seminar on build-then-sell -the way foward- ism

7/27/2019 Seminar on Build-Then-Sell -The Way Foward- Ism

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IMPROVING THE DELIVERY SYSTEM ON THE PROCEDURES ANDPROCESSES AND

IMPLEMENTATION OF THE ONE STOP CENTRE FOR DEVELOPMENTAPPLICATIONS



No.Abstract

1.0 Objective

CONTENTS

Items Page1

2

2.0 BACKGROUND 2

3.0 ISSUES & PROBLEMS 3

4. 0 CURRENT PRACTICE OF DEVELOPMENT APPLICATION 7

PROCESS

5. 0 IMPROVING THE DELIVERY SYSTEM ON THE PROCEDURE 9

AN D PROCESS AND IMPLEMENTATION OF THE ONE STOPCENTRE FOR DEVELOPMENT APPLICATIONS

6.0 IMPLEMENTATION OF THE ONE STOP CENTRE TO PROCESS 14

LAND DEVELOPMENT APPLICATIONS

6.1

6.2

6. 3

6. 4

Function and Membership of the One Stop CommitteeFunction and Membership of the One Stop CentreSecretariatProcedures of the One Stop Centre Committee meetingsInspectorate Team of the Ministry of Housing and LocalGovernment

14

15

15

18

7. 0 CONCLUSION 20



IMPROVING THE DELIVERY SYSTEM ON THE PROCEDURES ANDPROCESSES AND

IMPLEMENTATION OF THE ONE STOP CENTRE FOR DEVELOPMENT

APPLICATIONS

By:

DATO' MOHO. FADZIL SIN HJ. MOHO KHIR

Director General

Federal Department of Town and Country Planning, Pninsular Malaysia

Jalan Cenderasari, 50646 Kuala lumpur

Tel: 603-26989211, Fax: 603-26987371

Abstract

The Ministry of Housing and Local Government (MOHLG), through theDepartment of Town and Country Planning, has taken the initiative to improveand re-engineer the whole process and procedure in treating developmentapplications that are currently practised. This effort to improve the deliverysystem shall be an incentive to developers who have chosen to adopt the "Build

Then Sell U (BTS) Concept, and for the projects with high impact and foreigninvestments as well as Government projects, so that approval can be given within4 months. The approval for development applications, especially that concerningtown and country planning in this country is not only sUbject to the Town andCountry Planning Act 1976 (Act 172), but also other legislations such as theNational Land Code 1965 (Act 56), Street, Drainage and Building Act 1974 (Act133), Local Government Act 1976 (Act 171) and the Uniform Building Bye-Laws1984. Local Authorities (LA), are also guided by other mechanisms such asRules & Regulations, procedures, standards and guidelines, in the deveopmentcontrol process. In outlining the details of the improvement in the delivery systemof the approval process for development applications, this paper will focus on themechanism, process and procedure for simultaneous approval of developmentapplications through the implementation of a one stop centre



1.0 OBJECTIVE

The objective of this paper is to table a new approach that will beimplemented to improve the government delivery system particularly thatinvolving the process and procedure in the approvals of developmentapplications. This is in line with the Cabinet decision dated 21 st March2007.

This paper will identify the issues and differences that exist in the processand procedures of development applications currently in practice in the

country. A uniform and standardized system foran

Local authoritiesin

Peninsular Malaysia shall be used to comply with the requirements of theNational Land Code 1965 (Act 56), Town and Country Planning Act 197(Act 172), Street, Drainage and BUilding Act 1974 (Act 133), LocalGovernment Act 1976 (Act 171) and the Uniform BUilding Bye-Laws 1984.

2.0 BACKGROUND

The current practice of development plan approvals that involve landdevelopment, planning, building and engineering is made separately andsequentially, which consumes much time. The approach used in theapproval of land development that involve several governmentdepartments and agencies also differ from state to state. Therefore thegovernment has directed that all agencies at federal, state and local levelsundertake steps to ensure that the service provided is cost effective, fast,efficient and of quality besides being an incentive. Every governmentagency has to continously improve to satisfy customer needs and offerquality services.

Thus a coordinated effort on the work processes that is more systematic



technical departments and agencies so as to achieve a basicunderstanding and agreement on the new process and procedures.

On the part of the government, the fast lane incentive for BTS has a twopronged objective:

a. developers who choose this concept will be more competitive in thehousing market and the issue of abandoned projects will be a thing ofthe past as buyers will purchase ready built houses, and

b. The decision is basically a re-engineering of the whole system of

process and procedures that is currently practiced, to ensure thatdevelopment plan application can be processed and decisions madequickly and efficiently.

3.0 ISSUES AND PROBLEMS

The MHLG with several other departments undertook an examination of

the flow chart and work processes in all departments and agenciesinvolved in the approval of development projects. As a result, it was foundthat approvals for any development proposal, from land matters, to layoutplan approval to building plans, can take up to more than a year. Some ofthe reasons attributed to the lengthy approval process are:

i. The process for land matters in this country involves various agenciesand technical departments, at both federal and state levels. Theprocess also involves several legislation including the National Land

Code (NLC), Act 172, Act 171, Act 133 and several others.

ii. Based on existing practices, there are several shortcomings anddifferences in terms of the process and procedures of land



iv. there are differing interpretations of the NLC and Act 172. This hasresulted in the different processes of planning and building planapprovals and the development of land;

v. there is a lack of transparency in the processing of developmentapplications according to procedures of the law;

vi. There exists a definite process for development applications, in whichthey are done in sequence under section 124, 124A and 2040 of theNLC, in which each is submitted separately to the land office. On the

other hand, planning permission and building plan applications are alsosubmitted separately even though to the same authority.

4.0 CURRENT PRACTICES IN THE PROCESS OF DEVELOPMENTAPPLICATIONS

Currently, development proposals that involve planning permission, andbUilding plan approvals, refers to specific legislations namely the NLC, Act172, Act 171, Act 133 and the Uniform Building Bye-Laws. Although allthese legislation are adopted by all authorities, there still exist delays forapproval. As an example, the approval process for land conversion takesup to between 3 to 6 months.

In the processing of applications there is not much diffiCUlty in giving

preliminary approvals by the Land Office and the Director of Lands andMines as they can easily refer to the available Structure and Local Plans.The process of subdivision (under the jurisdiction of the State Lands andMines Department) takes an average time of 2 weeks to 4 months As



As an example, the comments given by the State Department of Landsand Mines during the planning permission stage is repeated during thebuilding plan approval stage. This repetition also happens when obtainingcomments from technical departrl}ents.



5.0 IMPROVEMENT ON THE DELIVERY SYSTEM IN THE PROCESS ANDPROCEDURES AND IMPLEMENTATION OF THE ONE STOP CENTRE

The proposed improvement incorporates the requirements of the NationalLand Code (for section 124A and 2040) and Act 172 (Section 19), and Act133 (section 70A). This Shall act as an incentive that Will be given todevelopers who choose the BTS Concept. Applications for high impactprojects, or projects invOlving large foreign investments and projects bygovernment that are referred to Local Authorities shall be processedthrough the fast lane within 4 months.

Besides that, development proposals involving Sell Then Build (STB) alsoneed to be expedited in line with the Government's objectives of givingexcellent service to the pUblic. Applications involving this concept shall beapproved within 6 months from the date of submission.

FOr purposes of increasing the effectiveness of the delivery system, thisre-engineered approach shall be adopted by all Local Authorities (LA). ForLAs

that do not have the professional services of a town planner, theState Department of Town and Country Planning need to assist in theprocess and make recommendations on the application. In order to avoidconfusion, it is suggested that this new approach be implementedsimultaneously throughout the country and the former practice be setaside.

To reduce amendments on the plans submitted, applicants/developersneed to undertake preliminary discussions With LAs and relevant technical

departments and agencies, as well as abide by current governmentpolicies, guidelines and planning standards available.

Under the BTS concept, simultaneous applications that involves section



For applications under 124A and 2040 NLC that is accompanied with precomputation plans, technical inputs from technical departments andagencies are not required as this is considered a duplication. This is

because the layout plan that is submitted during planning permissionrequire technical inputs and comments from government departments andagencies first before the pre-computation plans.

Upon receiving any application, the Secretariat of the OSC shall check alldocuments according to the prescribed checklist. When all documents arein order, the Secretariat shall distribute the application to relevantdepartments for processing:

• application under section 124A and 2040 to the Land Office:

• application for planning permission to the divison/department of Townand Country Planning at local Authority; and

• Application for building plan to the divisin/department of Building at theLocal Authority.

The OSC Secretariat shall also distribute all three applications to thetechnical departments/agencies for comments and views.

At the same time, after receiving the application, the land office canproceed to process, although approval will be based on the status of theplanning permission. This is to expediate and improve on the effectivenessof the delivery system of the work process and procedures. The processand procedures for simultaneous applications shall be as follows:

A. Application for subdivision and conversion will be as follows:

i. Check on Form 70 , receipt of payment, *pre-computation plan,agreement if under different ownership and power of attorney



The time frame for processing the application shall not exceed 25 days.

B. Application for Surrender and Re-alienation will be as follows:

i. Check on Form 120, receipt of payment, *pre-computationplan that will show details of the units to be surrendered,agreement letter if under different ownership, Letter ofOath,and power of attorney (if available);

ii. Land Administrator checks on land status (caveat, conditions of title,expressed conditions, and others);

iii. Land Administrator records receipt of application into theownership document;

iv. the settlement officer prepares land report;

v. charting of application by draughtsman;

vi. Land Administrator prepares review to the OSC Secretariat.

*/fapplicant submits a pre-computation plan for simultaneous application.

The time frame for processing the application Shall not exceed 25 days.



v. send notices to neighbouring lot owners I hearing of

objections (if no local plans available);

vi. Refer to the State Planning Committee (SPC) and theNational Physical Planning Council (NPPC) (when required);

vii. receive comments from technical departments andcoordinate the conditions;

viii. prepare written instructions to the applicant and ensure thatthe applicant fulfill conditions within 7 days;

ix. Prepare working paper for the es c secretariat.

