected their units.
Wong said that there is a reason why property buyers are advised to buy from reputable developers.
He added that the most important thing is for buyers to get what they pay for, especially if it is going to be their primary home.
“Purchasing a property is a huge financial commitment, and all it takes is one mistake for a buyer’s finances to be irreparably damaged.”
