Let the house buyers beware!

A file photo shows a house for sale in Alexandria, Virginia, outside Washington DC. In countries like the United Stat es and Canada, home inspections are a standard practice in the purchasing process. — EPA

To not educate yourself and learn from the mistakes of others only sets you up to be at best, disappointed and at worst, being house poor'

FOR many people, the purchase of a home is the most important financial decision of their lives. Therefore, it makes sense to approach the decision carefully.

The purchase of a home is unlike any other consumer product as it covers a lot of ground including legal, financial, technical and emotional considerations. To not educate yourself and learn from the mistakes of others only sets you up to be at best, disappointed and at worst, being “house poor”.

Caveat emptor! Let the buyer beware! The idea is that buyers take responsibility for the condition of the items they purchase, and should examine them before purchase. How true is this for the property buyers? It works well for buyers of completed units but not if you are buying an abandoned house to call it a home.

What happens if you have paid for your house and discover defects later which cost thousands of ringgit to repair? This would not have happened if you had used the services of a building inspector. His duty and responsibility is to give you a report on the condition of the house, and to check for permitted renovations, against shoddy renovations, before you buy.

The report would have given you room for negotiation with the seller too.

Most people are under the mistaken belief that the local council issuing the Certificate of Fitness for Occupation (CFO) will discover problems such as defects and shoddy workmanship when they issue it. They do not. Their job is strictly to ensure that there are no by-law violations or safety issues. They are not quality assurance officers and nor do they have that authority.

Furthermore, there could be problems with the house that are not necessarily related to by-law violations, yet have serious consequences for the new owner.

We believe that it takes three types of know-how to make a wise decision on a purchase: financial know-how; legal know-how and technical/engineering know-how.

In the first two, consultations with financial or legal experts are not a problem as those professionals, namely “buildings/home inspectors” are already in the market.

However, when it comes to the technical part, there is a lot of tension from the layman's point of view and the vendor's as getting a professional home inspection report has yet to be practiced by house buyers as one important process of the purchase. These building/home inspectors are themselves professionals like architects, engineers and surveyors.

The layman is only guided by his untrained eyes (to inspect), naivety assumptions. When it comes to quality and workmanship, new homeowners' problems are compounded by the fact that there is no degree of benchmark on buildings and its components for the layman to rely on.

In countries like the United States and Canada, home inspections are a standard practice in the purchasing process. Home inspectors conduct inspections of newly built or previously owned homes. Prospective home buyers hire home inspectors to inspect and report the condition of a home's systems, components, and structure.

They typically are hired either immediately prior to a purchase offer on a home, or as a contingency to a sales contract.

In addition to structural quality, home inspectors inspect all home systems and features, including roofing as well as plumbing, electrical, and heating or cooling systems.

After you have known what you are purchasing, the legal issue of sale and purchase contracts are the usual conveyancing routine in buying and selling transactions.

Checks will be made by the lawyers as to the arrears of quit rent and assessments rates at the land office and local council, respectively.

The potential buyers could also made checks at the utilities companies as to outstanding charges for service provided to the property.

Chang Kim Loong is the honorary secretary-general of The National House Buyers Association, a non-profit, non-governmental, non-political organisation manned by volunteers. For more information, check www.hba.org.my or e-mail info@hba.org.my

By The Star

How affordable housing can succeed

IMAGINE a cook without his pots, pans and utensils, can he still perform his duties of cooking a delicious meal for his clients?

We need essential tools and resources to accomplish our tasks even if we are skilful in our own profession. Same goes to the property industry.

With the market demanding more low and medium-cost housing, all stakeholders should look for the most effective ways in maximising the usage of our resources to build affordable housing and to meet the ever increasing housing demand.

In my article last month, we identified the root causes that influence the pricing mechanism of a housing project. These include the rising land acquisition cost, lengthy approval period, holding cost of unreleased bumiputra units and cost of building utility infrastructure.The next questions are:

What are the remedies available?

Which parties have the ability, expertise and resources to implement the remedies?

First of all, to address the issue of high land cost, the Government could tap onto the expertise of the private sector to develop government land as the land acquisition cost is much lower. Land can be fairly distributed to property developers through open tenders. This way, more homes can be built on a more affordable and effective manner for the people.

To increase the supply of affordable housing, the Government should also conduct a study to accelerate the development's approval process by reducing the number of steps and the time involved (sometimes two to three years) in the approval process, have an automatic release mechanism for unsold bumiputra units, and remove the burden of utility infrastructure costs on developments, which should be borne by privatised utility companies themselves instead.

In the recent budget announcement, it is encouraging to see that the Government has proposed several measures to tackle the issue of affordable housing in Malaysia. The efforts include the allocation of RM1.9bil to build 123,000 affordable housing units nationwide and a RM500mil fund to build 80,000 houses priced between RM100,000 and RM400,000.

People and organisations that work on their areas of expertise are most likely to deliver outstanding results. Government agencies that have been working on affordable housing can build these housing effectively as they have both the expertise and resources.

On the other hand, though private developers have the expertise, the challenge of high land and material cost are the main hurdles in meeting the demand, just like the cook without his pots and pans. To meet the desired outcome, it is important for the Government to fund more government agencies with expertise and resources to embark on this initiative. I still recall in 1974, when I joined the Selangor State Development Corp (PKNS) as a director, the main objective of PKNS was to build mass housing for the people and to eliminate the shortage of affordable housing.

However, according to a recent article in The Star, PKNS today has also ended up venturing into high-end developments to subsidise its low-cost housing projects and infrastructure, as it no longer receives grants from the Government. This has inevitably distracted the corporation from delivering more affordable housing projects to the public.

Therefore, it is important for the Government to constantly revisit the original objectives of corporations such as PKNS and other SEDCs (State Economic Development Corporations), Syarikat Perumahan Negara Bhd, and 1Malaysia People's Housing Scheme (Prima) that have relevant expertise, and continue funding them to build low and medium-cost housing.

Generally, people and organisations perform best in their areas of expertise. However, this must be backed with essential resources. If both the Government and private developers can leverage on each other's expertise and resources, I believe we can work towards a more sustainable and affordable housing policy, and realise the rakyat's dream of having their own homes.

In that way, the cooks can equip the kitchen with the right utensils to cook up a delicious meal.

FIABCI Asia Pacific chairman, Datuk Alan Tong, has over 50 years of experience in property development. He was FIABCI world president in 2005/06 and was named Property Man of The Year 2010. He is also the group chairman of Bukit Kiara Properties.

By The Star

Buying your first home is a big step and can be exciting

Let’s say one morning you wake up and realise that, yes, buying your first home is the right thing to do for yourself.

You’re tired of throwing away money on rent and figure that it’s time to get into a home of your own.

In most cases, first-time home buyers would opt for apartments due to convenience and the abundance of choices in accordance to one’s budget.

Apartments enjoy a reputation synonymous with city living, stylish open-plan space and great views.

But choosing and buying an apartment can be an arduous task (or maybe it was just me), and there are plenty of things you need to think about at each and every stage of the investment process.

This guide is what I put together to help highlight those key points you need to be thinking of at each and every stage of your quest for the perfect apartment. It was what I used to consider my purchase.