The Planning department at the Local Authority must refer to thedepartment of engineering for engineering plans, and the department ofLandscape for landscape plans, for coordination purposes. The director ofPlanning shall table the working paper at the e sc Committee meetings.The recommended schedule is not more than 50 days. For applicationswithin areas with a Local Plan. the processing time shall not be more than25 days.

D. Applications for Building Plan approval require the officer at theBUilding Department to undertake the following process andprocedures:

i. Receive application;

ii Ch k F A b i i f d d l ( b ildi g l



Next, the Secretariat of the OSC shall compile and coordinate all reportsand arrange for the meetings, as well as distribute the reports to themembers of the OSC Committee. In cases where technical departments

could not provide feedback and comments within the time frame setwithout valid reasons, the esc Committee shall consider and approve theapplication. For applications that have submitted the pre-computationplans initially, and there are differences between the pre-computationplans and the detail layout plans, the secretariat shall request the applicantto make the necessary amendments to the pre-computation plans beforetabling the application at the OSC Committee meeting.

For areas that has no local plan, all technical departments I agencies shallbe given 50 days to process the application. This is because the LA hasto send out notices and receive objections from neighbouring land ownerSwithin 21 days. SUbsequently, the LA has to hold a hearing within 14 daysof receiving the objections. ThiS is an improvement to the proviSion of subsection 21 (7) Act 172 from 30 days to 14 days.

The OSC Committee shall consider and decide on the application forplanning permission and building plans as well as make recommendationson the pre-computation plans, and simultaneous applications for subdivision and conversion under 124A, and surrender and re-alienationunder 2 0 4 0 NLC, in line with the provisions of sUb-paragraph 136(1 )(c)(i)and paragraph 2040(1 )(d).

The Land Administrator shall prepare the working paper onrecommendations on Whether to approve or refuse applications, to theDirector of Land and Mines who will then prepare a working paper to betabled to the State executive Council. The decision has to be reverted to

the Land Administrator in order to determine the premiums. The escsecretariat is responsible to present the decision of the application to theFull Council of the Local Authority for endorsement.



The Cabinet, has decided, amongst others, that the process andprocedures for the two concepts of BTS and STB be undertakensimultaneously until further research is undertaken, which is after 2 yearsthis new approach is implemented. As it is the objective of theGovernment to expediate the delivery system, the MOHLG suggests thatthe Simultaneous Application for Land Development, Planning Permissionand Building Plan for the Sell Then Build Concept (STB) also be givenattention and approval given within a time frame of 6 months.

For developers that still choose the STB concept, the process andprocedure for applications are the same. However, the time frame will bea bit longer compared with the BTS concept. This approach will involvethe following time frame:

i. application for conversion 48 days;ii. application for planning permission 84 days;iii. application for building plan approval 45 days;iv. comments from technical departments 40 days; and

v. Giving enough time to the OSC secretariat to compile allcomments and prepare working paper.

To process applications under the STB concept that involve land matters(simultaneous subdivision and conversion and surrender and realienation), planning permission and building plan approval, the time frameshall not exceed 142 days (4 months and 22 days). Refer Appendix 2.

In this new approach of processing development proposals, thecooperation of all departments and agencies in making decisions is vital.In the event that technical departments and agencies cannot providecooments and feedback within the stipulated time frame without a valid



6.0 IMPLEMENTATION OF THE ONE STOP CENTRE TO PROCESSDEVELOPMENT PROPOSALS

6.1 Implementation of the One Stop Centre (OSC)

The approach under the concept of aTS and STa involves theestablishment of the One Stop centre (OSC) at the Local Authority. ThisOSC has been given expanded functions from the processing of buildingplans and Certificate of Fitness as in their previous scope, to theprocessing of land matters, planning permission and building plans. Theissuance of the Certificate of Fitness shall be replaced by the Certificate ofCompletion and Compliance (CCC) that will be under the responsibility ofthe certified professional person. However, for old cases that still have notbeen issued the Certificate of Fitness, the responsibility still lies With thisOne Stop Centre.

The establishment Of the OSC is to reduce the normal time for processingof development applications through simultaeous submission and

immediately increase the efficiencyof the

government delivery system ofland development at Local Authroity level. The OSC at the local authorityshall have the following role:

i. Coordinate, control and monitor simultaneous applications thatinvolves land matters (simultaneous subdivision and conversionand surrender and re-alienation), planning permission and buildingplan from the applicant to the Land Office and Local Authority as

well as technical departments and agencies as prescribed;

ii. examine the status of development applications and issuance ofapproval decisions to the applicant;



6.2 Functions and membership of the OSC Committee

The functions of the OSC Committee are as follows:

i. consider and make decision on the planning permission application,bUilding plans and other related plans (power is delegated by theFull Council of Local Authority). and

ii. Endorse and inform the decision on the application under provisionsof section 124A and 240D NLC and in line with the provisions ofsub paragraphs 136(c)(i) and 204D(1)(d).

To ensure smooth implementation of this new approach of the OSC, acommittee shall be formed and chaired by the Mayor, or President of theMunicipal Council, or President of the District Council. The members areas in Appendix 3.

6.3 Functions and membership o f lo ca l One Stop Centre Secretariat

The secretariat of the OSC shall consist of the Town Planner in theDepartment of Town Planning at the Local Authority. There are 4categories of organizational structure for the OSC secretariat, which are:

Category 1: The proposed organization structure for the OSC secretariatfor 14 Local Authorities with City Hall I Municipal status will be as such:

i. a town planner at J48;



Category 2: For 21 Local Authorities with City Hall I Municipal status, the

orgcihization structure shallbe as

follows:i. a Town Planner J44;

ii. a Town Planner J41;

iii. a technical assistant (architecture) J29;

iv. a technical assistant (engineer) J29;

v. a Town Planning Technician J17;

vi. an administrative assistant N17, and

vii. a general worker N1.

Category 3: For 25 local authorities with district status, the organization

structure shall be as follows:i. A Town Planner J41 ;

ii. an assistant town planner at J 29;

iii. a technical assistant (architecture) J29;

iv. a technical assistant (engineer) J29;

v. an administrative assistant N17, and

vi. a general worker N1.



The functions of the Secretariat of the One Stop Centre shall be as follows:

i. receive applications of development proposals covering planningpermission, building plan, earth works plan and landscape plans,from applicants;

ii. examine if the proposal received has met with all requirements andconditions set by the Local Authority;

iii. Undertake to distribute the documents of the proposal to alltechnical departments and agencies for comments and reviews

(Secretariat shall issue an acknowledgement slipif

applicants wantto distribute the documents themselves;)

iv. monitor the development applications that has been distributed totechnical departments and agencies;

v. Inform the One Stop Centre Committee on the applications received;

vi. Obtain feedback from the technical departments and agencies if

there are issues and problems on the proposals;

vii. prepare and forward the recommendation paper on the applicationtogether with the pre-computation plan, for the approval of the OneStop Centre Committee;

viii. Distribute the decision of the One Stop Centre Committee on theapplication to the Land Office that consist of:-

a. application for land development under section 124A and2040 National Land Code;

b. application for Planning Permission;li i f b ildi l l



6.4 Proceedings of the Meetings of the One Stop Committee

To ensure a smooth process, every development application submitted by

consultants on behalf of the developers to the one stop centre, mustcontain complete information and documents in accordance to theprescribed checklist. The OSC Secretariat will only register applicationsthat are complete. Consequently the Secretariat will take immediateaction to distribute the simultaneous application regarding land matters tothe Land Office, planning permission to the Department of Planning of theLocal Authority, and building plans to the Department of Building at theLocal Authority. The Secretariat shall distribute all three applications totechnical departments and agencies for comments and views. TheTechnical Departments shall prepare and submit their recommendationsto the asc Secretariat.

The format for technical departments' reviews and comments has beenprescribed in the Guidelines. To ensure that decisions are made withinthe least amount of time as prescribed, it is sugested that the One StopCentre Committee meetings be held twice (2 times) a month. TheSecretariat shall pre-determine the dates of the meetings to enable

developers to present their proposal should they want to. To ensure thesmooth proceedings of the meeting, the checklist of technicalrequirements shall be prepared for the Chairman and committee members.The One Stop Centre Committee shall be informed from time to time thenumbers and status of applications that has been received by thesecretariat, as well as the scheduled dates for consideration.

The One Stop Centre Committee shall make the decision on the planningpermission and bUilding plans as well as other plans. This Committee shall

also make recommendations on the land development applications to theDirector of Land and Mines. The Secretariat shall prepare therecommendation paper based on the decision of the One Stop CentreCommittee This recommendation paper shall be forwarded to the Full



The establishment of the One Stop Centre with the suggestedmembership of technical officers from government departments andagencies and only 4 local councillors is not ultra vires the provision ofsection 28, Local Government Act 1976 (Act 171).

semasakhas,

lis dan

pihak. apa-apapat pihak

gan cara suatumana-manatut melainkan kuasa

mjaman, dan bolehkuasa itu." (Pelikan

To be copied from the Act itself!!/

6.5 Inspectorate Team at Ministry of Housing and Local Government

An Inspectorate team at the Ministry of Housing and Local Governmentthrough the Department of Town and Country Planning and theDepartment of Local Government needs to be established, to continouslymonitor the implementation of the One Stop Centre at Local Authority level.The team will have the following functions:

i. to receive feedback from the public and those involved and makeassessments with the objective of further improvement whereverneeded;

ii it th i l t ti f t l l li i i l di th



addressed immediately to ensure that the objectives of the one stop centrecan be achieved.

7.0 CONCLUSION

Improvement to the procedures and process and the implementation of theOne Stop Centre (OSC) for Development Applications is pertinent andtimely. This is to ensure a delivery system by Government that iscomprehensive , fast and uniform that is adopted by all StateGovernments and Local Authorities for any land development. It will atonce meet up with the needs of the community and ensure the nation'saspirations towards Vision 2020.

This improvement meets up with the Cabinet decision and the wishes ofthe Prime Minister who wants the procedures for development approvalsto be expedited and the idiosyncracies of bureaucracy at all levels arereduced, in order to increase the country's competitiveness to attractforeign investments to Malaysia.

