79 abandoned housing developments and 17,724 houses in total. Solution needed.
My good friend bought an apartment in Penang island in the 90s. Obviously he’s slightly older than me. The project was abandoned and he was forced to continue paying for it. When I knew about it, he had already paid for the last 5 years. I do not know what has happened since then but every time we have abandoned projects, the government has to step in because otherwise, all the buyers would be left hanging.
There’s very little the buyer could do for abandoned projects
Usually, for abandoned projects the buyers have no avenues to go to because the developer may no longer be available. The banks meanwhile would only be focused on the borrowers; following up with them for mortgage payments. Thus on one hand, the buyer has no home and on the other hand, they have to keep paying. At the same time, they may still have to pay rental for the current place they stay.
We have a statement from the Minister of Housing and Local Government (KPKT).
Article in nst.com.my KPKT Minister Datuk Reezal Merican Naina Merican said there are 79 abandoned housing projects in Peninsular Malaysia totaling 17,724 houses as of September 30. The projects have a combined gross development value (GDV) of RM5.57 billion, before depreciation and arrangements with liquidators.
According to Reezal Merican the abandoned projects impacted 11,824 homebuyers. He said the ministry has taken steps to restore and complete abandoned projects in order to relieve the buyers’ burden, including mediation and a settlement arrangement with the buyers through the resale of the unit to a liquidator.
He shared that 15 of the country’s 79 abandoned projects are now being rehabilitated, totalling 2,830 units for 2,699 customers. Please do read here for more details: Article in nst.com.my
Always be aware of what we buy
Is the price too low versus every other projects in the neighbourhood? We must not think that the developer is special. The cost of construction does not differ too much. Thus, the property price cannot differ too much unless of course the land which the developer has was free or very cheap. Thus, when the prices is too low, there is a chance that the developer would fail to build.
Who is the developer? For first-time home buyer, it may be safer to buy from secondary market or from very established developers. If the developer is a first-time developer, then enquire a little more. Who are the owners, what were their experience previously? If they were construction company, then ask what are the projects they completed before and do go and take a look. Just be more careful because it’s many hundreds of thousands Ringgit.
Abandoned developments will still continue to happen
Unforeseen circumstances do happen. This is why sometimes, the development may still be abandoned even after we have done lots of prior checks. However, it’s always possible to reduce this potential down to a minimum. Plus it’s super important for our KPKT to be always be on top of things. These are hard earned money of the buyer and when they lose it, imagine the financial stress they will fall into. Thanks in advance yeah KPKT. You are an important ministry for the home buyers.
Property News Malaysia? Sign up for daily investment news updates (FREE since Nov 2013 and FOREVER). Alternatively, Follow me on Telegram here.
Please LIKE kopiandproperty.com FB page to get daily updates about the property market beyond kopiandproperty.com articles. Else, follow me on Twitter here.
Next suggested article: Property News Malaysia: Buy before prices move up in 2022?
Header Photo by Eva Elijas from Pexels