If you go by housing developers' advertisements in Malaysian newspapers and magazines, they cannot build houses fast enough to meet demand. Only a few units, it seems, are left of the latest phase, the others in such demand that they were sold as soon as advertised. But house prices decline, as unsold properties onthe market mount. Now, the National Economic Action Council, "in a strategic move to boost growth in the housing sector", exempts stamp duties for sales and puchase agreements and for transferring properties from buyer to seller for "residential properties -- houses, condominium units, apartments and flats -- bought between 1 January and 30 June this year. This is to help stimulate the economy and is aimed at the important construction sector. The NEAC action comes to kick start the construction industry out of its doldrums. In other words, the housing developers' advertisements were false.

But the NEAC announcement is neither here nor there. March is about to dawn on us. But lawyers and others in the chain of housebuying have yet to be told of this officially, as they must, of this exemption. In fact, for a measure as important as this, the only proof of it is newspaper reports. And that has grown cold. It is a simple matter for NEAC to have announced it after all the legal procedures have been met. Instead, it makes an announcement that means nothing and is, if the past is any guide, irrelevant. In other words, in practice, if the house buyer did not buy his house in January, when he did not know of this exemption, he could not almost certainly take advantage of it.

So, to most house buyers this concession means nothing. Those who paid the stamp fees to their lawyers until the NEAC announcement cannot expect it unless the lawyers are told to return; all new housebuyers have to pay the stamp fees as before. In other words, nothing has changed. All it has added to the hapless housebuyer is one more frustrating obstacle: you would know what that is if you have tried to get money back from the government that is rightfully yours.

It takes at least six months to transfer a house from houseowner to buyer; and ten years and more so for a new house owner to get his title from the government. How much would a houseowner save in stamp duties if he could take advantage of this rule? To most of us, that is one per cent of the sale price to a maximum of RM1,000. So, he must have bought his property in January and have it it transferred to him by June 20 to get this concession. To a buyer of a new house, he must sign a sale and purchase agreement within the first six months of this year -- and save RM10 stamp fee. He gets no other benefit; it takes about ten years to get a fresh title for a new house; and, more or less years in other states.

If the government seriously wants to help the house buyer, it must take more concrete steps. The housing construction industry is so loaded in favour of the developer that a man who buys a house, in effect, finances its construction. And, in many cases, left in the lurch. A man buying a new house has everything stacked against him, and the government does not address this problem. Instead of being tough on the developers and insist they honour their contracts, the government finds creative ways to excuse them and blame the housebuyer. Even in the issuance of certificates of fitness. Often they are handed over with the house not ready for occupation. It must not allow developers to mortgage the land on which the houses are built, for the danger of them not lifting the mortgage is real after the houses are complete.

The progressive payments housebuyers make should be put in an escrow account so that if the developer absconds, which happens too often, the housebuyer is protected, as he is not now. If the government wants to see the housing setor of the economy grow and develop, exempting stamp fees is not how to do it. If it can guarantee the money a housebuyer pays a developer is not paid to him until after the house is complete, and returned to him if it is not, that would make more people want to buy houses. But the sad fact is housing developers depends on these progressive payments to complete his house, buy his fleet of Mercedes Benzes and BMWs, and work on the assumption that if they complete their projects, it is the housebuyer's good luck. There are, of course, a few good developers who deliver what they promise. But many are hit-and-run developers who are in it to make money than build houses. So, how would a RM10 stamp fee exemption stimulate house buying?

MGG Pillai
pillai@mgg.pc.my