The Housing and Local Government Ministry (KPKT) is planning to set up escrow accounts for housing projects. This is in order to ensure payments by homebuyers are used exclusively for housing projects that they have bought. An escrow account is an account in which funds are held by a third party or in trust, while two or more parties complete a transaction. Currently, without escrow accounts, a developer can transfer funds from Project A to Project B, leading to Project A becoming abandoned. The Housing and Local Government minister said the ministry is planning to set up escrow accounts to ensure payments by homebuyers are used exclusively for housing projects that they have bought.
Source: https://ms.wikipedia.org
A proposal has also been submitted by KPKT to the Ministry of Finance to provide up to RM30,000 in deposit assistance for first-time homebuyers. The proposed initiative, dubbed the Madani Deposit, is aimed at alleviating the monthly payment burden of the first-time purchasers, especially youth buyers in the B40 (Bottom 40%) and M40 (Middle 40%) income groups.
The Madani Deposit initiative is one of 33 proposals put forward by KPKT to the Finance Ministry for Budget 2025. Other proposed initiatives include the creation of 100 Madani recreational parks, the transformation of retention ponds and the introduction of electronic property sale agreements with e-stamping.
Since January 2023, KPKT has successfully revived 704 sick or abandoned projects, with a total gross development value of RM58.94 billion. This has helped over 65,000 homebuyers secure their desired homes.
The idea of ringfencing homebuyers’ payments is laudable. This is the same problem faced in China. Evergrande and others have moved funds around, leaving homebuyers in the lurch. The other important piece, the Minister could do is “name and shame’ the errant developers, board members and management. Of course, some are shameless but that’s part of human behaviour. We need to find ways to protect the genuine, hardworking buyers from unscrupulous developers. There are also some others who may have not set out to defraud people but fallen into difficult circumstances because of external conditions. And that may be understandable.
In any event, KPKT being active is helpful to the average consumer and let’s see better results soon.
Reference:
Govt mulls escrow account to ringfence homebuyers’ payments, Syafiqah Salim, theedgemalaysia.com, 21 August 2024
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