PETALING JAYA: Bank Negara is studying the risks arising from the developer interest-bearing scheme (DIBS) with a view of potentially imposing curbs on it, sources said.

Although it is unclear if or when such curbs would be put in place, Hong Leong Investment Bank (HLIB) said that it may be “later this week”, adding that such a move would be a negative for future sales in the primary property market.

Other industry players think that the measures might be introduced in the second half of the year.

DIBS has become a popular easy financing package offered by property developers in joint-promotion activities with banks in recent years.

Under the scheme, buyers need not fork out much initial downpayment to buy properties, as the developer supposedly absorbs the initial interest. This is until the buyer takes possession of the property.

A high number of buyers enter this scheme with the intention of flipping the property when they gain possession of it, making a profit without having to come up with much capital in the process. Such a scenario fuels speculation.

“Typically, under the scheme, buyers only foot between 5% and 10% of the house price upon signing the sale and purchase (S&P) agreement and only begin payment when the project is completed,” a property consultant told StarBiz.

“There are caveats to this scheme, as buyers commit to a financial obligation upon the signing of the S&P and the interest cost has actually been already passed on to buyers via the higher selling prices.”

DIBS is mainly offered to the high-rise residential segment. Some property consultants have opined that the presence of DIBS in the market has caused prices to be set on an artificially higher trajectory.

Notably, the Singapore government banned DIBS in 2009.

“While the exact measures are yet to be revealed, we believe the curbs would impact this easy financing scheme,” HLIB said in a note yesterday.

According to analysts, most of the sales in the recent property bull cycle were tied to the attractive DIBS scheme at the expense of the secondary property market which has remained sluggish. And given the persistent rise in household debt, the Government is mulling over measures to limit it.

“In the recent past, Bank Negara has been compiling information on the scheme and studying its impact on the sector,” a source said.

Bank Negara had yet to respond to StarBiz’s queries as at press time.

“The difference between the non-DIBS and DIBS pricing can range from as low as 5% to as high as 30% if other incentives like early-bird discounts, stamp duty waivers and cash payments are taken into account,” said Elvin Fernandez, managing director of Khong & Jaafar group of companies.

He advocates regulators to compel developers to be transparent on the various incentives, as it may be difficult to do away with DIBS packages.

“Developers should inform buyers and bankers of the actual value of the discounts they are getting so that house buyers know the true value of the house they are buying,” he said.

UOB Kay Hian Research noted that new launches in selective high-rise projects in the suburbs of the Klang Valley were transacted at over RM1,000 per sq ft (psf) vis-a-vis RM450 psf two years ago.

“Household debt has risen to 80.5% of nominal gross domestic product as at end-December 2012, up from 60.4% as at end-2008.

“We also note that outstanding banking sector loans in the household sector has risen 3.6% year-to-date as at end-April to RM638.5bil from RM616.5bil as at December 2012. As the rise in consumer credit is partly linked to housing, curbs may be introduced to dampen speculation,” UOB Kay Hian said in a report yesterday.

On the financial impact of curbing DIBS on property companies, HLIB said that it would be “negative for future sales in the primary market but the extent of damage varies with the degree of exposure to the high-rise segment for each individual developer”.

UOB Kay Hian reckons that if DIBS or similar schemes were to be tightened, it could “significantly dampen new property launches as speculators will be filtered out”.

The company also does not rule out the possibility of a further upward revision in real properties gains tax (RPGT) to dampen speculation.

In Budget 2013, the Government had raised the RPGT for the second time since 2011, stipulating a 10% to 15% tax for the disposal of properties within two years of purchase, and 5% to 10% for the disposal of properties within three to five years. However, properties sold five years after purchase are exempted from the RPGT.

Source: StarProperty.my

In recent times, the redraw facility has become a common feature in most home loan packages in Malaysia.  Whilst the concept of redraw is relatively simple to understand for most seasoned home buyers; a new home buyer may find this term slightly confusing as it really isn’t something you see everyday.

In this article, we explain what redraw facility is and how you would be able to take advantage of it if your home loan has this feature.

What is Redraw?

Redraw is the act of accessing excess payment you have made on your home loan.  To understand this concept, we will first have to explain what excess payment in a home loan is.

In Malaysia, most home loan packages allow you to make excess repayment, which basically means extra payment you pay to the bank on top of the minimum loan repayment amount.

Example:

Say your monthly home loan repayment is RM1,000.

And this month, you’ve made a repayment of RM1,100.