W.dyah Senikl Lee Yoke San

F:\persidangan KPKT 13 apnkertas ketja sistem pehyari"lpaian.ctoc



Chairman

Secretary

Members

APPENDIX 3

MEMBERS OF THE ONE STOP COMMITTEE

City Mayor I President of Local Authority

Town Planning Officer of Local Authroity

State Town and Country Planning Department

State Land and Mines Department I District Land Office

Public Works Department

Department of Irrigation and Drainage

Department of Environment

Water Supply Department*

Tenaga Nasional Berhad

Deaprtment of Fire and Rescue Services Malaysia*

Telekom Malaysia Berhad*

Department of Sewerage Services

Department of Mineral and Geoscience

Department of Landscape, Local Authority

Department of Health, Local Authority

Building Department, Local Authority·

Engineering Department, Local Authority*

4 local Councillors



APPENDIX 1

SIMULTANEOUS APPLICATION MECHANISM FOR AL L PROPERT DEVELOPMENT PROJECTS WITHCOMPLETE DOCUMENTATION UPON APPLICATION

Complete?

( 50 days) (25d ~ y . · )

• If Local PJan exfh

TECHNICALDEPARTMENTS

• JPBD• P IO /P IG• JKR• JPS• TNB• JAS• JPP

• PBA• JMG

• JBP• Jab.

rertanian• Jab.

Penilaian• Other

technicaldepartments

( 50 days) (25doys')• If Local Plan exIst

Prepare recommendationpaper to OSC secretariat

LOCAL AUTHORITYBUILDING

Building Pion oppllcation

(section 70 Act 133-Streets.drainage & Building Act 1974

JPNSecretariat

Checking 01 documents(1 day)

Refe< to JPN/MPFN' (ifnecessaryan d subject to MPFN meeting

..Jawatdnkuaso PeroncongNegeri/Mdjlis Pemncong FtZikolNegoro

Application consideredwithdrawn if conditions

a r en o t me t within 7days

Written Noticeto ad jacen tlandowner

( 50 days) (25 days')i t

Request Additic:mcllDocuments/Information

Simultaneousapplication for land

conversion andsubdivision (124A) or

surrender an dalienation (204D)



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LEGAL IMPLICATIONS OF THE BTSSYSTEM AND 10:90 CONCEPT

TheIIlSIituUon,IS"'Il)'" M,lll)sia,

11 MAY 2007

--,

,PROF SALLEH BUANG

SAGE Business Services



A QUICK REMINDER

• PRIMARY OBJECTIVE OF HDA 1966- To protect purchasers

• HDA ALSO FAVOURS THEDEVELOPER

- Provisions for extension- Water and electricity- Limit on liability towards purchasers

2 SALLEH BUANG



PRIMARY OBJECTIVE OF THE LAW

3

• TO PROTECT PURCHASERS

- SEA Housing Corp v. Lee Poh Chao[1982] 2 MLJ 31 (house completed 5months after due date; whetherdeveloper can rely on exemptionclause; held, parties cannot contractout of the Act)

I':::,

SALLEH BUANG



4

THE ACT ALSO FAVOURS DEVELOPERS

• PROVISION FOR EXTENSION - Reg 11 (3)- Developer can apply to Controller to "waive or modify" any

provision of the SPA- Controller must be satisfied that "owing to special

circumstances or hardship or necessity", compliance withthe SPA "is impracticable or unnecessary"

- Controller can issue certificate in writing grant the request- The application cannot be made after period stipulated for

handing over of vacant possession I :

SALLEH BUANG



WATER AND ELECTRICITY SUPPLY (cont'd)

6

• After the 1994 amendment, the developer isonly required to ensure that water andelectricity supply is "ready for connection";this has been defined to mean -

- Water and electricity fittings have beeninstalledFittings have been tested by the appropriate

authoritySupply is available for tapping into individualhomes.

. -

, \

SALLEH BUANG

•

l . ~• -...

,•



LIMIT ON DEVELOPER'S LIABILITY

• Developer only obliged to pay liquidated

damages at 10% paof

the purchase price• Purchaser cannot sue for actual loss andexpense - Limmewah Development Sdn Bhdv. Dr. Jasbir Singh [1993] 2 AMR 1263 (date of

completion scheduled 25 August 1981; actualcompletion date January 1985; purchaserclaimed liquidated damages for delay, as well asa further claim of RM6,000 (travelling back twiceto Malaysia) and damages Tor pain, anxiety,distress and humiliation.

• Held, claim for liquidated damages allowed; otherclaims rejected.

7 SALLEH BUANG



EXISTING SELL THEN BUILD (STB) SYSTEM

8

• Two standard SPAs- Schedule G - houses on firm ground

- Schedule H - highrise buildings• Section 7A(9): no obligation by developer to maintainHD Account if BTS system implemented

• Some developers are now willing to give extended*arranty

SP Setia 18+18 months- SOB 36 months- TH Properties 5 years

• This warranty is meaningless i f the p ro je ct i s l at erabandoned.

t·...............

se laHOMES.COm

. --el13HOMrS.com

SALLEH BUANG



9

WHYBTS?

JUST ONE CASE AMONGST THOUSANDS

• 150 buyers of a low-cost housing project in Slim River - still waiting fortheir houses after 14 years. [NST, May 18, 2001].

• Buyers (estate workers and government servants) had paid more thanRM2 million to the developer of Bandar Baru Slim in 1987; projectabandoned a year later; efforts to revive the project in 1990 (aninjection of RM1.41 million from Bank N e ~ a r a ' sspecial fund) failed dueto problems between the developer and financier.

• Poject auctioned off in 1993 without the knowledge of the buyers andthe Housing and Local Government Ministry. The new developer soldthe houses at more than RM60,000 to new buyers.

SALLEH BUANG



10

WHY BTS?

• "Rumah tak siap 20 tahun" (Harian Metro, 18 April 2007)Abu Seman's Story; Taman Kotawira Taiping Perak.

• 47 buyers of Taman Kencana Ampang - waited 10 yearsfor their homes; in 2000, the Official Receiver took over theproject; since then, nothing.

• "Dream Home Nightmare" (Singapore Sunday Times, April 1,2007) - 95 Singapore retirees purchased expensive homesin Taman Permata, Johor Bahru; properties auctioned off

by bridging financier.• In 2004 - 227 housing projects abandoned; 75,356 houses,

worth RM7 billion (Source: HBA)• 64% (168 out of 261 projects) abandoned in West Malaysian

since 1990 have NOT been revived.SALLEH BUANG



WHY BTS? HBA'S VIEW

INEQUITIES IN THE EXISTING STB SYSTEM:

• Vacant possession given although CF not applied for /construction work, including amenities, notcompleted;

• Long delay obtaining CF after delivery of vacantpossession;

• Buyers have to chase developers to make good on

their breaches, rectify defects long after the delivery ofvacant possession;

• The present system allows developers "to take riskswith purchasers' money". In other sectors, businesspeople take risks with their own money.

12 SALLEH BUANG



14

BTS EARLIER HISTORY

• Housing Minister Ting Chew Peh first raised

it in 1994• Admitted that "BTS will enable purchasers to

know what they are buying"• But gave 3 reasons why the proposal was

rejected -System not viable

Developer had to obtain higher bridgingfinance

- Progress of construction work may be

adversely affected

SALLEH BUANG



BTS MOST RECENT HISTORY

•"I

think itis

not rightto

pay moneyfirst, before you get your house ... ifthey (developers) don't get to sell lall their houses, the money won'tbe enough for them to build. Whatwill happen to those who have paidup?" [Datuk Seri Abdullah AhmadBadawi, May 2004].

15 SALLEH BUANG



CABINET DECISION ON BTS

• "The Cabinet has to consider 3

key factors before giving the BTSthe green light" - Ong Ka Ting,NST 27 May 2006

• The 3 factorsAvailability of affordable housing willnot be affected

- Provide better protection for housebuyers

- Will not hamper growth of thehousing industry

16 SALLEH BUANG



FORMALAPPROVALOFBTSSYSTEM

• Government approval "inprinciple" - June 22, 2006

• Subject to review in 2years (June 2008)

• Old system (Sell then

Build) still in force.

17 SALLEH BUANG



18

TWO FORMS OF BTS

• Complete BTS 0: 100

- Developer sells house, complete with eee- No down payment, no progress payment

• Partial BTS 10:90 Variant- Parties sign SPA: purchaser pays 10% deposit- Purchaser pays balance upon completion,

eeeissued.

SALLEH BUANG



19

BERNAMA REPORT 13 DEC 2006

• "The government has yet to set the launching date of the buildand-sell concept as many developers still do not have thefinancial capability to carry out such projects."

• "If the concept was implemented hastily, it could jeopardisehousing development, especially in the urban areas. Weencourage the concept to run parallel to the conventional

concept," Ong Ka Ting, winding up the debate on 2006Amendment Bill in the Dewan Rakyat.

SALLEHBUANG



ALTERNATIVE SYSTEMS[Consumer.com.my]

, ...

. ( O J 1 j . 1111 ',

20

• Sell then build system "only practised in thisregion" (Malaysia, Indonesia, Vietnam).

• China, Hong Kong, Singapore, Australia"adopt something in between".- China, after 2/3 rd of structural work completed

- Hong Kong, 20 months before completion date- Australia, 10% held by developer's solicitors in

trust; 90% after completion, titles, CFO

SALLEH BUANG



21

•

BTSI

ABANDONED PROJECTS:HBA'S VIEW

• Not true that BTS will totally prevent projects from beingabandoned

• Many reasons for abandoned projects - financial problems,mismanagement

• Whether STB or BTS - future housing projects "will continue toface the possibilities of being abandoned"

• But under BTS, buyers will not be dragged into "the legal andfinancial quagmire if the project fails"; they will be "insulatedfrom the business risks of developers and financial institutions".

• Under BTS, developers will "exercise more responsibility", toavoid disputes on quality when payment is due.