Spend some time thinking about the kind of apartment you’re looking for. This will help you narrow down your options and enable you to determine some ‘must haves’ in your apartment choices.

* Location, location, location! - Narrow down the areas that you are most interested in living in, and make a list of these locations. Similarly, make a note of all the areas you definitely don’t want to live. This way, property agents will know immediately which properties to offer and which to discard. This process narrows down your search and save you time when viewing.

* Money matters - Consider your finances carefully and decide on a maximum budget – narrowing down your search field in this way will ensure that you only view properties you can afford. Don’t forget to bear in mind your income and outgoings – factoring in not just the monthly payments, but the apartment’s montly service charges as well.

* Space - How much space will you need in your apartment? How many bedrooms? How big a kitchen? Do you need an office?

* Style - Studio apartments merge all your living space into one area, while open-plan design means that your kitchen, dining area and living room will be contained in one open space. Do you want separate rooms within the apartment? Would studio living be too cramped? For me, I had to give up on the idea of an open-concept kitchen mainly because I placed top priority on my apartment’s location and the apartment that suited my budget did not have an open-concept kitchen.

* Specifics - Are there certain criteria on which you are unwilling to compromise? Do you want wooden floors? High ceilings? An open-plan design? Designated parking spaces? In my case, besides the location being a priority, I wanted to have the smallest room in the apartment to be right next to the master bedroom. That way, I would be able to hack the wall to create an opening for my walk-in wardrobe.

It would be pointless for me to look at layouts where the smallest room would be at one end of the apartment, and the master bedroom be at the other end of the apartment.

The middle room would be too big to house my wardrobe and the smallest room would have been too small for my guest room and office.

Things to look out for

1. Noise - If you’re seriously thinking of investing in a particular apartment, take the time to research those living above and below as well as next-door to your property.

A week into your new apartment-life is not the time to discover a neighbour’s penchant for heavy metal or playing the drums!

2. Accessibility - Take a minute to think of those who will be visiting you at home – are there people for whom access could be a problem? Is there a functional lift for older visitors or family?

3. Outside Space - One of the sacrifices of apartment living can be the loss of outdoor space. I’m not so much of an outdoors person, but I made sure the apartment I purchased had a reasonably-sized balcony.

4. Pets - If you have pets, consider them in your property search.

This can be a major consideration for those wishing to move into an apartment, as you must be fair to both your pets and your neighbours.

Is your dog’s barking likely to irritate neighbours? Will you be able to give the pet adequate fresh air and exercise?

When you’ve found an apartment you’re really keen on, you may want to ask around people who live there or nearby to ensure there are no hidden problems which may affect your interest.

These efforts in research goes a long way in giving you peace of mind, should you finally decide to put in an offer, and can help you to avoid making an unsound investment.

I was passively looking at properties and being indecisive for three years before making a choice and sticking to it.

> Dawn Jeremiah is looking for faux mantelpieces and fireplaces for her living room. Armed with a passion for television and journalism, she handles regional marketing at a regional lifestyle channel. She also tweets at www.twitter.com/dawnjeremiah

By The Star

Points to consider when buying a house to avoid future complications

Can you afford a house now?

Assuming you can afford a house, how much can you afford to pay? These are important questions that many people do not research. This oversight can lead many people to bad debt and even bankruptcy.

Your monthly expenditures will be more than just the housing loan. There will also be insurance, electricity, water, telephone bills, contributions to maintenance fund, medical bills, groceries, unexpected household/auto repairs, lunch money and many other obligations.

They must all be accounted for in your budget spreadsheet. For many of us the purchase of a house or property is the largest financial commitment we will ever make. This makes arranging the most suitable housing loan just as important.

Make sure you know the costs of entering into the loan for the purchase of the property. They include conveyancing, application fees, valuation and legal fees, mortgage insurance (if necessary) and sometimes, extra life insurance premiums.

Some lenders will tell you the advantages of whatever housing loans they are trying to squeeze you into, but rarely will they tell you the disadvantages.

According to an article in a business magazine, the banking system is flush with RM180bil liquidity. This explains the increasingly aggressive sales promotions undertaken by financial institutions for the housing industry.

Always look at the total deal, not some dangling carrots in front of you. Compare the entire housing loan cost of different lenders to determine which is best for you.

I would like to discuss some of the lenders' offers that may not be as attractive as they appear. I will start with the special low interest offered for the first year. Such an offer is usually given during a sale campaign and it usually carries a fixed calendar period with a run-out date. Thus, even if a house buyer commenced his application process immediately upon the launch of the campaign, by the time the loan is approved and disbursement commences, the period remaining to enjoy this special low interest rate will certainly be less than one year.

If he were to start the application process a few months after the campaign, it is likely that he will enjoy the special low rate for only a very short period.

Due to our unique system of progressive payments to the developers, the mean average of the amount disbursed by the banks during the “first year low interest offer,” is really lower than the loan amount. Thus, any saving on interests is really much less than it seems. And these have all been figured out already by those marketing experts in the banks.

A more sincere approach would be to offer the special low interest rate to apply during the progressive payment period and to continue to run for one year after the date when the loan is fully disbursed. Only then can such offers bear some element of sincerity. I believe that anything short of that makes the offer a sales marketing gimmick.

There are other clauses that put house buyers in a disadvantaged situation. Some lenders include clauses in the loan agreements that give them the absolute rights to alter both the Base Lending Rates and/or the margin of interests.

Doesn't this in effect nullify their typical attractive offer of “BLR plus X% for following years?”

One cannot make a special low interest offer in the sales campaign and then contractually (through the loan agreement) creates a clause to allow that special offer interest rate to be invalidated. Make sure you know all the costs of early discharge of the loan.

One other clause to look out for is the redemption of the loan. A house buyer may wish to sell the house and wished to fully-settle the loan.

This is where the conditions for full-settlement differ from one financial institution to another. Think long term.

When one takes a loan, one spends a much longer period servicing the loan beyond the first year or even the second and the third year. So do not be taken in by the very attractive offers during the honeymoon year/s of the tenure of your loan. Remember, the remaining of the 25 years is more important. Do not go for short-term gains only to lose out heavily on the long remaining years.

I would advise house buyers to look beyond the first year of so-called low interest when shopping for housing loans. With the stiff competition among the various lenders today, one should seriously shop around and scrutinise each and every offer before commencing the application process. Talk to your bankers, lawyer friends or seek advice from the National House Buyers Association.

One really has to scrutinise the fine print before making a decision as to which financial institution to go to for a loan. It is about time to standardisde the terms and conditions in the loan agreement so that there will be orderliness in the banking industry.

No more “embedded” clauses within the voluminous stakes of papers one has to initial giving the impression that one has truly read and understood them. It is obviously impossible to read and understand those 40 over pages of legal language that comes with appendixes.

Chang Kim Loong is the honorary secretary-general of The National House Buyers Association, a non-profit, non-governmental, non-political organisation manned by volunteers. For more information, check www.hba.org.my or e-mail info@hba.org.my

By The Star

Efforts to curb property speculation

The government will initiate measures to address various issues gripping the property sector, including curbing rampant speculative activities in the market.

