Developers get creative

May 23, 2016


Amidst the challenging housing market, developers have adopted various creative financing schemes to attract buyers. However, the central bank advises clients to be cautious before taking up such schemes.

According to sources from Bank Negara Malaysia, these funding arrangements are a testament that property developers want to sell houses. But if the buyer is unable to fulfil the condition of these agreements, he would end up losing.

For example, SDB Properties is offering a rent-and-buy scheme for completed condos in Cheras and landed homes in Puchong.

Under this arrangement, the price to be paid by the buyer is divided into two portions of 30 percent and 70 percent based on the property’s total price. On the 30 percent portion, he only needs to pay five percent upfront, eight percent needs to be paid over three years, while the remaining 17 percent is free.

After three years, the buyer needs to pay the 70 percent portion. If he cannot, the amount he has paid during the period will be forfeited in favour of the developer.

He may also sell the unit if he cannot get a loan to repay it, but he must take into account his payments so there’s no loss, said SDB’s head of sales & marketing. Khong Wei Chung.

Meanwhile, Sunway Group is providing loans to buyer who cannot get mortgages from commercial banks, but these loans come with heftier interest rates.

The buyer also needs to pay three percent upfront, 12 percent would be paid over a 12- or 24-month period, while the remaining 88 percent must be paid upon completion of the unit. Failure to do so and the property will be repossessed by the developer.

Another developer, SP Setia, is offering a 10:90 scheme for its Eco Templer project. Under this scheme, buyers need only to pay 10 percent of the property’s value, while 90 percent must be paid when the house is ready.


Mangalesri Chandrasekaran, Editor at PropertyGuru, edited this story. To contact her about this or other stories email


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