SALLEH BUANG



22

HOUSING INDUSTRY'S EARLIER VIEW ~ON BTS Rf: :HD:\

• House prices will go up between 30% and

50%; housing supply will go down by 60"(REHDA President, Datuk Jeffery Ng, UtusanMalaysia 24/9/2005).

SALLEH BUANG



23

HOUSING INDUSTRY'S EARLIER VIEW:IT WOULD BE A FAILURE, A DISASTER

• "... The build-and-sell concept based on the Australian model of

10/90 would be a failure if not a disaster if introducedin

Malaysia. The 10/90 system based on the Australian model isregulated under S9AA of the Sale of Land Act 1962 of the Stateof Victoria ...

• From the developer's perspective, this model would onlycompound its problem, notwithstanding that it still has to complywith housing laws and state government policies on Bumiputeraownership, mandatory laws on low-cost housing andinfrastructural requirements enforced by local councils. [NST 29SEPT 2005]

SALLEH BUANG



24

HOUSING INDUSTRY'S EARLIER VIEW:

IT WOULD NOT WORK

• "In short, such a concept would not be workable in theMalaysian environment where procedural andgovernment policies differ extensively from theAustralian model. "

• "The 10/90 variant model as practised in Australia issuccessful because of the absence of bureaucracyand the efficient mechanism in place for submissionand approval of building plans." [NST 29 SEPT 2005]

SALLEH BUANG



25

HOUSING INDUSTRY'S EARLIER VIEW:OTHER CONDITIONS MUST BE IN PLACE

• ''The ministry must first ask itself whether it can dismantle the

government and state policies of low-cost housing andmandatory Bumiputera allocation. Can it promote an efficientmechanism to reduce bureaucracy in the submission andapproval of building plans?

• If the answer is no, then the 10/90 model is not a workableoption for our building industry. If there is an attempt tointroduce the Australian 10/90 model, it is imperative that allother conditions be in place beforehand." [NST 29 SEPT 2005]

SALLEH BUANG



1_ _ -::::::==

26


WHY IT WON'T WORK

• "Under the 10/90 model, purchasers pay a down-payment of 10

per cent ... and the deposit is placed in an escrow trust account.The remaining 90 per cent ... becomes payable on delivery of

vacant possession of the completed house.

• The developer would have to use its own or borrowed funds tofinance the project. From the time of submission of the property

plans for approval until the completion of the houses, the gestationperiod is almost five years (assuming building takes two years)."[NST 29 SEPT 2005]

SALLEH BUANG



27

WHY IT WON'T WORK (cont'd)

• "Is it practical and fair for the developer to bear the risks for fiveyears before seeing a return on its initial investment?"

• "What would happen if, during the interim period, there is adownturn in the property market and the buyer decides to cancelhis obligation to buy the house?"

• "The buyer may choose to forfeit his 10 per cent deposit, but thedeveloper would now be left without the 90 per cent purchase

price."• "In short, the likely scenario would be abandoned projects and

bankrupt housing developers who are left in the lurch by housebuyers in the event of a property crash." [NST 29 SEPT 2005]

SALLEH BUANG




IT WILL JEOPARDISE TARGET

• It will "jeopardise the housing target setunder 9MP" - 709,400 units (privatesector to build 72%, over 500,000 units)

• It will "spell the death knell for smallerdevelopers who playa very critical role insmaller towns" - REHDA branchesMalacca, Pahang, Kelantan,Kedah/Perlis, Negeri Sembilan,Terengganu

• Under the present system, the industryhad built 2.9 million housing units. [TheSun, 27 April 2006]

I

I ~, "-

f ~•,

•

r

28 SALLEH BUANG



IMPACT ON BANKERS - HBA

• "Banks will be able to revive and take ove

abandoned projects much quicker, without having todeal with so many parties."• "Bank will be able to operate in a more secure

environment; it will have absolute control over loandisbursement and collateral".

,- • "Banks will be more secure as they will only be

.,,,, financing completed properties with titles" - DatukGoh Seng Toh, HBA vice-president.

•"HBA- _ NATIONAL HOUSE BUYERS ASSOCIATION.,. SA,roAN KEBANGSMN PEMBEU RUMAH

., ," ,

- 30SALLEH BUANG



INCENTIVES FOR DEVELOPERS

31

• Faster development approval

• Deposit of RM200,OOO waived• Medium cost houses instead of low-cost

housing quota• Fast track approval /Fast lane /

Express land- One Stop Centre- Certificate of Completion and

Compliance• Inspectorate to monitor housing delivery

system

BUSTING RED TAPEGUIDEBOOKS 14 APRIL 2007

SALLEH BUANG



SALLEH BUANG2

INCENTIVES EXPLAINED

• One-Stop Centre (OSC) will process development applications simultaneously;committee headed by council presidents and made up of other technical

departments officers;

• Certificate of Fitness for Occupation (CFO) replaced by Certificate of

Completion and Compliance (CCC);

• Building and Common Property Act 2007 to ensure better maintenance andmanagement of stratified properties;

• Waiver of deposit for developers for BTS system;

• Option for developers to replace the quota to build low-cost homes withmedium-cost homes.

• Approvals for selected projects (eg BTS, high-impact projects, government andforeign investors' projects) would be even shorter - within four months. [NST14 APRIL 2007]



FAST TRACK APPROVAL,•,

• Concurrent applications of Conversion and Subdivision (124A NationalLand Code), Surrender and Re-alienation (204D National Land Code),

Planning Permission and Building Plans approvals can be made to theOSC.• The OSC committee will replace the local authority's planning and

development division and will be chaired by the chairman of a localauthority.

• Its members will consist of officers from various technical departmentssuch as the Land Office, Land and Mine Office, and technicaldepartments like the Town and Country Planning Department, PublicWorks Department, Drainage and Irrigation Department, TenagaNasional Berhad, Department of Sewerage Services, State WaterAuthority, Mineral and Geoscience Department, and Fire and RescueDepartment.

• A flow chart has been prepared setting out in detail the processes anda time frame for each technical department to ensure thatdevelopment proposals are approved within four months.

SALLEH BUANG



A ~ " , , " r " t ~ ,VY i'")' to o I ~ n diJ C "O PN <t

Property.com.my··THE 10:90 VARIANT[iProperty.com.my]

• The 10:90 variant is not a "true BTS"

• It is still a BTS system, but with a "deferred payment"',. '.•

schedule.• Deposit of 10% paid to developer's solicitors and the

sale is "locked in"

• To the purchaser, it is still a purchase based on

brochures and plans; the purchaser is, however,protected if the project is later abandoned by thedeveloper.

•

34 SALLEH BUANG



IMPACT OF THE 10:90 VARIANT

. r - .

• A new SPA must be drawn up, which•

requires- an amendment of the 1989 Regulations;

alternatively- a new set of Regulations.

• HBA Legal Committee proposed anew draft Schedule J & K

- 10% upon signing of SPA- 90% upon completion (24/36 months) of

property, together with GF (now GGG)and issuance of titles

••••

. ~ ~c o ~ ~' . .. .'- -

35 SALLEH BUANG



BTS WILL CUT COSTS: ONG

• "Logically, the BTS concept can lower developers'

costs because the new system launched by theGovernment helps to save their time.

• "In the long term, it will help to make house pricesmore competitive."

•

36

[Ong Ka Ting, in

14 April 2007]Bersama Menter; program RTM1

SALLEH BUANG



TAY AH LEK

BTS WILL BENEFIT BUYERS: BANKERS

J

MICHAELLOR

• "With reduced processing time, there will besignificant improvement in business efficiency

and productivity. This will also reduce theholding cost for developers, which can then bepassed on to consumers," Datuk Seri Tay AhLek, Chairman of Association of FinanceCompanies of Malaysia.

• "The BTS concept will clearly benefit customersand we are ready to assist our present andpotential customers by making home ownershipa simpler and efficient process." Michael Lor,Head of Consumer Banking, RHB Bank Bhd.

[The STAR, April 14, 2007]

37 SALLEH BUANG



HOUSING INDUSTRY'S CURRENT STAND

• "The PM should be congratulated for hisinitiative to improve the public delivery system... It is indeed a milestone not only for theproperty industry but for the whole nation ... Thesetting up of the National Inspectorate is a stepin the right direction" (Ng Seing Leong,REHDA President)

• "Developers applaud the incentives granted for

the adoption of build-then-sell concept and willbe encouraged to be involved with this salesmethod" (Datuk C KWong, Sunway City Bhd)

Ng Seing Leong

Datuk C KWong

SALLEH BUANG



39

SUMMING UP

• Two systems running parallel - STB & 10:90 Variant• Greater incentives offered to developers choosing 10:90 Variant• Banks will operate in a more secure environment• Legal Implications of 10:90 Variant

- New SPAs required I governing legislation- Buyers less exposed to risk of abandonment

Developers not obliged to build low cost houses (effect - l e s s units ofaffordable homes to the poor)

- Developers face less BRT; OSC I Fast track will reduce developer'sholding costs (effect - not certain of being passed to buyers)

• Reforms of existing / conventional systemPurchasers Warranty Insurance- Repeal (scrap) 10% limit liability of developers; restore full remedies to

purchaser

SALLEH BUANG



THANK YOU

I M A I L

[email protected]

SALLEH BUANG



B U I L D T H E N S E L L :

The Way ForwardThe dual experiences o f Bandar Utama

Damansara

Presented byDato' Teo Chiang Kok

DirectorBandar Utama Development Sdn Bhd

11 th May 2007



I N T R O D U C T I O N

1. ACCIDENTAL INTRODUCTION2. 1997 FINANCIAL CRISIS

3. FIRE SALES OF DISTRESSEDPROPERTIES

4. WITHDRAW FROM MARKET I NOTCOMPETE I STABILISE MARKET

5. ALREADY 7 YEARS DEVELOPINGBANDAR UTAMA

6. PRIVATE NON-LISTED COMPANY I NODIVIDEND POLICY I ACCUMMULATEDRESERVES I INTERNAL FINANCING



I N T R O D U C T I O N (CONT'D)

