No loan? No worry. I (developer) lend you.

Nope, the title is not a joke about the property market today. The housing developers may be issued with a money lending license to help non-bankable house buyers own a home. As per the Urban Wellbeing, Housing and Local Government Ministry, this proposal is being discussed. The main reason as per the Minister was that he wanted to help buyers to own a home. He said, “I am thus proposing that eligible housing developers, especially those with deep-pockets like Sunway Group, EcoWorld, Mah Sing and Glomac be issued a money lending licence. It will be restricted to only providing end-financing to eligible house buyers who face difficulty in securing loans from banks.” Full article here.

First of all, how many of those reading this piece of news is happy? Okay, first of all, the money lending license is definitely only for developers with deep pockets. I would think they should have surplus cash reserves and not developers who are themselves having huge debts. When we look at all the listed developers, not many fulfils this easily. Perhaps those names the Minister mentioned as well as a few more. Secondly, of course if they (developer) lends you the money, you must buy their properties! Haha. So, this is a question of whether their offering is what we are desiring. Last but not least, if the banks are not lending, would developers lend? How would they do the risk assessment of the buyer? The same way banks assess the loan applications?

Actually there are still questions which needs a bit more answer. However, as per the Minister, this proposal is a win-win situation. In fact he shared that “For the developers, this end-financing facility offers a second profit centre after the sale of the houses.” He said that interested developers can start to submit an application for the money lending licence. This will be covered under the Money Lender Act (Revised 2011) or Act 400 under the purview of the ministry. The interest rate shouldn’t exceed 18 percent per annum. (YES!, this is a money lender… remember?)  Let’s just wait for the scheme to start. Anything to help first-time home buyers whether private or government is definitely welcomed.

written on 8 Sept 2016

Next suggested article: Sustainability is about money and responsibility

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