The cost of doing business for developers in the local property sector must evolve with the times to ensure prices of houses can be reduced further.
National House Buyers Association (HBA) secretary-general Datuk Chang Kim Loong said a host of compliance, or regulatory costs, including fees to local councils, Land Offices, and utility companies, are currently being borne by the developer.
Such fees included development charges, land conversion premiums, strata title applications, cost of building utilities, and payments to utility providers for water and electricity for their development projects.
These costs are then passed on, from the developer to the consumer.
“If a housing developer wants to put up a sub-station in the new development project, they must ‘sacrifice’ a piece of land for this purpose and put up a building for Tenaga Nasional Berhad (TNB),” said Chang.
“But TNB has been corporatised. They are no longer what they used to be 30 years ago, when they were known as Lembaga Letrik Negara. Yet, they are still enjoying the same perks. Shouldn’t TNB be absorbing the costs instead … shouldn’t the model change?”
Chang said utility companies should not push these costs to the developers, who would then pass them on to house buyers.
Chang is one of the 25 individuals in the panel of experts appointed by the Housing and Local Government Ministry yesterday to help the government formulate and implement new and improved housing policies, to help revitalise the sector.
He believes that property prices can be further reduced if compliance costs are brought down by between five and ten per cent.
“This is on the proviso that developers do not increase their profit margin.
“We must have the willingness to dissect what these various compliance costs are and move forward and ask local governments and agencies to reduce fees related to the cost of development.”
Chang, who founded HBA two decades ago, added it was also important for the ministry to look at abandoned, and problematic projects in the country – and not just the issue of affordability of properties – in its bid to encourage homeownership. He suggested the setting up of another technical group to look specifically into this issue.
“There has never been a proper, workable solution for abandoned projects. There is no point of advocating for property ownership if the people have no guarantees that their rights and interests are protected in the case of abandoned projects,” he said.
“Abandonment should be criminalised and developers prosecuted. Section 18A of the Housing Development (Control and Licensing) Act allows for this, but how many have been prosecuted in recent years?”