7. PRIVATE FAMILY OWNED BUSINESS- PATRIARCHAL COMPANY - NORETRENCHMENT IF POSSIBLE

8. KEEP CONSTRUCTION TEAMINTACT- VALUABLE HUMANRESOURCE I FOR ECONOMICRECOVERY

9. PRICES STABILISED ANDRECOVERED FASTER THAN OTHERAREAS



M A R K E T IN G P H A S E

1. FORTUNATELY, ECONOMY RECOVERED IN TIME2. DO NOT NEED ADVERTISING PERMIT AND NEED NOT

USE SCHEDULE G SALE AND PURCHASEAGREEMENT

3. NORMAL COMMERCIAL 'SECONDARY MARKET TYPE'

AGREEMENT4. PROVIDE STANDARD 3 MONTHS FOR BALANCE OF

PURCHASE PRICE TO BE PAID UP

5. WHEREAFTER THEORETICAL 1 MONTH FORCONFIRMATION, BANK UNDERTAKINGS,PRESENTATION OF TRANSFERS AND END-FINANCERELEASES

6. EMPIRICAL EVIDENCE: HANDOVER 4 TO 6 MONTHSFROM SALE



HANDOVER OF PROPERTIES FROM TIME OFSALES UNDER BUILD THEN SELL

Phase 5

12

1.5%

110

2.9% 2.4% 1.5% 1.0%

'-'--,-T ' . _ ~ - .6 7 8 9

12.0%

1 - - - - - - - - - - - - - 1

4

69.0%

- - - - 5 ' 8 % : -3.4%

0.5%0% ~ - -1 . - - , - -

1 2 3

60% J - - - - - - -

80% r7 0 % r - - - - -

~ 50% + - - - - - -

SC 40% 1 - - - _

~ \I Q,) 30% ! ~ _

Co I

i

Months



HANDOVER OF PROPERTIES FROM TIME OFSALES UNDER BUILD THEN SELL

Phase 6

60% , - - - - - - - - - - - - - - - - - - - - - - ,52.1%

I --- ~ , - ~ , ------r - ~ ,

50%

!i 01

40 %1I ~ ,, C l l '

I ~ 3 0 % . - : - - - -l:~ 20% + - - - 1 _

",

!

10% + - - - - - -1.6% 2.7%

0% : I I I I l l L r - . ,- -

!------------- ,I

I

I

- - - c -

4 .S7 c - % - - - - - - - - - - - - - - - - I I0.5% 1.6% i

.,--1 2 3 4 5 6 7 8 9 10 11 12 13

Months- - - - - - - _ . __.. _ - - - - - - -



N E G A T IV E F A C T O R S

1. HIGH RISKS I MUST COMPLETE AND LAUNCH AT

THE RIGHT CYCLE2. UNCERTAINTIES AND DELAYS: PLANNING AND

BUILDING PLANS APPROVALS I UTILITY SUPPLYI CLEARANCES AND CF

3. UNCERTAINTIES AND DELAYS: END-FINANCINGAPPROVALS I ADJUDICATION FOR STAMPDUTIES I BANKERS', LAWYERS' TIMELY ACTIONS

4. SAFEGUARDING PROPERTIES AFTERCOMPLETION UNTIL VACANT POSSESSION I

EXTENSION OF INSURANCEI

PAYMENT OFASSESSMENTS AND QUIT RENT DURINGCONSTRUCTION I MAINTENANCE



N E G AT I V E FA C T O R S (CONT'D)

5. DE FACTO EXTENDED WARRANTYPERIOD

6. PURCHASERS NOT ABLE TO MAKE

CHANGES I UPGRADE FINISHING DURINGCONSTRUCTION - DENIED CHOICEWHILST DEVELOPER MISS OPPORTUNITYOF ADDITIONAL WORKS BUSINESS

7. EXTENSIVE RENOVATION BY BUYERS

AFTER HANDOVER : WASTAGE - DELAYACTUAL MOVING IN



1 0 / 9 0 VA R I A N T

1. PRE-SELL WITH 10% IN ESCROW ACCOUNT

2. NO ADVANTAGE IN CASH FLOW FUNDINGCOMPARED WITH BTS

3. LOCKED IN SELLING PRICES - EXPOSED TO

HIKES IN CONSTRUCTION COST WITH NORECOURSE ON SELLING PRICE

4. PRE-SELL DOES NOT GUARANTEE COMPLETIONI BUYERS CAN RENEGE I LEGAL RECOURSETIME CONSUMING

5. BRIDGING FINANCIER MAY REQUIRE ACHIEVINGLEVEL OF PRE-SALES BEFORE FUNDING



P R E - R E Q U I S I T E S F O R B T S

A N D 10/9,0 VARI!ANT1. KEY REQUIREMENT: CONTRACTUAL

SPECIFIC PERFORMANCE BY ALLPARTIES I APPROVING AUTHORITIES ICONTRACTORS I MATERIAL SUPPLIERS IUTILITY SUPPLIERS I BANKERS I ENDFINANCIERS I PURCHASERS

2. APPROVING AUTHORITIES I TIMELYAPPROVALS TO ENSURE DOVETAIL WITH

PROJECTED FAVOURABLE ECONOMICCYCLE UPON COMPLETION

3. CCC DELIVER PROMISES



P R E - R E Q U I S I T E S F O R B T S

A N D 1 0 /9 0 VA R I A N T (CONTO)4. CONTRACTORS I LAD5. UTILITY SUPPLIERS I BACK TO BACK LAD6. WILLINGNESS OF BANKERS TO PROJECT

FINANCE7. END FINANCIERS I UNDERTAKING FOR

TIMELY RELEASE UPON CCC8. PURCHASERS: NO RENEGE CLAUSE9. HAVE TO ADDRESS BURDEN OF LOW

COST QUOTA I BUMIPUTERA QUOTAIDISCOUNTS AND AUTO-RELEASEMECHANISM



C O N C L U S I O N

1. WHY BAN DAR UTAMA CONTINUING WITH BTS

2. GOODWILL AND PUBLICITY OUTWEIGHSNEGATIVES

3. ONLY IN SITUATION OF DEMAND EXCEEDINGSUPPLY I LOCATION

4. PROJECT FINANCING COST I OPPORTUNITYCOST LOWER THAN APPRECIATION OFPROPERTY PRICES UPON COMPLETION

5. TO EXTEND TO OTHER PROJECTS NEED

GOVERNMENT TO PUT IN PLACE ALL THEINGREDIENTS TO MAKE BTS POSSIBLE AND AFEASIBLE CHOICE



ThanK YOU!



•"



TOTAL1 " ' - 1 " ' ":a .s -1l', .su1 " - 1 3 t , . 3 2 t. z t M - t3a,71t

o R Io s l l l ... Us l 1 7 0 , K 175,." ' l 2 . U I 1 a 7 . " ne.".c_ ...... ~ "'.., '1)"" n . _ 1,,! tO' " , . I e 1 ' , H 3 :u.,n ' . , 151 ",'"• """ 'sl<tal ' ,271 I,." ' " '

, . ~ 7 , n . .- 1,010 ' . - 7 , 11 ' 7 , IU •.n30 • - 510t02 "" ' " '" n l 2 1 "" , n 0 7 1 - " ' .. - 110723

~ - ...... ou.. . . ..... ,17 . . . . ' .'" .u, 7 . 1 . ' ... ' .- ..... ..- u ..... 12 . ' "

, - ....

- ",M... ....

""....,.

' ...



AGE COMPOSITION OF THE POPULATION

AGE GROUPKLANG VALLEY

CumulativeMALAYSIACumulative

35--44 yrs

55-64 yrs

15-74 ylS

H5 y rs

840,744 15.1% 84.1%

495,415 8.9% 93.0%

233,762 4.2% 97-2%

111.313 2.0'1. 99.2%

45,925 0.8% 100.0%

3,188,623 13.7%

2.094.722 9.0%

1,163,734 5.0%

605,142 2.6%

279,296 1.2%

82.2%

91.2%

... ,..

98.8%

100.0%

Total 5,563,995 23.251,403

ROUGH GUIDEFOR HOUSE PRICE LEVELSBASED ON HOUSEHOLD INCOME(4.5,) ANDANALYSISOF CURRENT MARKETTRANSACTIONSAND FOUNDED



HOUSE PERFORMANCE-1985

TO 2006IIET Y1!.LD IN l:l{PECTEO

HOUSE CAG" CAGR CAGR "OR TOTALLOCATIO" ".U '1-05 11-05 01-05 ,... "" 2005 "" RE1lIRN

OS,. . . ""S .." I IMU ." .... U S ' . 3 ' ..,. " .1 ' ." ,.. . "

OS,nt H IltIOAH ", '.21 ." 3.1t .... W u, ,... .,.OS,r-.IMZJI· ... IU ' leG ... ." ... ,.. •• .... ... ...

0 '

m1 " . U I l I I M U ,., O. ... ,. ...,

"".... u, ...

• ·...iIIiS.-' __ ~ ; - . # .~ ' . : ; " ~ ' ~ .. " . • ;1" ." . , " ~ ' v<" · , · i : ~ " " ' a -

..~ ·..j ( , -. ~ '" ' l , , , · r . ~- - , '• . .- • • ~ " . :• . ~ : : ' _ : < - _ ~ ~ , . : - . ; a .~ ' _ '

.".K..

" ' -· u . . . . " ... ..... ." ,,. ' " ... ....... .... .. "

" ' -,-- ..... . " .... ... .... .... ,., ,... 'M

C()"tlO.-oNT M...M " " £ $ ,.. I. U . ~ ." ." '.11c= .... ... ...

e . . - -c" '. -1 .. n , _ _ ~ I , ' _ _ " ....." ' . _ - _ " , . - " . . _ . . . . . , -) ~ _ .. _ · - _ .. f • • _ ~ , . ~ - - , . . , ~

SELL OFF THE PLANVS BUILD AND SELL



4. He is essentially an agent entrepreneur who, seeinghousing development opportunities in lhe propertym a r k e ~enters lhe market, assembles land, technicalexpertise and finance and delivers a needed productfor the public. The developer undertakes the risk andis adequately rewarded. The authorities should assisthim as much as possible in fulfilling his vilal role. Byhelping means ensuing fair treatment in approvals but

not extending to lessen his risk unless by lesseninghis risk he shares his reward.

