- The Ministry announced a new ruling against property bulk sales by developers, especially in the Klang Valley
The concept of a Property Investors Club (PIC) may have to die an early death with the new cooling measure imposed by the government to curb the proliferation of property bulk purchase to gain sizable profits.
In the government’s efforts to keep property speculation in check and manage the meteoric rise of property pricing, the Ministry of Urban Wellbeing, Housing and Local Government, Datuk Abdul Rahman Dahlan announced a new ruling against property bulk sales by developers, especially in the Klang Valley.
“Developers selling more than four units of their properties to a single buyer or group must now obtain prior approval from the Controller of Housing,” announced Abdul Rahman during the launching of Sime Darby Property’s housing income index.
How does it work?This new regulation will likely affect members of these property clubs who normally strike a deal with developers to take up new development units in bulk before the launch of a project at a steep discount and lower down payments.
The members will enjoy these benefits and will resell the units when the project nears completion at a much higher price.
The members of these property clubs, will first seek for individuals who are willing to participate in the deal by providing their identity cards and signatures for a fee of RM2,000 to RM5,000 per deal.
Then, these properties are sold in the secondary market after a year or two, with members of the syndicate fetching a profit of at least RM50,000 per unit.
Is it legal?Though bulk buying is not against the law, it creates a false demand causing unjustified price spikes.
“The new condition would palliate those effects. I will call for a meeting with the Real Estate and Housing Developers’ Association of Malaysia (Rehda) stakeholders in a month’s time,” Abdul Rahman said.
This new enforcement would be made compulsory in all real-estate advertising and sale permit materials.
The existence of property curbs came to light last year when developers announced huge take-ups in the first days of a project launch, causing an artificial demand.
This resulted in unsuspecting house buyers rushing to take up the remaining units, also causing a spike in property prices.