Housing and Local Government Minister Datuk Seri Chor Chee Heung said he would present to the cabinet findings of an industry meeting which could be used to come up with innovative ways to build affordable homes.

"The government has done fairly well in addressing the housing issues of the lower income. However, 40 per cent of the medium-income society still need accommodation.

"My ministry will use some of the findings to improve the sector," Chor told reporters here after opening a roundtable discussion on "Housing Affordability - Issues and Challenges".

The government will put forward recommendations, which will be based on proposals made by Real Estate and Housing Developers Association Malaysia (Rehda) such as on how to curb speculative property prices, financing, abandoned projects and sluggish developments.

Metro Kajang Holdings Bhd group managing director Datuk Eddy Chen Lok Loi said for example, a house built in Perlis cost RM250,000 but the same house using the very same materials but built in KLCC would cost RM1 million.

"This is caused by land cost due to two different locations. Nevertheless, there are some of the issues which Rehda will look into to address this such as materials prices. Working groups and a task force have been set up," said Chen.

Meanwhile, National House Buyers Association secretary general Chang Kim Loong said all parties, including the government and developers, need to launch proactive measures to stop steep price increases in the property market due to false demand and excessive speculation fuelled by easy mortgages and low real property gain tax.

"There is a huge mismatch between what the average household income can afford to buy compared to what is available in the market. A homeless generation will emerge and create various social problems," said Chang.

Chang said the average rakyat in a major urban area was struggling to buy his dream home where the average household with income of RM5,962 in 2009 would not be able to qualify for a 90 per cent loan over a 30-year period.

Assuming the average household income rises 15 per cent this year, the household may still not qualify for a 90 per cent loan in far areas such as Kajang, let alone in hot areas such as Kuala Lumpur.

He added that the government must also fine-tune the Bumiputera quota which has not made any headways.

"Don't get me wrong, we have no qualms over the discount for the first buy. But when you buy properties for the fourth and the fifth time and get up to 15 per cent discount ... that is wrong," said Chang.

By Business Times

The real estate open book

President of Reapfield Properties David Ong (left) and Kho have come together to share over four decades of experience knowledge in a priceless tell-all guide.

Reapfield CEO Gerard Kho answers questions about the evolution of Malaysia's real estate sector and his book Thrust Real Estate Riches which he co-authored with founder and president David Ong. This e-mail interview was done in conjunction with BookFest@Malaysia 2012. Star Publications (M) Bhd is a media partner.

1. What prompted you to write Thrust - Real Estate Riches and how long did you take to complete it?

We initially took on this writing project as part of a branding exercise but within writing about 10 pages of the book, we got bored with the contents and decided to change direction to one where we made a choice to tell the industry and our customers what Reapfield was doing and has done in the last 28 years to arrive where we are today, but more importantly what we are doing to ensure that we constantly remained competitive. We have shared in this book as much as we could what we did as an organisation. There are lots of practical information anyone running a real estate agency can adopt. Many of the principles about how to grow a business profitably while adding value to people's lives are also inspiring. The book took us 15 months to complete.

2. There are so many books on properties in Malaysia today by investors and those involved in the property sector. How different is your book from the rest?

We write not from the angle that we know all there is to know in the sector, or that we are the best in the industry. We don't provide the fish but we teach people how to fish. We have shared all the “secrets” we use in our organisation to the point that we are a real open book. By sharing everything we know, we walk the talk. Second, we are now forced to find new and innovative ways to run our business so that we are able to share more in our next book.

3. What was the most challenging part of writing Thrust?

The most challenging part was keeping to the timeframe to complete the book and at the same time to be succinct about what we wanted to share. There is a lot more we could have shared but we were limited by time because we wanted to get it published.

4. How have the many years living in Australia shaped the book?

It has helped me see that the real estate business is the same everywhere. Real estate business is never about the property. It is about the people whom we serve. People are all the same everywhere. At the fundamental level, they want to be served something of value and in return for that value, they will reward you with a well deserved “fee.” The thing many of us have done wrong in the past is to focus on sales, sales and more sales. In our pursuit of sales, we have forgotten about people. If we place people first, be it our customers, our own agents, our fellow colleagues in the real estate industry and the industry partners we work with, we will surely be one step closer to creating followers for life. Be it Australia, Singapore, Malaysia or the United States, the real estate industry is all about the people first. The property just happened to be the item of exchange.

5. How has it shaped your views as a real estate professional now that you are back in Malaysia and leading one of the largest real estate company with about 800 negotiators?

People come first. It is not about being number one in the industry. It is about building our people and agents, to be the best, the most productive, to have the highest standard possible and to have ethics. Only then will they be able to service the customers.

The market will continue to evolve and all of us in the profession will need to be humble enough to grow and to learn, to unlearn and relearn constantly. Only when we adopt this attitude can we succeed. There is a huge opportunity for Malaysians to train and nurture the best real estate agents in the world because of the nature and diversity of our people.

6. How different is the Malaysian property sector compared with Australia's?

The pace of real estate transactions is a lot faster here in Malaysia. People are more willing to learn and less sceptical of new ideas.

Though there are many areas we can improve, it is more exciting to be in Malaysia because there are still so many opportunities for the real estate market to grow and for the real estate industry to develop. We are probably what Australia was 10 years ago or so. Look at the number of cranes, the amount of construction and the way people buy and sell properties. The pace signals the optimism. Despite the inefficiencies in any country and system, there is opportunity for growth. It is terribly exciting to be in Malaysia right now as it is just only beginning to boom! We are on the threshold of being a developed nation status! I wouldn't want to be in any other place but a developing nation.

7. How do you see the property sector for the next six months of this year, and in 2013?

The next 6 months may see (the price of) properties in the key areas in Klang Valley moving upwards as the number of properties available for sale continue to fall. These are properties that are priced correctly by motivated sellers. We have noticed increasingly that the asking price of properties are on the rise while the number of listings continue to decline. This will create an upward pressure on prices. Agents in the last three months are finding it difficult to get listings that are sellable. Buyers are willing to purchase properties that are priced correctly In the short term, prices are expected to increase, or at worst, remain stable. There is much optimism. The transaction numbers are less this year compared with same time period last year. This is due to properties not being priced correctly. We have experienced earlier this year a decreased volume of properties transacted, but an increase in the total value transacted. This is attributed to the fact that property prices have increased in that period compared with same period last year.

8. When did you return to Malaysia and what prompted you to make this move?

I returned to Malaysia four years ago. I was offered to help grow the Reapfield group, to streamline the organisation and to bring out the best of it. It was a real challenge for me but it was a great opportunity. Since then, we have almost doubled the fees collected and the number of negotiators.

9. Are there plans for a second book?

Yes, there will be. Writing a book brought clarity to the leaders in Reapfield. It gave us focus. It also allowed us to share with the industry the inner workings of our organisation. Sharing our experiences was one way we could contribute back to the industry in a productive manner. Our wish is for more people in the real estate industry to be more profitable and to build organisations and businesses that last beyond the leader's time. This is part of our succession planning and we want to help more businesses to give priority to this area.

10. As a real estate professional, what, in your opinion are the three most important things a property purchaser should consider besides location in today's fluid and volatile market?