5. Premised on this understanding of the role of thedeveloper, it is clear that if you increase his cost inanyway the cost in fact is passed on to the house buyer.The model I willshow at the end of this presentation willillustrate that a mandalory imposition of the 10190 systemis an enormous cost to the developer and this will have tobe, ullimatefy, borne by the house buyer. ,



6. Then there is the question of financing. Under the Sell off the Plansystem banks have measured their risks, over the years, and have beenan active partner 10 the developer and have enabled th e developer 10secure easy funding. Project and mortgage lending for propertydevek>pmenl has been relatively high in tenns of Iotal bank lending. H

the Buildand SolI system were to be mandatorily Imposed as the solesystem of housing delivery (and I belieYelhal no country inthe world hasmandatorily imposed this system as the sole system of housing delivery)the risks in lending will increase substantially. There wi. be increasedrisks for the lending institutions because how can the lending lnslnulionslor example be assured lhal purchasers who sign up and pay their initial10 per c e n ~stay with their commnmentlopurchase, at completion.There has been somewhat of a deafening silence 0 0 this issue from th e

lending insIilutions in th e public debate so far.

7. Lastly, there is the question of whether it is good policy to encouragespeculation and flipping in a rising housing market as this will be oneof the fall outs of the system should the build and sell system beimposed mandatorily as the sole system for housing delivery.

~ M A N K



M a t h e m a t i c a l M o d e l o n

~ y s t e m v s .

Conventional System

,

JJ}

Ong See Lian, KMN

Past President - Institution o f Surveyors MalaysiaPartner - Juru Ukur Bahan Malaysia

Director - Davis Langdon & Seah Malaysia Sd n BhdChairman, RlCS Asia Pacific

1




~ The Build-Then-Sell concept was first mooted by our PrimeMinister some years back, in his agenda to enhance thedelivery system both in the public and private sector

~ Since then there has been intensive public debates over the

merits and demerits of the concept~ The consumer public, in particular the House Buyers

Association (HBA) argued that, the existing system ofprogressive payment during construction had put housebuyers at greater financial r isks due to delayed orabandoned project, defective houses, etc

~ HBA further argued that financing construction is theresponsibility of the developer and the buyer is only to seekhis financial requirement to buy the completed house

2




~ Developers argued that the present system hadsuccessfully helped in the construction and completion of675,000 units by the private sector under the 8 th MalaysiaPlan.

~ In response to consumers' complaint on numerousincidences of abandoned projects and shoddyconstruction, developers argued that one does not need asledgehammer to kill an ant. The solution, they say, ismore effective and transparent enforcement

•

~ They further warned that implications of forcing developersto sell only homes that are completed will be painful and farreaching

3




~ It was reported that one of the top officials of REHDA evensuggested prices of houses will escalate by between 30%and 100%

~ They even suggested if the BTS system is made mandatory,it will affect the country's home ownership agenda as wellas the economy, because "60 per cent of the developerswill go out of business"

~ Though relenting the move towards BTS, the developerssubsequently conceded that the BTS should co-exist withthe existing system, so that buyers would "have a choice"

4




~ On June 22, 2006, the Deputy Prime Minister announced, afterchairing the 54 th meeting of the National Council for LocalAuthorities, that the Government had agreed "in principle" to theintroduction of the new Build-Then-Sell concept known as the"10/90" concept to co-exist with the existing system

~ Along with this announcement, a series of "perks" was alsooffered to developers adopting the "10/90" system such as:• Waiver of the deposit of RM200,OOO-OO deposit for developer's

license• Building medium-cost houses in lieu of the low-cost housing quota

• Fast-track approval for their projects (4 months has beensuggested)

~ The Government reiterated that this approval is only "inprinciple" approval only and would like to re-evaluate itseffectiveness within a period of two years

5



I S S U E S

.Would the Build-Then-Sell (10/90)system result in price increases ofhouses?

. I f so, to what extent?

.Should the Build-Then-Sell (10/90)system be a permanent feature in our

housing industry or should it be allowedto co-exist with the existing system?

6



M E T H O D O L O G Y

~ Cost Modeling on 4 selected projects (hypothetical)• Condominium Project• Landed Proper ty (Terrace Houses) without the low-cost quota• Landed Proper ty (Terrace Houses with quota low-cost houses

based on progressive billings

• Landed Proper ty (Terrace Houses) with medium-cost housesbased on 10/90 payment system

~ The cost models are based on Cash Flow Project ions overconstruction period of between 24 to 36 months

8



Cash Flow Sample CF sample(for

. PP).xls•C O N DO M IN IU M D E V E L O P M E NTL o c a t i o n : S u b u r b o f K u a l a L u m p u r

• P R O G R E S S I V E B I L L L N G

7) P r e l l m i r l 8 r i " "8) C o n t i n g e n c i e s

9 ) P r o f e ss i o n a l F e e s

, 0 ) C o n s t ru c t io n Su p e rv i s io n, 1) P r o j e c t M a n a g e m e n t an d A d m i n i s l n u l o n

12 ) M a r k e t i n g & P r o m o t i o n

T O T AL C A SH O U T FL O W

1 0 . 9 4 2

2 , 4 1 2

1 0 . 9 4 2 2 , 4 1 2

1 0 . ~ . 2,.." ..0' .0'

1 . 2 0 6

2,1!51

° " 2° '0 '

••• ...

., ", .9•• ••

1 3 , 7 0 8 3 , 6 8 7

( 2 . 7 6 6 ) ( 1 . ' 7 5 )0 ( 2 . 6 2 1 )

( 5 5 ) ( 8 0 )

° 0( 2 , 8 2 1 ) ( 4 , 0 7 6 )

,9

'0 ',.....

.,6 6

' 6

.0.

1 , 8 0 9

' , .09

5 , 4 1 5

3 , 7 6 9

( 3 . 6 0 6 )( 4 , 0 7 6 )

(1, '54)o

( 7 . 8 3 5 )

2

•

,,•

•

5 . 3 4 63 , 3 4 1

5 , 7 7 4

1 . 0 8 39 0 2

72 2

3 2 . 9 8 4

( 2 , 1 9 0 )1 , 8 7 7

3 2 , 6 7 1

1 0 . 9 4 2

9 8 , 5 6 8

1 0 , 9 4 2, ..2' .

2 . 0 1 5

1 . 2 0 6

1 2 0 . 6 0 0

1 3 1 , 5 4 2

Ye a r s

Q u a r t e r s

M o " " , "

R M 'CQQ

...,..

2 . 0 %

1 . 0 %

1 . 0 %

8 .0 0% P A3 . 5 0 o ~PA

6 6 . 8 2 4

N ET C AS H F LO WC a s n S u r p l u s / D e f i c i tS u r p l u s / D e f i c i t e lFI n t e r e s ' P a id o n D e f i c i tIn te r e s t I n c o m e o n S u r p l u sS . .. . p l u s l D e f i c i t e lF

C O N ST R UC T IO N C A SH F L O W

C A S H O U T FL O W

1) b e n d C o s t

2 ) L e g a l F e . s & S t a m p DUl Y3 ) P l ........ ng F e e s

.) Pre_Dotv C o s t & A u th o r i ty Contr1butlonS) IVVK C o n t r i b u t i o n

6 ) C o n s t r u ct i o n C o s t

M a i n e ... i ld ing Wol'1<,sE x t . ~ 1Wor1<s & Se rv l c e s

C A S H I N F L O W') L e n d V. h . J e2) Sa l e s P r e g r e s s Pa\ 'fTIents

C o n d o m i n i u m s

T O T AL C A SH I NF L O W

9



A S S U M P T I O N S

• Land cost: fully paid up~ Legal Fees & Stamp duty: 1% of loan amount~ Planning Fees & Titles: RMO.50 per sq.ft. of land area• Pre-development cost &

Statutory Contributions: 2% of TOC• IWK Contribution: 1% of GOV (excluding low-cost)~ Professional Fees: 8% of Construction Cost~ Construction Supervision: 1.5% of Construction Cost~ Project Management and Administration: 1.25% of

Construction Cost~ Marketing and Promotion : 1% of construction cost~ Interest Charges: 8% per annum~ Contingencies: 5% of Construction Cost

10




~ For conventional system:~ ' "Condominium: Sales commences 1 st month of

commencement of construction and progressively

sold during construction and achieve 100% saleon

month 36~ Terrace, LC & MC Houses:

Sales commences 1 st month of commencement of

construction and progressively sold duringconstruction and achieve 100% sale on month 24

~ Progressive billings are made in accordance withthe Schedule of Payment under the Standard SPA

11




~ That bridging finance will be readilymade available to the developers

~ T h a tthe economy will sustain theprogressive take-up rate during

construction i.e. no major economiccrash

~ Selling price is maintained throughoutconstruction period

13



Model 1: Condominiums

(RM)(A) 10:90 (B) Progress Variance (A-Payment Billing B)

Selling Price 450/sf • 450/sf -Total Dev. Value 120,600,000 120,600,000 -

Land Value 10,942,272 10,942,272 -Max Draw-Down 78,201,208 18,784,647 59,416,561

Interest Charges 8,551,373 2,190,179 6,361,194

Total Dev. Cost 107,845,656 100,748,351 7,097,305

Surplus/(Deficit) 14,100,734 21,728,915 (7,628,181 )

RODC 13% 22% -9%

RODV 12% 18% -6%14

Model 1: Condominiums -



Model 1: Condominiums -Sensitivity Analysis

10:90 System Selling Price

RM/sf482481

RODe

220/0

21 %

RODV

180/0

18%

Appx. 7% increasein

selling priceof

10:90 Systemwill generate the same RODe & RODV as Progress Billing

15



M o d e l 2: Terrace H ouses -



Terrace H ouses

Sensitivity Analysis

10:90 System Selling Price

RM/unit352,800

351,000

RM/sf196

195

RODe

21%

20%

RODV

18%

17%

apprx. 3% increase in selling price of 10:90 System

will generate the same RODe and RODV as Progress Billing System

17

Model 3: Housing



Model 3: Housing(RM)

