Ministry studying mechanism to better protect housebuyers

Housing and local government minister Nga Kor Ming said under the new proposal, buyers could pay up to 5% of the purchase price and submit their financial information for loan assessments. PETALING JAYA: The housing and local government ministry is looking into a mechanism to provide greater protection for homebuyers and reduce the risk of sick and abandoned private housing projects.

Nga Kor Ming. Minister Nga Kor Ming said the proposed "option to purchase" (OTP) mechanism would establish a more systematic process before the signing of the sale and purchase agreement (SPA).

The OTP mechanism aims to safeguard homebuyers' interests while allowing developers to better assess genuine market demand, he said.

Under the OTP mechanism, developers would be given a specified period to assess buyer interest before deciding whether to proceed.

Buyers, on the other hand, could pay up to 5% of the proposed purchase price and submit their financial information for loan assessments.

Should the developer decide not to proceed, buyers would receive a full refund together with accrued interest.

"At present, developers often assess market demand through the collection of booking fees.

"However, this presents several challenges, including difficulties in distinguishing genuine buyers from those who are not serious about purchasing, while homebuyers risk losing their booking fees if they choose not to proceed," Nga said in a statement.

Nga also said that the mechanism would also provide greater price certainty for homebuyers.

Currently, buyers may pay booking fees based on an indicative price, only to discover that the final selling price has changed when the project is launched, he said.

Nga said through the proposed OTP mechanism, developers would be required to honour the indicative price initially offered to buyers, ensuring that the final selling price remains unchanged.

"For developers, this means greater certainty on genuine market demand.

"For homebuyers, it means greater transparency and price certainty before making a major financial commitment. Through this reform, we want to ensure that buyers will never have to pay for houses that they may never get."

Nga also encouraged established developers to step forward as white knights to revive abandoned projects, noting that the 2027 budget proposed full stamp duty exemptions on qualifying loan agreements and property transfers involving developers coming to the rescue and the original homebuyers.