You must consider the following:

● Know how to leverage your limited financial resources to get more into property investment. Have the end in mind;

● Don't buy just because there are great financing schemes that makes it easy for you to buy; and

● Get to know as many real estate agents as possible. They can profit you in your journey in property investment.

Kho will be present at the BookFest@Malaysia on Aug 18 between 3pm and 3.45pm. The launch will be held from Aug 18-26 (10am-10pm) at the Kuala Lumpur Convention Centre. Admission is with purchase of the BookFest catalogue, at RM2.50 per entry or RM10 for multiple entries over the nine days. Catalogues are available at all Popular and Harris bookstore outlets nationwide and at the BookFest entrance. Entrance is free for students who are 18 years old and below and for senior citizens aged 60 and above. For more information, visit bookfestmalaysia.com.

By The Star

Can we afford to buy that property?

The last two weeks were rather sobering.

There was this small 700 sq ft condominium unit that seemed rather promising for retiring in, priced at more than half a million ringgit. There were no steps to manoeuvre, no slippery floor tiles and the bath was elderly friendly. The project had all the merits for retiring in with nearby amenities.

There was another unit, about RM800,000, which was about twice the size, which, from the start, was way beyond the radar of affordability. So off to the financiers.

The first, after looking at the relevant documents, and assuming the purchase would be for the small unit, looked up and smiled broadly. Doable!

The little heart smiled, relieved! Incidentally, according to ancient Chinese culture and beliefs, it is the heart that is the fountain of wise decisions - and bad ones - not the mind. That is why, the word wisdom (hui) is written with the heart symbol as its base, or root word. Unlike Romanised languages, Chinese is based on pictograms or pictures.

So let's consider the second and bigger unit. Doable! That is shorthand for getting the bank's stamp of approval, that is, getting a loan would not be a problem.

But wait! It will be a stretch after retirement, she cautioned.

A second and third bank officer were consulted. Both gave an outright No! even for the small unit.

The conversation went something like this:

“We could approve it for you. We just lengthen the tenure up to 20 years but you make your repayments based on a 10-year tenure. But you will be the one to suffer when you retire.”

The third officer said: “You can put in 40% of the purchase price, instead of 10%. Or you can stay with 10% downpayment, we stretch your repayment, but six months before the unit is completed, you sell your present house, and put in a big lump sum. But you will be the one to suffer because it is a huge risk you are taking.”

They said it will not be right to earn the commission because they will not be doing their good turn for that day if they were to go ahead with the loan application. They want the good karma to remain with them. Both convey the same message not a wise purchase at all. So perish the thought.

Before parting ways, they brought up several reasons why a property purchase was not the best decision. That was when the moment of truth came, which brought about the sobering effect. Being a bit defiant, another type of financier certainly not an Ah Long was consulted; a reputable lender, but one that does not come under the purview of Bank Negara's regulations.

Incidentally, the most recent change in lending criteria when evaluating loan eligibility is based on the net income of applicants, and not the gross income, as was done previously.

This new lending guidelines deduct all personal commitments which may include car and computer loans, personal and credit card loans. It also includes contributions to the Employees Provident Funds and other deductions. The loan application is based on the net figure.

Another broad smile came from the fourth financier. No problem! Doable. Unfortunately, the terms and conditions were not attractive. At that point, the question was not how desirable the property may be, but how much does one want it? Does the end justify the means?

When one arrives at such a metaphorical fork in the road, there will be two sets of emotions. The greedy little heart says, “Go on, take the risk”. And there will be all sorts of justifications you've worked long enough and you deserve it. While wisdom says, “Wait! How will you finance it after retirement? Do you want this apartment at all cost?”

The crux of this rigmarole is this, there are always ways to get around rules and regulations in order to have what we perceive as “our prize”.

When it comes to the stage when one wants something at all cost despite the hordes of naysayers and the little barriers to entry, then maybe it is best to just walk away.

A property consultant said he has come across clients who want to buy a property so much that they begin to take all sorts of risks. “Buying a property should not stretch one's resources to the point of having to give up the little treats in life,” he says.

So, there goes the little 700 sq ft to somebody else!

The saying “when there is a will, there's a way” does not sit well with deputy news editor Thean Lee Cheng.

By The Star (by Thean Lee Cheng)

Selling a haunted house

SELLING a house, even in a stable property market, can be quite a challenge. But what if the home you’re trying to dispose of happens to be haunted?

It’s not a common occurrence, but once in a while, you (or someone you know) may end up running into a property transaction where the house was the scene of a horrific crime and is now home to some ghostly inhabitants.

According to an article by US-based Realtor Magazine, haunted properties fall within the category of “stigmatised properties,” or real estate that is not defective in any physical manner, but due to psychological or emotional factors, may have a reduced value.

Among the situations covered under the title of “stigmatised” is a property that was the site of a murder, suicide, alleged haunting, or “other parapsychological phenomenon,” it says.

And according to Reuters, stigmatised homes typically sell for 10% to 20% less than comparable homes.

On the local front, all of this is compounded by the fact that most Malaysians are generally quite superstitious, meaning that anything associated with the dead is considered taboo and should be avoided like a plague!

One local property realtor concurs that a haunted house is much more difficult to sell.

“It’s a known fact that it will affect the marketability of the property and may even take a long time to sell it.

“If it’s known in the market that someone was killed there, the price could be affected,” he says.

In a worst case scenario, if your home is haunted, it may never get sold, says VPC Alliance (Malaysia) Sdn Bhd director James Wong.

“There are many abandoned houses in Malaysia that are supposedly haunted and have been vacant for a long time because they are difficult to sell,” he tells StarBizWeek.

If you happened to own a house that has a macabre past and plan to put it on the market. What can you do to increase the marketability of this supposedly haunted dwelling?

Rumours and hearsay

A house could falsely be considered haunted due to rumours or inaccurate stories.

“Sometimes it’s all just a matter of hearsay. No one may have actually experienced anything eerie, but people just keep talking about it,” says Malaysian Institute of Estate Agents president Nixon Paul.

“They may say things like ‘don’t go to that place because it’s haunted,’ and then the story just stops there. Nothing supernatural is really experienced and the house (is stigmatised) due to a malicious rumour.”

Henry Butcher Marketing Sdn Bhd chief operating officer Tang Chee Meng points out that people can get easily carried away by stories they read or movies they watch.

“Sometimes movies can have a psychological effect on people. But after they live in the house for a while and nothing bad is experienced, everything is fine.”

Sometimes, the imagination can play cruel tricks on the mind. If you’re convinced that you have spiritual squatters living with you, get an expert to examine the place.

“It’s always best to get to the bottom of things – just to be sure,” says Vincent Liew, a seasoned roof repairman who also does household repairs.

“The sounds you hear could be caused by the wind and the vibrations you feel from loose fittings or a heavy vehicle passing by. If you’re seeing shadows, check to see if they are caused by something external, like an overhanging tree branch or moving curtains, for example. Try recreating the sound yourself.”

If the house you own is looking a little dilapidated, giving it a ghostly appearance, all it may need is some sprucing up or a fresh coat of paint.

KL Interior Design executive designer Robert Lee says “a house looks like it is haunted” because of the lack of maintenance.