(A) 10:90 Payment (B) Progress Billing Variance(with MCA) (with LC Flat) (A-B)

Selling Price- Terrace Houses 342,000/ unit 342,OOO/unit -- LC Flat (190/sf) (190/sf) -- MCA - 42,OOO/unit -

100,OOO/unit

-Total Dev. Value 155,810,000 145,776,000 10,034,000

Land Value 43,560,000 43,560,000 -Max Draw-Down 52,912,379 11,326,168 41,586,211

Interest Charges 3,546,643 311,606 3,235,037

Total Dev. Cost 132,353,548 125,198,903 7,154,645

Surplus/ (Deficit) 30,100,056 27,834,103 2,265,954

RODC 23% 22% 1%

RODV 19% 19% 1,9%



C O N C L U S I O N

• The 1 0 /9 0 system would result in anincrease in total development cost dueto the additional financing cost

• The impact on cost and selling priceswould be as follows:

Impact on Impact onDevelopment Selling Prices

Cost

Condominium 9-10% 7-8%

Terrace Houses 4-5% 3-4%

19



C O N C L U S I O N

• Where medium-cost houses are allowedin lieu of quota for low-cost houses,there is no financial loss to the

developer if he adopts the 10/90system~ T h e10/90 system should be workable if

i t has the strong support of the financialinstitutions and further support by theauthorities in simplifying the approvalprocesses

20



•

21

•

•



)

B U I L D ~THEN-SELL:The Way Forward

l1'h May2007

Matrade Hall (Level 3), Menara Matrade



10:90 CONCEPT IN HOUSING DEUVERYTHE FINDINGS OF THE BTS COMMITIEE OF THE INSTITUTION OF SURVEYORS,

MALAYSIA .

- - - - - - - - - - - - - - - - - - - -1 INTRODUCTION:

The purpose of this paper is to present views of the BTS Committee of theInstitution of Surveyors Malaysia (ISM) on the housing delivery system in the country.This paper discusses housing delivery system within the framework of the industry keyplayers of buyers, developers and bankers. The govemment is the promoter for theproposed 10:90 Build-Then-Sen (BTS) concept, which was launched on th e 1 3 ~April

2007. In this score, this paper examines the current delivery system ofS e l ~

Then-Build(STB) and proposed 10:90 Build-Then-Sell (BTS) concept. The strength of both systemsis presented. Concurrently, ~ highlights problems in the current STB system andprobable issues derive from th e proposed BTS system. Views from the ttvee key playersin housing delivery of the Housing Buyers Association (HBA), which represented housebuyers. developers and bankers, form th e basis of th e study. The findings are drawnfrom information collected during interviews with the key players in th e housingdevelopment industry. Finally, this paper concludes that both STB and 10:90 BTSconcepts shoukl be viewed as business strategy in delivering housing units into the

market.2 THE BACKGROUND: THE HOUSING DELIVERY SYSTEM

2.1 The Current S e l ~Then-Build (STB) Concept

In the present system. a potential buyer makes a booking and pays 10 percent ofthe sales price upon signing of th e Sales & Purchase (S&P) agreement fo r th e purchaseof a house. The buyer then makes a loan arrangement with a bank to finance hispurchase (KPKT, 2007). The bank would release stage payments directly to the HousingDevelopment Account (HDA) of th e p<oject, upon certification by the a r c h ~ e c taccordingto the construction stages.



In the event an y failure to comple te the project in accordance to the agreedschedule and specification. buyer has the right to resc ind the contract and have thedeposit returned together with an y interest that ma y have accrued. Therefore, a buyerdoes not cany an y financial b ur de n a nd shoulder the f inanc ing cos t for the developer

and development risks of the project.

2.3 Ne w Initiatives in th e Housing Delivery System

The Ministry of Housing an d Local Government has taken a bold step to improvethe housing delivery system by expanding the role of th e current One-Stop Centre(OSC) (KPKT, 2007). The Centre will replace the Local Council Planning, Developmentand Building Committee and empower to make decisions through meetings that are heldon a regular basis. In other word, it will process development applicationssimultaneously an d systematically via a committee headed by Local Council Presidentand made up of other technical department officers. Hence, the time taken to approveconstruction projects will be slashed from five years to six months. In addition, approvalsfor selected pro jects inc lud ing BT S housing development will be given within fourmonths. The shortening of time-frame would enhance business efficiency and facilitatedevelopment of the housing marke t. Speedier approva ls would lead to lower holdingcosts, translating into better efficiency of capital investment.

Furthermore, to support housing delivery system, government providesincentives to d ev el op er s w ho o pt for the BTS system. These include exemption of theRM200,OOO deposit fee fo r housing development license. Developer are also given fullrelease from low-cost housing construction quota as required under the current practice,to allocate 30 percent of the developments for low-cost housing. However, developersare encouraged to build medium-cosl houses.

3 STRENGTH IN TH E STB VS BTS CONCEPT

3.1 Strength in the Current STS Housing Delivery System



Public Listed Development Companies have land bank. The companies seldom



borrow from banks because they issue bond to fund their own projects. If thesecompanies bor row to finance their projeds, th e ba nks are willing to len d because theyhave the exper ti se an d abili ty to manage development pr oj eds. T he y h ave internalmechanisms to control the speed and volume of houses to be launched. The developers

consider 60 to 70 percent sales performance, are sufficient to earmark a successfulproject. However, to some extent, the development fo r these developers is unstoppable.Albeit low take up rates in th e hous ing market, they continue to launch ne w phases.They will u se n ew d es ig ns a nd development concepts t o gauge demand. Most of thesedevelopers prefer to develop housing units fo r th e niche and high-end marke ts, as th emarkets are doing well and bankers are willing to finance both for development andpurchasing of the housing units.

Bankers are willing to provide financial facilities to Medium Sized Pocketdevelopers if they meet some break-even sales. The interpretation of ~ s o m ebreak-evensales" would depend on individual bankers and developers. Most of these developers donot finance their development projects. They may us e joint venture (JV) method withlandowners to acquire land for development. When they launched housing units fo rsales, they collect 10 percent deposits from house buyers. Developers start s ite worksand proceed to building construction. They also use suppliers' money to pay fo r buildingmaterials. Thus, the ir capi tal outlays are low. However, in cases where they have toborrow to purchase land. they have to launch the ir hous ing uni ts for sa les in phases tomanage their cash flow. These developers depend critically on progress payment frombuyers to finance th e projects especially the init ia l 10 percent deposits to start-off siteworks. In such cases, effective and efficient project management is crucial indetermining the success of the development.

Small Sized Pocket Developers operate housing development in a similarmanner as the medium sized pocket developers. The cost of borrowing among thesedevelopers is lo w if they embark on JV with landowners for development and use creditto pay for building materials. To remain competitive in the housing market, thesedevelopers normally price the ir p roducts (housing units) slightly lower than the o ther

bigger developers do.

Th i t t h t i ti f th SUbj t l d t b d l d b

i fl h d d l L i h h h



influence on the proposed development. Locations where there are too many overhangand unsold units, auctions, and certain segments of low cost, condominium, andapartment development, remain unfavourable for project finance. These locations car. b e

considered as blacklisted areas. Thirdly, competition from other housing development in

progress or newly completed within the vicinity of the SUbject development may influenceproposed development. Finally, bankers use feasibility technique such as DiscountedCash Flow (DCF) and break-even analysis or computation in determining economicfeasible of a proposed development before approving fo r project finance.

4.2 Consumer Finance or Mortgage

In the past years, the availability of consumer finance fo r the purchase of housing

units together with attractive financial packages drove the housing market in the country.This is partly due to bankers ' support for the government home ownership policy. Thus,any changes in the structure or delivery of mortgage finance would give direct impact onthe overall housing market.

In considering consumer finance, the most important factor is the affordabi li tylevels of the borrowers. Bankers assess the income levels of the applicants as well astheir other finance commitments.

The monies are released via progress payments under the current STS systemthrough the Housing Development Account (HDA). Banks are responsible for theoperating of the HDA and releasing of money from the HDA in accordance to theconstruction progress as stipulated in S&P agreement. Developers utilise these paymentto finance development project.

5 ISSUES IN TH E HOUSING DELIVERY SYSTEM

5.1 Problems in the Current STB Housing Delivery System

• The developer may run short of funds when th e project could not achieveh d l



the required amount of sales;

• Th e developer 's building contractors cannot delivery their contractualduties of constructing the buildings and the developer may be stuck in a

legal tussle, which may also affect house buyers.

There were an increasing numbers of abandoned projects and affected buyers inthe past two years of 2004 an d 2005 (Ministry of Housing and Local Government, 2006).Table 3 shows that 261 housing projects were abandoned as at year-end 2005 against227 projects in the preceding year. In 2005, these projects affected more than 58,000buyers and locked up more than RM8.0 billions capital in the market.

Table 3: Abandoned Housing Projects in 2004 and 2005

(Source. KPKT 8ahaglan Penguatkuasaan, 2006)

Year Number of Number of Number of Estimated valueProiects houses buvers rRM Millionl

2004 227 75,356 50,813 7,033.082005 261 88,410 58,685 8,043.00

.

The housing delivery system has to address the fact that buyers have to endurefinance risk as consumers in housing development. In the current ST 8 system, buyershave to finance housing development, when they paid the 10 percent deposit and stagepayments in accordance to construction phase. In the case of project failure, buyers arethe one that sustained losses. This system has to be re-examine. In housingdevelopment projects, developers and bankers are profrt makers in developmentprogress. Hence, they should be the risk takers for the development projects. Buyers onthe other hand, are consumers in t he housing delivery system, so they should beprotected from any development risks. Furthermore, the 10 percent deposits are basedon development value of the hous ing project. Buyers paid the amount even before the

foundation cos ts incur red dur ing the construction phase. This indicates that buyersfinance housing development projects right up front before the starts of the construction

k

House prices may rise due to higher cost of doing business or construction costs



House prices may rise due to higher cost of doing business or construction costscaused by higher cost of finance. The government however, gives incentives todevelopers that utilise BTS system by exempting them from building low-cost housingand RM200,OOO deposits fo r developer's license as well as speedier development

approvals. Thus, there should be lower house prices in the 10;90 BTS housing delivery,as the cross-subsidies from other houses are given to the buyers. On the other hand, ifthe BTS system drives house prices upward, may deprive the needy and lower incomegroup from home-ownership due to affordability gap.

