13MP: Govt plans to amend Act to mandate build-then-sell model to curb abandoned housing

• The BTS model may be implemented through a risk-sharing partnership, such as the BTS 10:90 scheme, where buyers pay 10% upfront and the remaining 90% upon completion.

KUALA LUMPUR (Aug 1): The government has proposed to mandate the build-then-sell (BTS) model for the property market under the 13^th Malaysia Plan (13MP) which was announced by Prime Minister Datuk Seri Anwar Ibrahim yesterday.

To do this, the government plans to amend the Housing Development Act 1966 (HDA) to make the BTS model mandatory, reported The Edge Malaysia today.

It stated that the BTS model may be implemented through a risk-sharing partnership, such as the BTS 10:90 scheme, where buyers pay 10% upfront and the remaining 90% upon completion.

Notably, the BTS 10:90 has been stipulated in the HDA and governed under the Housing Development Regulations since 2007, but alongside the sell-then-build (STB) model. Given the option, most developers favour the STB, where buyers pay substantial down payment and progressive payment sums from as early as pre-construction stage. 

Under the STB, issues of abandoned or sick housing have been hard to control, where developers run away with the collected payments without completing the projects. 

In response, Hong Leong Investment Bank (HLIB) Research stated that if the proposal is made into law, it is expected to reshape the property market and lead to industry consolidation over time, reported The Edge Malaysia.

It also noted that only developers with strong financial backing would succeed under this model, "as they must fund projects upfront without early cash from buyers".

"This can strain their finances, raise debt levels, and lead to fewer new project launches. A drop in housing supply could push up prices and hurt affordability, especially for mass-market homes," it added.

Similarly, TA Securites "anticipates a phased approach that balances buyer protection with developer viability, potentially through exemptions, transitional support, or segmentation by developer scale", stated the same report.

On the other hand, Maybank Investment Research said BTS would help reduce the risk of abandoned projects, encourage careful planning and better quality products, reported Focus Malaysia today. 

"It may also address the oversupply issue by discouraging reckless launches and promoting more responsible, demand-driven development," it was cited saying. 

Meanwhile, National House Buyers Association secretary-general Datuk Chang Kim Loong told EdgeProp.my that while he welcomed the news, he hoped it would not be another lip service. 

"We have fought for BTS 10:90 for 25 years, and the government has already initiated it since 2007, but so far, it has still not been implemented across the board.

"The BTS 10:90 is a far safer mode of home delivery system and the government should compel the industry to adopt it without delay. It will drastically, if not totally, eliminate cases of abandonment.

"The devastating impact of abandoned housing does not just impact house buyers, but banks and governments too, which have to mop up the mess left behind by the fraudulent developers," said Chang. 

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