Permanent measures needed, says HBA

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PETALING JAYA (Feb 18, 2014): The National House Buyers Association (HBA), which lauds the government's move to set restrictions on bulk-buying by property investor clubs, believes that laws need to be changed and more permanent measures are needed to curb "property insider trading".
"It's a good start and we congratulate the Ministry of Urban Wellbeing, Housing and Local Government in coming up with this measure which is able to address the issue without amending any laws. But it is only an interim measure," secretary general Chang Kim Loong told SunBizyesterday.
"In the long-term, new laws are needed," he added, opining that property investor clubs should be outlawed.
In January, Chang in an exclusive interview with SunBiz, asked the government to step in to curb bulk-buying activities by property investor clubs, blaming the clubs for runaway property prices.
Yesterday, Minister of Urban Wellbeing, Housing and Local Government Datuk Abdul Rahman Dahlan announced that the ministry is looking at ways to restrict bulk-buying of property done by investor clubs to curb speculation in the property sector.
However he said the ministry does not intend to introduce a new Act or law to stop the operations of property investor clubs because the government wants to maintain a free market.
"We have looked at it and some people are saying that the way property investor clubs operate is sort of like insider trading but we find no laws broken under the circumstances. So let's deal with it within confines of the law by maybe monitoring them and requiring them to buy nothing more than four to six units at one go," he told reporters at the launch of the Sime Darby Property Housing-Income Index yesterday.
Abdul Rahman said that creating laws is a step backward and that prices should be determined by demand and supply.
According to Chang however, property investor clubs will find ways to circumvent the new restrictions for example, by using one name to buy less than four units.
"If they have 300 members, they can still buy in bulk," he said.
HBA recommends that the government make it compulsory for banks to value new properties sold by developers instead of using the developer's selling price when dishing out home loans.
"When you buy a property in the secondary market, you need to get a valuation when applying for the loan. Similarly, new properties should also be valued against the market price of properties within the vicinity of the project," he said.
He added that the Controller of Housing could also monitor the price range of new properties.
"The problem is, the disparity is very high. The range could be from RM450,000 to RM1.5 million (for a particular project). The Controller of Housing should dictate the price range to stop developers from giving massive discounts," he said.
Sime Darby Property managing director Datuk Seri Abd Wahab Maskan when asked to comment on the announcement however said the government should encourage freedom of market forces.
"Any government should encourage more freedom of market forces. At the same time, that freedom must also be exercised with responsibility…while we believe in market forces rather than (full) regulation, we must also be guided by the fundamentals of good economics and good corporate behaviour. Don't go overboard in doing things for short term play without taking into consideration the bigger impact on the economy and the country," he said.
"There needs to be a balance. Government measures may be short term or long term. What's important is that any regulation must allow certain kind of flexibility for the good practitioner, not just one regulation fits all; don't be rigid about it," he added.