“If your house is overgrown with weeds, cut or trim the bushes. If the wall or fence is damaged, fix it. Some properties are so badly neglected, it can actually look abandoned or even haunted. This won’t boost your resale value,” he says.

If, after everything you’ve done and you’re still convinced that the property you have is haunted, then it’s best to get an expert to deal with it.

“Getting help from a priest or a medium can help deal with this,” says Lee.

Disclosure

If, after everything you’ve done and your spooky inhabitants refuse to go away, then the next thing you need to consider is whether to disclose to the prospective buyers that the house you’re selling is indeed haunted.

In certain countries, such as the United States, it is a legal obligation for the seller to disclose information about the property’s history, for example the house may have been the scene of a gruesome crime such as murder.

Fortunately for sellers, no such law exists in Malaysia.

“In this case, the doctrine of caveat emptor (which is Latin for “Let the buyer beware”) applies,” says one industry expert.

“Here, the onus is on the buyer to do research about the property’s history. There is no onus on the seller or agent to disclose anything,” he says.

Kuala Lumpur-based lawyer Dinesh Kanavaji concurs that there is no rule for a seller to disclose that his or her property is haunted.

“There is no legal obligation. But then, which seller would want to disclose that anyway? Of course, morally, you should disclose.

“Either way, a buyer should do the necessary research first if he’s heard things about the house,” he says.

Not a bad thing

To some buyers, a haunted house may be more of an attraction than a deterrent.

“Not everyone is superstitious or cares if a house is haunted. As long as they have a roof above their heads, that’s all that counts,” says one industry observer.

“In a hot property market where prices are sky-high, a haunted house, which would fetch a lower price, is more likely to attract prospective buyers in droves – assuming of course they’re not concerned about sharing their abode with some ghostly housemates,” he adds.

In an article last year, online business portal Business Insider reported that investors sometimes look to buy a haunted house in the hope of gutting the premises, building a new abode and reselling it for a larger profit.

“Other times, adventurous business owners purchase haunted houses in order to transform the properties into bed-and-breakfast, restaurants, or local businesses that will attract curious visitors.”

While many believe that it’s detrimental to own a haunted property, whether residential or commercial, some believe that the impact would be lesser if it’s the latter.

“If it’s residential property, it will have a bigger impact because people are living there. That’s not the case for retail premises because you’re not living there, so it’s not too much of a concern,” says Richard Chan, past president of the Malaysian Association for Shopping and Highrise Complex Management and national committee member of the Building Management Association of Malaysia.

“Of course it does not help if the (commercial) property is haunted, but it’s not detrimental,” he says.

Chan adds that sometimes it’s best to not know what you’re buying into.

“What you don’t know won’t hurt you,” he says.

Another industry observer, meanwhile, believes one has to worry more about the living than the dead.

“It’s better to live next to a cemetery than an unruly neighbour,” he says.

By The Star

Housing fund poser

Is the 3% deposit imposed enough to revive abandoned projects?

Recently, it was reported that an amendment to the housing Development Act 2012 will require developers to set aside 3% of the gross development cost to be placed in a fund that will be managed by the Housing and Local Government Ministry. The proceeds from the fund will be used to revive abandoned projects.

The Housing Developers Authority (HDA) will only issue licensed permit once the 3% is paid (to be enforced end of this year). It is a good move but the quantum may be insufficient to rectify the problem.

The reason being, it all depends at what stage of construction the projects were abandoned. If they wereat 20% completion, then 3% allocation may be insufficient, unless we assume the balance 80% can be sourced from the fund.

It remains unclear how the fund works. A check with the Housing Ministry indicates that the 3% allocation can be refunded to the developer concerned if the project is completed. From what I understand, the 3% allocation is then not considered as a contribution to the fund since the deposit is refundable.

Fund or not?

I fail to understand how 3% can be sufficient unless the completion-to-date reaches 97% development cost (assume also 97% physical completion) and the amount to complete requires the balance 3%. The fund looks and sounds like a fund but in reality, it is not truly a “fund”.

Assuming all the developers completed their projects and there is no abandonment, what does it mean? It means all the deposits will be refunded and there will be no money in the fund, so I don’t see how the fund will help other abandoned projects.

I used to have a friend in Rehda institute who told me that it had in the past actually kick-started an “insurance” concept where all members could contribute some money into the pool. This money was to be used to help members in the event a project was abandoned.

Somehow, it did not take off.

There are many causes of abandonment but invariably the developers who cause problems are the ones that are inadequately capitalised to carry out development projects. In other words, they are not financially strong, they rely too heavily on bank financing and buyers to fund their projects.

The development risk is skewed towards the consumers, meaning they take bigger risk in the event of a failure.

Saving projects

Everybody thinks property development is very profitable and they want to jump onto the bandwagon to make a fast buck. Many do not have the necessary experience and don’t bother to do market studies. The result is that they have a wrong product in a location where there is no demand.

Others get into trouble because they are too ambitious and have financially over-stretched themselves. Some of these projects were designed-driven rather than market driven.

When a project is abandoned, it leads to legal and technical problems. Reviving abandoned projects is no easy task.

In a private free market, white knights (except the Government) will only come in if they can make money upon reviving a project.

I have seen cases where liquidators act as developers. But they do not use their own money. They use the fund accumulated from the additional top up from buyers, money in the developer’s account, buyers’ past payments and sale of remaining units. In these cases, buyers waive their late delivery claims.

When the Government comes in to help, the objective is different. The motive is not profit but a sense of social responsibility. However, they only focus on low/medium cost projects.

I have also seen bridging financiers acting as temporary “developers” who use their own internal fund to complete the projects. They take calculated risk while the white knights will only proceed if the projected result shows viability.

Their injection of fund varies, depending on the stages of completion to date. Some are abandoned at 50% completion, some at 90%. There are times when internal funding is inadequate and external funding is required. There is, therefore, no pre-determined amount required to complete an abandoned project.

Coming back to the 3% allocation, smaller developers complain of high opportunity cost involved when their money is locked up in the HDA account. Bigger developers are well capitalised and have no problem with the 3% ruling.

Buyers at risk

All developers make provisions of between 3% and 5% for contingency or cost variance. The bigger developers will use the provision to meet the requirement. Smaller developers argue that it is a burden and barrier to entry into the industry.

My question is: “A property development often runs into hundreds of millions of ringgit. If they cannot pay the 3% development cost, what does that tell you?”

They want to have their cake and eat it too. The problem is, most developers want to fund their projects almost entirely by purchasers’ cashflow. I can understand if they are unable to come up with 100% equity but how about 30% to 40% own capital and the rest from financiers or buyers’ progressive payments?

Lastly, what is the level of enforcement by the authorities? What is the point of having all the rules and regulations if they are not enforced?

We have cases where developers do not even apply for a developer’s license. Hence, they do not have to pay the RM200,000 deposit for the developer’s licence and open a HDA account. Buyers’ interest are therefore not protected.

What guarantee is there that they will play by the rules and pay the 3%?

People will circumvent the system if malpractices are allowed to go unpunished.

I hope the authority will take a tougher stance to safeguard buyers as well as the industry from the few rogue developers who give the industry a bad reputation.

·Chris Yong is the principal of Rochester Properties.