The housing delivery system has to address the finance structure fo r projectfinance in the new concept of 10:90 BTS. The willingness of the banking system tofinance housing development project has to be materialised.

6 ADDRESSING ISSUES IN THE HOUSING DELIVERY

6.1 Non-Performing Developments and Project Failure

Further improvements in the current STB system can attend to the nonperforming developments and project failure issues. Such improvements cover buyers'interests, developers' licenses and operating of HOA in the banking system. TheHousing Development Act must serve as a tool to address buyers' problems andcomplaints. The establishment of the Tribunal for Homebuyers' Claims (under the Act)can provide house buyers with additional safeguards of purchasers' interests especiallyquality housing. Government must insert authority to the developers to comply with thedecisions of the Tribunal for Homebuyers' Claims.

Furthermore, to ensure that developers adopt best practices and determiscondud, the government can uphold or non-issuing of new developers' licenses inthe future under the law. In addition, issuing of developers' ficense should cover both theprojects and developers . In this case, non-performance development (non-timelydevelopment and non-delivery projects) should embrace both the housing projects anddevelopers.



•

By price range, most of the unsold units were priced at less than RM100,OOO pe r



y p ce a ge, o t e u so d p ced at , punit. Table 5 i n Appendix C shows that in 2005. housing units in this price range madeup 19 percent (3,777 unrts) from unrts priced at less than RMSO,OOO (i.e. low costhouses) and 29.6 percent (5,806 unrts) from unrts priced between RMSO.OOO andRM100,OOO per units. These units are categorised affordable houses by Malaysianstandard. In addition, the market has another two categories of unsold units i.e. theunder construction and not constructed that had been launched for sales but no takers.Table 4 shows that there were more than 100,000 unsold units comprising 61,000 underconstruction and 21,000 no t constructed in 2005. The increasing numbers of overhangsignals that the housing market is becoming saturated.

Last year, 38,526 new housing units were offered fo r sale, the lowest numbersince 2002. In spite of this, response was lukewarm with only 40.6% taken up, lowerthan 46.2% achieved last year (NAPIC, 2007). Taking into consideration the increasinglycompetitive market conditions, the changing requirements of consumers as well as themore cautious behaviour amongst prospective buyers, housing developers slowed downthe launches of new housing units. In this regard, a slower housing developmentperhaps. is healthy for the industry especially for a short term.

Nonetheless, as housing market mature, developers have to produce housingunits that meet the market demand. Mass housing production can no longer meethousing demand in the future. In order to remain competitive and to curb with thechallenging market, housing developers should be more innovative by producing qualityhousing products that meet the rising demand of consumers as a result of improvementin living standards and quality of life.

6.4 House Prices

Market mechanisms determine house prices. Developers' argument that houseprices may rise due to higher cost of doing business or construction costs caused byhigher cost of finance under the BTS concept should be considered together with thegovernment's incentives. The incentives include exemption from building low-costhousing and RM200,OOO deposits for developer's license as well as speedier



7. CONCLUSION

As a condusion, the BTS Committee of the ISM welcome bOth STB an d 10:90BTS concepts in housing deIivefy system. The concepIs should be viewed as businessstrategy in delivering housing units into th e mar1cel Nonetheless the BTS Committee ofthe ISM ~ the gowmment proactive appmach to strengChen th e proceduraldeivery system for approval o f housing dew/opmenl. Th e impo ....ment in the deliverysystem in housing deYeIopment has to be holistic irMlMng boIh th e puIlic an d private_ partic:uIatly key pIaye<s in producing housing unils inlO the mar1cel Developersare urged to conduct "ProIessional' feasibility study Of mar1cel survey befOfe embarkingon any new developments. Th e objective of the study is to ensure that the right ty pe o f

housing unit is buill,in the right

location.at the righllime and at the righ t

price. Allhousing developments inespeclive of Iocalion, building type an d price have to bemartrelable an d successful tIvough optimal resoun:es allocation. Further, developershave to change th e ways they a re doing their business . . to remain competitive. Theyare encourage to us e the latest construction lechnoIogy to compete in th e market.SinUlanecusly, bankers haVe commitment to finance deYeIopment projects and in doingso, they must provide clear an d transparent guideines with regaJd to approvalconddions.

Lastly bu t not least, the BTS Commillee of the ISM considers the government's

_ to improve the delivery system for the property sedor - * ' lead to greaterefficiency in housing projec\S, higher quality homes and laster completion of housingunits. Th e construction sedor especially housing deYeIopmenI should cordinue as onemain contr ibuIOf that ha s sigr1ificanI spiII-OYer elfeds on the economy.

Economic Planning Unit (EPU, 1976 - 2006) Third Malaysia Plan - Ninth Malaysia Plan,

PlillleMinister

Oeparlment,Pulrajaya

Kementerian Perumahan da n K erajaan Tempalan (KPKl) (2007) Bulcu Pane/uan:



APPENDIX AT.ble1: PUBLIC AND PR.lVATI SI!CTOR HOUSING PROGI'tAMMES TARGI!T AND P I ! R ~ O R M A N C I !1171.2005

ThIrd M'III I"ourth ' I I , Fifth M',I. Sixth M'lla tVtnth M eI , ;M M ,I .~

I, n /1'7I-1'1I01 PI'n (1181011851 Pl'n '1.1a-1110'GENCYPI,n 111110111S1 PI'" (1. . . . . 1OQO\ tt1," t l ~ ~ ~ n 2OOI-20.!2l.o m ~ t e l t d...

l .rall ~ !!!I!!!!PUBUC SECT •" Public Iow-COllhaYing 82,200 28,250 118,500 72,302 45,800 28,172 ·0.000 15,378 &4.000 82,812 "',000 IU,124 '7,000

2. Housing In l 'nd Ich tm •• 60,000 3&,710 110,0'0 3&,112 57,500 32,058 58,100 e,Q75 1,300 7,1e8 3,000 8,420 s.oOO

3, Inltitutlon,1 QUIrt '" & . ' ,300 20,5110 55,500 23,258 27,000 11,284 32,1100 18,778 102,700 1Z,015 112,000 .3,8Z0 48,400ether , t tH leccmmod,t1en

•. SEOC'S Projects & olher 57,300 37,930 530580 58,373 18,700 27,a1. .5,315 .Z,315 5'.000 31,eM se,OOo .7,505 S 7 , ~ 5l ta l l pro)tetll medium.n d high-eoll houling

Sub-Totlt 220,100 121,510 3'1,170 110,0045 "1,000 17,121 17.,015 84,542 2SO,OOO 121,124 312,000 tal,111 "7 ,IOS

PRIVATE UCTOR

" Privlt . OIIIIIOpers 100,000 1911,490 • • • • • • • • • • •

• Low·cell houllng • • 00,000 22,714 37D.400 aU77 215,700 212,003 "7,000 127,$14 31il,000 94,029 71,100

• Medium&. h\on-eolt • • 259,470 70,005 111UM 107,442 170,700 331l,&10 411,000 &M,83' 250,000 538,1D4 414,805houling

2, C ~ . r a t i v tSocieli .. 12,000 4,120 25,280 5,474 12,500 7,483 12.aoo 11,305 15,000 13,703 14,000 23,151 10,000

3, Individuall and Groupi 150,000 1$1l,010 150,000 .. .... • • • • • • • •

Sub-Tot,1 212,000 312,a10 124,130 201 ,133 552 ,500 203,102 311,000 H2 , l t l 110,000 m . .. . 303,000a8S,374 81' ,8ts

TOTAL 482,eOO 484,110 '23,300 311,t78 70t,500 300,'28 513,015 " ' ,480 800,000 ....... .1 ••000 U4,043 701,400

Soure.: Third MIIaYiIt PI.n (1;715),Fourth M.I.pi l Plan (10"), Fifth M.lIVtia Plan (10S15),Sixth M.lIVli. Pl." (,0.,), s. ....nltl M.l tys l tPl ln (1090), ElgtltM.ltyslt P18n (2000).n d Ninth M.I.Y'' ' Plan (2005)

BTS Hou,ing DelveryZMI

• 11 .

APPENDIX B



Table 2: Non-Performing Developments and Complaints from House Buyers

2002 2003 2004 2005

To t a ~ o i e c t s 151 187 212 245Total numbers of buyers 28.550 33.772 37.810 38.315

Category Types of % - % - % - % -Co m laints I (Numbers) I (Numbers) (Numbers) (Numbersl

Timeliness delivery

1 late issue of certificate of 14 % 13% 15% 12%fitness (CFOs) 139971 143901 (5672) (45981

2 Late delivery 13 % 15% 12% 14%(3711 ) (5066) (4537) (5364)

Non-delivery of housing units 6% 10% 9% 11%

(1613) (3377) (3403) (4215)

Quality housing

1 Shoddy workmanship & 11 % 7% 9% 7%

defects (3141) (2364) (3403) (2682)2 Non-adherence to building 7% 4% 3% 1%

plans (1998) (1351) (1134) (383)

Others

Ownership issues strata 27 % 28% 29% 29%title (7709) (9456) (10964) (11111)

Infrastructure 3% 4% 2% 1%(857) (1351) (756) (383)

•

APPENDIXC



APPENDIXCTABU:5. HlJIIl8ERN/DVAlUEOf CJlIERIW«>RfSIlENlW. UNITSBYTYPE ANDPR a AANGE2ttl4&2OD5

•To.. . • ...... 1 _

"""

"" "" "",

"" "" "" "" '''' "" """ .......RWO.oooOrLm .,

'" •'M

'" •I , t l

"n,cOl

_... '" '" • .. '" • "' , . , 'M "......(RMIao'I) •• •• . ~ •.~ ,. US . ~ . ~ 10.11 11.1' 14.12 THe .m 213.n

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