Build Then Sell System

Recommendation
A house are basic needs for people. While housing industry are important for the other
industry. A developer and buyer see a house for an investment that give a lot of benefit. A
buyer will be satisfied if his investment give back benefit such as the house are as they
thought. While for housing developer, the profit of sale from a sale of each unit of house.

However, there are certain problem in housing development in Malaysia. The main
problem is abandoned housing project. This abandoned housing project already exist since
1983. To minimise abandoned housing project, the need to fix the housing delivery system
from sell then build to build then sell. This Build Then Sell (BTS) will give benefits to the
buyer as they will be able to make a right choice in buying the house. This also will
encourage the developer to ensure their building the housing development to be finish faster.
This will give benefits to both parties.

In implementing the BTS, there are a lot of challenges come from the developer as
they do not want to implement it. Eventhough the government has encourage them to build
the house using BTS. The main issue of the developer do not want to implement this BTS is
that it cause a bad financial to housing developer, developer need to make a big loan to
sustain the business and the developer will only build a small amount of house unit and will
not be able to satisfy the market demand. Inability to produce houses in a large volume will
cause the price of the house escalate thus make ordinary buyer unable to buy house. Thus, we
recommend that the developer make a smaller development and come out with multiple
concepts and variety of designs compared to conventional mass housing projects. This type of
smaller development can be seen in some countries such as United States, United Kingdom,
Australia and Singapore which they only build house not more than 50 units per project
compared to us in Malaysia.1 This allow them to concentrate on their quality, planning and
coordinate the project better. As we can see in Sell Then Build housing delivery system that
had a lot of defects and poor workmanship but under BTS the buyer can decide to not buy the
1 Ng Lee Fen, (2007). Determinant Factors of Implementing Build Then Sell in
Malaysia: Housing Developers Point of View, at pp 15

house if there are defects. Therefore, the quality of houses should be enhanced under BTS
system.
The Ministry of Housing and Local Government shall help the developer to use Build Then
Sell and settle the dispute that suffer by the developer. The need to produce a more creative
financial model as the local financial institutions play a major role in supporting the Build
Then Sell (BTS) housing delivery system. The financial institution should provide a new
attractive financial packages so the construction industry in Malaysia will be go on. This will
also encourage the developers to maintain their good financial positions and track records.
The recommended financial model should consist of this:
1) Attractive financial loans to developers who implement BTS;
2) Lower land holding cost during the construction period;
3) The state and federal government should impose a requirement on adequate
capital for existing projects and new projects;
4) Mutual agreement between government and private developers which vacant and
unsold units to be sold to government staffs;
5) Lower stamp duty; and
6) Lower home loan interest.2

Addressing the problem faced by developers that has adopted BTS system is that
there is not proper monitoring system yet to exist in Malaysia. The main problem of
abandoned housing project is because of weak monitoring system in Malaysia. As we can see
in Australia, there are no abandoned projects because of their existing laws in governing the
industry players. The government should improve also their monitoring system through rule
and regulations. The enforcement of such law will motivate the developer to improve their
housing qualities. Thus, government shall play crucial role by having proper monitoring
system and strictly enforcing the law and its regulations. Improving the monitoring system
through rules and regulations. As in the case of Australia indicates that regardless of whether
2 Zairul M (2008). Identifying Economical and Sustainable Elements in Enhancing
the BTS Concept for Malaysia. at pp 15

BTS or STB is used, a proper monitoring system is necessary to ensure the success of the
housing delivery system. In Malaysia, the flaws in the monitoring system and enforcement
have led to many developers taking advantage and give a bad image to the industry.

Some of the industry stakeholders point out that the government need to formulate a
National Housing Policy as many developers organizations claim that the government itself
still fuzzy on the idea of BTS. The government should prepare a proper mechanism for the
implementation of BTS. As we can see, the Ministry of Housing and Local Government
(MHLG) only prepared the guidelines for 10:90 model of BTS but not for the other models
such as 20:80 or 30:70. The policy makes such as the federal government, state governments
and local authorities should work together to make the BTS implementation much better.

Then, to ensure Build Then Sell (BTS) to be implemented widely, a strong political
involvement is need from the top administration to successfully replace Sell Then Build
(STB) system as new housing delivery system. The government should act as the main driver
to implement the BTS system. The government should have a strong will to implement the
BTS system that urges all developers to adopt it. 3 The support of industry is also needed to
ensure the implementation of BTS is a success. The MHLG should take serious in granting
the project license by not giving to developer who have a bad record on the previous project
or financial problem. The only way to ensure this either by tighten the terms on granting the
license or choose Build Then Sell concept. The government also need to educate the
Malaysian public who do not concern about their rights in housing industry and only
accepting whatever the developers offered to them. Therefore, BTS housing delivery should
be spread in the news through media..

Furthermore, the incentives offered by the government for developer who adopt BTS
should be revise as it only applicable to the developers who are using 10:90 model. Which
currently the incentives include the fast-track approval for BTS projects, a waiver of the RM
200,000 deposit for a housing developer's license and an exemption from the low-cost house
3 NorAini., (2010). Strategies to Implement The Build Then Sell Housing Delivery
System In Malaysia, at pp 4

construction quota. Even the incentives offer only had low response from the developers.
This is because of unclear procedures and uncertainty regarding the application process so the
developer claim that the incentives were not worth the time and effort. Some of the
suggestions on providing more incentives such as discount on premiums land, special tax
structures and lower levy for foreign labour.

In addition, the role of professionals such as architects, engineers, quantity surveyors

and lawyers itself play a vital role in the industry. They must be responsible to ensure that the
housing development project are carried out according to the process and procedures. 4 They
should abide to a professional ethics and code of conduct so there will be no conflicts of
interest which at the end, they only follow the order of the developers who appoint them.

Last but not least, the Build Then Sell concept bring benefits to all either buyer or developer.
No one will be suffer if BTS are implement responsibly.

References
Fen, N. L. (2007). Determinat Factors of Implementing Build Then Sell In
Malaysia: Housing Developers Point of View.
Ibrahim, S. M. (2011, February 26). Retrieved from Syed Mahadzir Syed Ibrahim:
http://syedmahadzirsyedibrahim.blogspot.my/2011/02/konsep-bina-danjual-menguntungkan.html
Laura Lee, M. A. (2006). Getting "Real" With Build & Sell. In Home Finder
Magazine.
Nor 'Aini Yusof', M. W. (2010). Strategies To Implement The "Build Then Sell"
Housing Delivery System in Malaysia. Habitat International.
Nor'Aini Yusof, I. Y.-J. (2012). The Effectiveness of Government Incentives To
Facilitate An Innovative Housing Delivery System: The Perspective of
Housing Developer. Theoretical and Empirical Researches in Urban
Management.

4 NorAini., (2010). Strategies to Implement The Build Then Sell Housing Delivery
System In Malaysia, at pp 4

Zairul M, M. R. (2008). Identifying Economical and Sustainable Elements in

Enhancing the BTS Concept for Malaysia Housing Development.