By The Star (by Chris Yong)

Look at the fine print in guaranteed rental returns

CALL them what you like leasebacks, buy-to-let, cash back, own-for-free developers have come up with creative plans to woo investors with guaranteed rental returns (GRRs) on yet-to-be-built properties.

Developers would agree to pay buyers rentals ranging from 8% to 12% per annum or a proportion of the purchase price for a certain length of time.

This kind of purchase, which has become increasingly common judging from the press advertisements, sounds enticing to investors who do not want the trouble of managing their own investments. You buy the property, and you get the rental returns thrown in.

While GRRs could be very attractive, investors need to know that the scheme is not as simple as it seems, much like ads that appeal to our desire to lose weight quickly, get rich fast or strike the lottery.

Realistic rentals

If a developer is offering GRRs, the buyer has no way of knowing whether that property is going to achieve the promise in the open market. The developer may not be able to get the guaranteed rent or the property may not be let out at all during the guaranteed period.

Pitfalls

Generally, GRRs are best for the laidback investor. Some people will value the “simplicity” of the deal. However there are issues that buyers have to be aware of and comfortable with before entering into such agreements.

A typical mortgage lasts 20 years. If you have a guaranteed rental for just three years, what will happen for the next 17 years? You are left to sink or swim on your own.

A typical table of returns will show potential buyers a surplus income. A potential investor has to take into account the cost of maintaining the property, the taxes that come with being a property owner, the cost of maintaining the mortgage and all other fees related to acquiring the property.

Under most GRR schemes, you will need to buy a furniture package with the apartment and commit yourself to the management charges and sinking fund of the building, on top of the regulatory quit rent and assessment tax.

These will often take a substantial bite out of any rental money left each month.

GRRs are specifically aimed at selling units to investors, so you may see a situation of 500 apartments all going to the rental market rather than owner-occupiers at the end of the scheme. You will need to consider how many people will be chasing tenants at the end of the guarantee period and most particularly how many prospective tenants there are.

In areas of high competition, landlords will have to reduce the rent to attract available tenants. Consequently, the market value of the properties will go down rather than up.

If you decide to sell, you will also be limited to buyers who will also be mainly investors. Sellers will also find themselves competing with developers who are offering higher rental returns with new developments.

Overpricing When supply is more than demand, developers always look for ways to avoid having to reduce prices. While GRRs may offer attractive secure returns, it will be a false economy in the long run if the buyer ends up overpaying for the property.

A guarantee is only as good as the company who underwrites it. Even if the GRRs seem reasonable and are offered with honourable intentions, investors need to be sure that the developer would be able to sustain the returns if the rental or sales market were to take a turn for the worse. If developers were to default on the payments due to buyers, these buyers will likely default on their respective loan repayments, thereby setting off a chain of events with dire consequences.

Terms and conditions in GRR agreements are not regulated by law. As such, the inexperienced investors may not understand that the fine prints are often written in the guarantors' favour. Example of such clauses:

“Provided always and it is hereby agreed between the contracting parties hereto that the Developer reserves its right to terminate the GRR agreement for any reason whatsoever by giving TWO (2) MONTHS written notice to the Purchaser wherein such a case the Developer's obligation to pay the guaranteed return to the Purchaser shall cease from the date of such termination. Such notice is deemed to have been received within three (3) days from the date of the letter”

Purchaser's nightmare

Quite sometime ago, we received an email from an observer who was at a developer's office. He narrated this incident where he witnessed an elderly Ah Pek who had just taken “vacant possession” of his investments, comprising four units of apartments with a GRR scheme. He was demanding that the developer “take back” the units and give him a full refund on the purchases.

The Ah Pek had discovered that the four units he purchased under the developer's GRR scheme had depreciated in value by 25%. To rub salt to the wound, the developer had terminated the GRR scheme as allowed in their agreement, leaving the Ah Pek frustrated with his “failed” investment. The elderly Ah Pek wept in full view of all present at the developer's office! Did the “generous” developer give the Ah Pek any refund? Your guess is as good as mine.

In another case reported in the local papers two years ago, a group of investors filed a legal suit to claim from the developer whom they alleged had breached their agreements. They were practically throwing good money after bad. Win or lose, lawyers collected their fees upfront.

Buyers beware

The rental market is volatile, depending on current competition and market conditions. People investing in these schemes are not just buying properties that they hope will increase in value in time, but also using “other people's” money (from rentals) to pay for the purchase. It is, however, a cyclical market, and one is subject to the laws of supply and demand as in any other sector of the economy.

GRRs offered to investors should be checked carefully against the local market and competition. A simple survey within the location will give an investor a fair idea of the state of the local market. If market prices are lower than the proposed rent, incentives and discounts being offered to woo the buyers, then this are issues to be considered. If guarantees of rentals are higher than the existing market rate, then a rent decline after the end of the guarantee is likely. It is a classic case of caveat emptor rental guarantees can sometimes guarantee investors nothing but heartache.

Anyone who has any real estate experience knows there is no such thing as a guaranteed rental. Real estate, as with any other type of investment, has its ups and downs. There are times when one cannot rent out. Any developer or any person (mind you) who says that he is able to predict the future is “bluffing.”

Our economic cycle goes through cyclical changes that response to economic and other happenings in, as well as, outside our country. Projected monetary returns that cannot be guaranteed (or self-guaranteed) are doubtful in nature.

Had it been so profitable, don't you think that the developer, their shareholders and related companies would have snapped them up before being available in the market? Why don't they keep it for themselves? Guaranteed returns should be accompanied by documentary proof of a trust account nothing more nothing less.

Chang Kim Loong is the honorary secretary-general of The National House Buyers Association, a non-profit, non-governmental, non-political organisation manned by volunteers. For more information, check www.hba.org.my or e-mail info@hba.org.my

By The Star (by Chang Kim Loong)

Foresight in resolving social and community problems crucial for the local authorities

There have been quite a number of cases when open parks and fields have been turned over for development purposes; a move that usually invite protests from the local residents.


LOOKING around our housing estates, work and recreation spaces, I believe many of us must have a wish list of things for a better living, work/study and recreational environment.

Although headway has been made in the residential arena with more practical and creative designs and concepts (depending on who the developers are), more value-adding initiatives are still needed in our work place and recreational facilities.

Im sure many of us have noticed there are quite a number of office buildings in some zones of Kuala Lumpur that are built up to the maximum plot ratio and are too close to the pedestrian walkways and roads. A high percentage of the built-up space has been sold which explain why the buildings dont have enough parking spaces for the office workers and visitors.

Allowing such building designs will further exacerbate the severe parking space shortage in the city.

During the construction of these buildings, the presence of the many tractors, cranes and fork lifts so close to the roads pose a threat to pedestrians and other road users. To prevent any untoward incident, the local authorities should ensure that all new buildings maintain a safe distance from the walkways and roads.

Given their role as the governing authority for land matters and project plans, local authorities that include district and municipal councils, play a highly crucial role in determining the well-being of the local communities and in how the areas that come under their administration fare.

Despite being one of the non glamourous public bodies with their placing in the lower rank of the public administration order, the local authorities are actually important institutions at the local level and the guardian of public property and facilities.