Your excess repayment = RM1,100 – RM1,000 = RM100.

Making these excess repayments is not without its benefit.  For most home loan packages, the excess repayments are used directly to offset the principle loan amount, which in turn reduces the amount of interest you’ll pay over the term of your home loan.

A redraw facility is a feature that allows you to withdraw excess repayments you’ve made on your home loan.  Say you’ve been making extra repayments religiously and have accumulated a total of RM10,000 in excess repayments, a redraw would allow you to take out that RM10,000 as cash for your own use.

Obviously, making a redraw means you’ll lose out on all the interest-saving benefits stemming from making excess repayments; but it is still a very handy feature especially when you need cash in a hurry and wish to reuse the excess repayments you’ve made.

One Thing to Take Note Of When Using Redraw Facility

Whilst the availability of redraw facility undoubtedly makes excess prepayment seems like a good idea for a home loan; one should always remember that executing a redraw usually involves fees and charges.

In Malaysia, most banks charge a standard fee of RM50 for every redrawal from a conventional home loan package.

For anyone carrying a home loan, the existence of redrawal fees is significant as it means you CANNOT treat your home loan like a standard current account (where you can put in and take out money as you like).

So before you make that excess payment, make sure you won’t actually be needing to redraw it a couple of days or weeks down the road… for you could potentially be losing more money than you’ve saved by making redrawals one time too many!

This article comes courtesy of www.imoney.my which compares between the various loans, savings and insurance schemes available in Malaysia.

Skyview Piazza is well placed to attract quality customers from the immediate vicinity. With all its units located on the ground floor, it offers a huge captive market of the residents from its base of Skyview Residence and other surrounding ones too, making it a sure choice for retail business. Designed with carefully planned layouts, Skyview Piazza is, without doubt, dedicated to the lifestyle activities of the entire family, all year around.

Property Name: Skyview Piazza
Location : Perak Road, Jelutong, Penang
Property Type : Mixed development
Total Units: 6
Land Tenure : Freehold
Developer : Gema Intan Sdn. Bhd.

KUALA LUMPUR: Penang-based Ivory Properties Group Bhd will start work on phases three to five of its Penang Times Square project, which includes a five-star hotel, by year-end.

Group chief executive officer Datuk Low Eng Hock said the three phases would cover 1.5 million sq ft, including a five-star hotel.

In a statement issued after its AGM in Penang, Low said these phases would comprise small-office-home-office (Soho) units, a shopping mall, a hotel with 300 en-suite rooms, exclusive suites and a stand-alone cineplex.

As for the mall, Ivory Properties is to be the sole owner and plans are underway to attract international retailers to fill up 500,000 sq ft of the mall area.

“There will also be a double-storey basement car park to accommodate high traffic flow during the peak season,” he said.

Source: StarProperty.my

Nadayu Properties Bhd aims to launch three projects worth over RM800 million in the Klang Valley and Penang within six to 10 months to grow the group and build its brand.

The developer will be launching Nadayu 99 in Cyberjaya, Superlinks@Nadayu Melawati in Ampang and Nadayu 290, Bukit Gambir in Penang.

Nadayu 99 comprises 13 units of three-storey shoplots and 132 units of superlink houses, while Nadayu Melawati comprises 46 units of superlink houses.

Nadayu 290, meanwhile, features 279 units of service apartments and hotel.

These projects worth a combined RM851.5 million, its chief executive officer Mohd Farid Nawawi said.

The company also has on-going projects worth about RM1 billion, which are being launched in phases.

This year, the company expects its property sales to hit RM300 million this year, led by its latest launches in the Klang Valley.

Farid said the targeted sales will be driven by its on-going property projects, namely Nadayu Melawati, Nadayu 92 in Kajang and Nadayu 28 in Bandar Sunway.

“The take up rate for the three projects is looking healthy at the moment and we are upbeat on the market,” he told reporters at the company’s shareholders meeting here yesterday.

Also present was its chairman, Hamidon Abdullah.

Hamidon said Nadayu has about RM250 million in unbilled sales, which will be recognised for the next one year.

“We will look at all opportunities to grow the business and also look for more strategic land banks for future development,” he said.

He added that Nadayu brand is becoming acceptable, where people are starting to identify the name and associate it with the level of quality and delivery.

Currently, the company has a land size of 334.67 ha, mainly in the Klang Valley and Penang, worth about RM5.9 billion.

Commenting on the second quarter performance, Hamidon said that the company is expecting to do better than the first quarter.

Source: Business Times