Among their traditional duties are the provision and upkeep of public health and sanitation, general maintenance functions of infrastructure and public facilities, as well as overseeing all land and development matters.

Thats why grouses over clogged drains, poor garbage management, potholes and floods, to town planning matters, environmental protection, building control, and issuance of certificate of fitness for occupation, come under their purview.

Being the authority that is closest to the people, their performance has a direct and immediate impact on the peoples daily lives. Their efficiency or inefficiency in discharging duties will affect the public and rate payers in many ways.

That could explain why the local councils are the recipients of a fair number of letters to the editors to newspapers.

With the many developments going on around us and an expanding population, there is a need for the local authorities to be more proactive and act as the catalyst of change and progress in their areas.

They should not just uphold their traditional roles but be effective thinkers and implementors of plans for social and economic development in their areas.

They must act fast and efficiently at all times, and must also have the foresight and initiative to undertake preventive measures to resolve some of the lingering social and community problems in the long run.

There have been quite a number of cases when open parks and fields have been turned over for development purposes; a move that usually invite protests from the local residents.

Instead of signing over public parks, lakes and open spaces for development purposes, the local authorities should act as the guardian of these public spaces and wherever possible undertake enhancement efforts to further add value to these facilities.

Local authorities should also promote best industry practices in building designs and development planning practices for more environmental friendly designs and healthier living environment.

To prevent over building and congestion, plot ratio of building projects should be strictly adhered to. This is so that the infrastructure, utilities and amenities are not strained.

Our local authorities can take a leaf from their counterparts in the more developed countries such as South Korea and Japan with well structured and transparent practices in building matters.

Over there, fair trade practices are standard operating procedures for all industry players where even the sale of property has to abide by the balloting process; and strict building design guidelines have to be followed even on matters concerning the amount of lighting to a building and natural ventilation.

Deputy news editor Angie Ng hopes shopping complex owners will set aside space for a library and garden which although non-revenue generating, will be much appreciated.

By The Star (by Angie Ng)

Security at what cost?

Communities have been proactive in promoting security but more police support is needed

WHAT does it take to build a city a simple, functional spot under the sun that draws people in and provides enough for them to build a home, find work and enjoy all that is within their resources to enjoy?

Let's forget about phrases like “world class city” or “state-of-the-art city”. These are just empty phrases that do not mean anything. There are many components that go towards building a city security, clean air and water, healthcare, education, a city employment opportunities, public transport and other services. The list can be a lenghthy one.

But let's just focus on security, which is likened to a roof over our heads. The roof keeps out the rain and other elements. There is no point in having a leaky roof.

Of late, we read constantly about crime being reduced. But while there are statistics that point to this, we feel no safer than before.

Last Thursday, the country rejoiced when 12-year-old Nayati Moodliar was reunited with his parents after going missing for a week. Many missing children either end up dead, or continue to be separated from their loved ones.

His abduction prompted the introduction of new measures like putting up closed-circuit television surveillance cameras (CCTVs) around school premises. Mont'Kiara, which comprises predominantly high density condominium products, is known for its layers of security features. That is one of the reasons why many live there, forgoing a landed property with a compound.

In high-rise residential projects, there are access cards programmed to allow entry to the floor one is staying in and to public areas like the swimming pool and gym. We also have gated and guarded communities. Some of the newer townships in Petaling Jaya employ their own security guards with the permission of the local authorities and put up bars and other security features like rows of drums to seal off escape routes in the event of a break-in. Other residential areas do not strictly go by the gated and guarded definition but have security guards and perimeter fencing.

In our search for peace and safety to build and raise a family, we have put a premium on security, either by installing alarms or living in places that comes with such features. There is nothing wrong with this.

But has anyone asked why we have come to this? And to what extend can these measures ensure that our children and loved ones will be secured and safe? While it may be relatively safe within the gated and guarded community and internal break-ins may, or may not, be an issue it is what happens on the streets that is of concern today.

Once a person is outside these “safe” perimeters, he or she is at the mercy of unsavoury and unwanted attention, which may be in the form of snatch theives, robbers, kidnappers or other tricksters, as in the case of Nayati, who was kidnapped while walking to school. Does this mean we install these features in public areas and how far should we go in pursuit of these measures?

While installing CCTVs in public areas like schools, malls and basement car parks and shops may help, there is the cost of keeping them in serviceable condition. But even if the images of tricksters and kidnappers' get-away cars are caught on camera, is there a system where this images and information can be relayed in minutes or seconds to police patrols who will then take it from there? In other words, patrol cars equipped with audio visual gadgets. It sounds so Hollywood. But we've seen enough of police car chases on TV.

This goes back to the systems we have. If cars can come with TVs and police patrol cars with walkie-talkies, why can't these gadgets and their functions be integrated in order to relay images to speed up the pursuit of criminals on-the-run?

But we have to admit that installing security gadgets that integrate seamlessly with policing comes with a cost. Another simple and cost effective way would be police presence.

Yes, there is a need for the men in blue to ride around on motorcycles, some to be in police patrol cars. But we also need those who will patrol on foot on a sustainable intermittent basis, not just because a high-profiled crime has been committed. This will give a sense of security to the people and at the same time serves as a deterrent, to a certain degree, to street crime.

There is something very wrong when the people spend so much money on being safe when they are at home, yet remain vulnerable to all sorts of crime when they hit the streets. We need police presence, and we also need to weed out corruption at all levels of the Government. We need a roof over our heads, but not a leaky one.

Deputy news editor Thean Lee Cheng thinks the building blocks that go towards making a city liveable is more than gleaming towers.

By The Star

Home repairs can be costly

HOME repairs can cost big money, especially when the job requires you to call in an expert.

However, for the adventurous few or do-it-yourself (DIY) enthusiast, fixing a leaky tap or hole in the wall is not only a cheaper alternative it can also be a rewarding experience.

Granted, the DIY option is not for everybody. But for those willing to “get their hands dirty,” tackling simple household repairs is not as difficult it may seem.

Tips for DIY enthusiast

Simon Tee, a 42-year old accountant and DIY enthusiast, says there is a wealth of information easily accessible for individuals that want to tackle repairs themselves.

“My wife would always complain that I was bad with my fingers,” he enthuses.

Tired of his wife's complaints (he jokes) and having to pay ridiculous prices for tiny breakdowns in the house, Tee says he started researching DIY tips “whenever and whereever” he could.

“I started looking up DIY and home maintenance books for reference and, after a while, I developed an interest for it. So much so that it became a hobby.”

Tee says he is now able to do an array of household repairs ranging from simple plumbing jobs to fixing small leaks in the roof.

K. Vijay, 37, is a part-time “handyman” when he's not working as a dispatch clerk for a legal firm in the Klang Valley.

“I first started fixing stuffs for my family and friends, and then through word of mouth, I became a repairman for hire,” says Vijay with a chuckle.

Vijay says he grew up observing his uncle take on household repairs and “learnt the tools of the trade” from him.

“Learning from an expert or someone who knows a thing or two about fixing things in the house can help save you a lot of money and reduce the need to hire an expert. Sometimes, even the hardware store guy can give you a pointer or two.

“Being able to perform simple things like fixing your clogged toilet or leaky tap also provides you with a sense of accomplishment,” he says.

Tee says that with the Internet, learning to do things yourself is virtually “just a mouse click away.”

“You can get a lot of information from the web through blogs and social media like YouTube. There is a wealth of information out there. You just know where to look and put a little effort into it.

Tee adds that individuals can slowly invest in fix-it tools as they take on more jobs.

“Instead of buying in bulk, just get the tools that you need. Build (your portfolio of tools) as you go along,” he says.

And what kind of repair jobs should be tackled by the DIY enthusiast? Well, that's up to the individual, says Tee.

“It depends, really. Some jobs may be easy for some and tricky for others. My philosophy is to attempt something at least twice. If it's still not fixed, then call an expert.”

Getting an expert

Being non-professionals, there are only so many things that a DIY enthusiast can tackle.

Paul Chan, a professional plumber for over 30 years, says hired help does not necessarily have to be expensive.

“If you're unsure, ask around and see what other experts are charging. But if it's all along the same line, then you know for sure that you're not being fleeced.” He says individuals should not attempt to solve something themselves just to save a few ringgit.

“It's better to pay a bit more and get a professional to fix it then to stinge on the money and try to work on it yourself only to botch it up and end up incurring a higher cost.”

Vincent Liew, a seasoned roof repairman, says there are limitations as to how much a DIY enthusiast can do.

“Non-experts should never attempt anything that's dangerous and risky or requires skills and expert knowledge.

“Similarly, an individual should not attempt to repair something that requires tools that are either expensive or need expert skills to operate,” he says. Chan concurs, pointing out that safety should be paramount when doing any type of repairs.

“It is also not advisable for non-experts to attempt jobs that require intensive and long hours or a lot of people to do. Why not just leave that to the professionals?”

Fix it quickly

Regardless of whether you're getting an expert or will be tackling the repairs yourself, the most important thing is to rectify the problem as soon as possible.

“Never put to tomorrow what you can do today,” Chan enthuses.

“It may cost a few hundred ringgit to repair, but if you let the problem remain, it will only get worse and end up costing you thousands of ringgit,” he says.

Chan recalls one of the roof repair jobs a customer had asked him to do when it was “almost too late.”

“This person had a leaky roof but water only dripped into the house when there was a heavy storm, so he let it be.

“Until one day, a huge part of the ceiling just collapsed because the internal roof damage became so severe. The guy was practically crying when he called me!”

By The Star

Tips for first time housebuyers

BUYING a house will most likely be the biggest single investment in a person's life. But for first-time buyers, going about purchasing a home can be a procedural nightmare, especially without the proper planning or guidance.

The following are some simple tips for first-time buyers to consider before ploughing their money into their “dream home.”

Weighing your options

The first thing to do is to determine what exactly you are looking for.

“Visit a few property showrooms and also attend a few launched to see what's available in the market. If you're a first-time buyer, you're probably looking for something below half-a-million ringgit,” says VPC Alliance (Malaysia) Sdn Bhd director James Wong.

Also, determine if you're looking for landed property or an apartment.

“You need to weigh your options. An apartments comes with additional running costs, such as service charges - it's part of a communal thing,” Wong points out.

“If you stay on landed property, the advantage is that there is no service charge. Furthermore, you may also have access to a garden of your own,” he adds.

Malaysian Institute of Estate Agents president Nixon Paul concurs that there are certain advantages to owning landed property.

“Landed property would make a better buy as you have control over your own house. With an apartment, the biggest consideration is the management running it. If there is no effective management, it could really go downhill,” he says.

Location

With land getting increasingly scarce, more so within the Klang Valley area, affordability can be an issue. “With land getting more expensive, the chances of getting landed property below RM500,000 close to the city is slim,” says Wong.

He adds that a person's distance from work should be factor to consider when buying property.

“You need to determine what is the commuting time to and from work that you can tolerate everyday,” he says.

Nixon however believes that it's still possible to find property below RM500,000 within the Klang Valley.

“They're available but you just need to look harder. You can find apartments within this price range in places like Kepong, Selayang and Puchong. You just have to go out further (from the city),” he says.

A viable option, says Wong, is to purchase property that will be located “not very far” from the proposed stations that will be built for the light rail transit (LRT) Ampang and Kelana Jaya line-extension and Mass Rapid Transit (MRT) projects.

“Once these lines are up, there will be improved connectivity within the Klang Valley.”

He adds that property along the proposed lines won't necessarily be expensive.

“The lines also go through the outskirts of the city and it would be good to study where the stations will be. If you live within 10-minutes driving distance of the stations, it won't be a problem.”

Wong says a mistake in the past was that there weren't sufficient parking facilities for the LRT lines.

“But I was informed that the future lines will also have parking facilities,” says Wong.

Another way for new housebuyers to around the issue of affordability is to try and apply for the My First Home Scheme.

Launched in March last year, the scheme allows young working adults obtain 100% financing from banking institutions to purchase their first home valued at a maximum of RM220,000 (for single applicants) or a maximum of RM400,000 (for joint applicants of husband and wife with household income below RM6,000 per month cumulatively).

Applications are made to participating banking institutions and upon approval, Cagamas - a national mortgage corporation - would provide a guarantee for the first 10% of the loan.

“It is a good move by the Government to promote home ownership,” says Wong. However, he notes that properties launched under the scheme are not located within the city.

“There were launches in Negri Sembilan and the Puchong area. However, if your workplace is within 5km of these homes, then why not,” he adds.

Inspect the property

If the property you're buying is physically present (such as secondary property), it's best to inspect it to ensure there are no shortcomings or flaws that will incur you additional unwanted costs.

“A house might look beautiful in pictures or from the outside, but you never know for sure until you take a closer look at it yourself,” says property investor Kamarul Ariff.

“It's best to inspect the house inside-out, floor to ceiling. Check to see if the walls and fixtures are in good condition, or if the house is infected with white ants, for instance. Bring along a friend who's a better judge of things like this, as it'll save you a lot of unnecessary cost in the future.

“Also, it doesn't hurt to inspect the property on a rainy day - a good way to find out if you've got leaks!”

Sorting out your finances

A major factor in the home-buying process is the issue of financing. Of course, one needs to have the financial resources first before going house-hunting.

Noteworthy is that effective January 1, Bank Negara has implemented its responsible lending guidelines, whereby loans are now approved based on net income compared with gross income previously.

The new guidelines are intended to help manage the household debt in Malaysia to reasonable levels.

“Currently, banks are tightening on housing loans and potential property buyers may not be able to secure up to 90% financing. Instead, they may only get between 70% and 80%. They now need to have as much as 20% cash or equity, unless its a gift or a loan from your parents,” says Wong.

But Nixon believes that securing a loan is not a problem, especially for young property buyers inspite of the new loan rules.

“From what we've been hearing, it's not the younger generation that's been having problems getting loans, but instead, the older generation.

“This is because the younger generation don't usually have debts - at most it might be a car loan. We find that it's the older generation, those with several ongoing loans or debt that have problems getting their loans approved under the new lending guidelines,” he says.

Bank officer Razlan Hashim says potential property buyers should ensure that their monthly loan payment will not be a burden on their spending. “You need to ensure that the home you're buying is within your means,” he says.

By The Star