Propsocial property developers giving out loans risk
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The move approved by the Government could help home buyers tremendously, providing a second chance for Malaysian property buyers who could not secure a loan, as well as to boost the sales of properties in the gradually slowing Malaysian market.

Under the Moneylenders Act 1951 and Pawnbrokers Act 1972, developers may provide up to 100% of financing to buyers, or just the amount that their (buyers) bank loans do not cover.

If you are one of the many Malaysians who were not able to secure a loan, read Top 10 Reasons Why Your Loan Application May Have Been Declined to find out more.

No significant impact

Most analysts and market watchers predict that this is the beginning of some relaxation efforts by the government, signalling the end of initiatives to cool down the property market.

Despite the hype surrounding the scheme, a research by CIMB Research Equities had found that the impact of its introduction was not as consequential as predicted.

Developers not keen to provide financing

The reason for the insubstantial impact on the sales of properties, as reported by the research, is the fact that developers are not too willing to begin providing financing to buyers.

“Based on our checks, most developers are not keen to start providing financing to their buyers in the near term,” stated the CIMB Equities Research report.

High risk for developers to give out loans

The research detailed that risk was a major factor causing developers to be hesitant in giving out loans to buyers. Key factors to this reluctance include:

1. Funding

Substantial amount of funds is required to be able to offer such financial facilities.

As the CIMB Equities Research explained, “…we believe only the developers with strong balance sheets will be keen to explore this option to boost their sales”.

The report added that developers which are more likely to be able to provide financing (or some form of it) to buyers, would be those which are “in net cash or near-net cash positions”. Realistically, such a position applies only to a few major developers.

2. Interest rates

The scheme also caps interest rates at an annual rate of 12% (or 18% without collateral), which, as the report asserts, “…is lower than the return thresholds required by most developers”.

Apart from that, the CIMB Equities Research also voiced concerns that the move not only poses the risk of defaults to developers, but also adds to the purchase cost of homebuyers, as banks are already allowing a 60% to 70% debt service ratio.

Giving loans not the only way to boost sales

CIMB Equities Research adds that mass-market housing remains a potential goldmine, given the high demand for the mass-market properties launched in recent years. In fact, there is not enough supply of affordable homes to meet the demand! Thus, honing the potential of this largely untouched market is a conceivable way for developers to boost property sales without having to take on the risks of providing financing to buyers.


Though the report had found that developers may not be too enthusiastic to provide financing to homebuyers, it does not completely eliminate the idea, stating that perhaps developers with firm balance sheets would offer other ways of financial assistance in the future.

So if you’re planning on buying a home, check out the things to look for when applying for a housing loan as it won’t be any time soon that developers will be giving out loans.

Tell us what you think

Do you think allowing developers to provide financing is a good move? What types of financial assistance would you like to see from developers in the future? Share your thoughts with us below and be rewarded!



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Interest at 12% or up to 18% without collateral... this rate is similar to credit card debt... it will be near impossible to repay it. Irregardless of the amount and loan margin.

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Ya I agree with you Dominic. I wonder if anyone took this up yet? Or has this already been implemented?

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Borrow from Loan Shark aka Ah Long, sure can get anytime... easier to get the loan in cash, but interest might differ.

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Difficult to find good tenants, afterall "good" is defined by landlords' own preferences/living styles.

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If a developer provide such a loan, does that mean that the property you bought from the developer will be charge to the developer?? 

Any how I'm really interested in the developers' loan agreements. Wonder how much would it differ from bank's agreement? Is it the government will regulate on this issue like HDA or it will be treated as an independent commercial agreement?  

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maybe developer get a big amount of loan with x % rate then issue to buyer with x % + y % of rate to earn the variance. :) if resident cant pay then resell to other buyer.

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Developers are coming up with all these solutions for property buyers because one of the biggest reasons why their property sale is slow is because of the bank loans. It's not easy to get a 90% bank loan anymore and property buyers can't afford to fork out a huge sum upfront.

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What to do? Currency devalued, living cost increased, salary remains the same. 

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for invididual, increase earning income as much as possible.

for government, really think about how to build more affordable home. 

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(Pos ini telah dikeluarkan oleh pengarang)

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12% - 18% is like 'ah long' :P 

Any developers implemented this yet?

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saw a lot of ads from developer but do not really ask about it how it's work. 

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Can you please share which developers are currently offering this loan to potential buyers?

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The purchase price is is fully paid for the property but not the transfer of title. 

The fees is for the Memorandum of Transfer (MOT), this is usually pay by the purchaser unless developer promised to give a free MOT. The MOT is calculated based on the % of the purchase price. 

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@ Lee

Basically, considering a property in the same category. Because of the cost of MOT. Buying a strata titled property is more costly than a non-strata... Am I right?

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LOL...why do i talk about MOT here...wrong post...sorry.

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@ Lee... Yes please discuss more about Loans given by developers instead. LoL

I can't wait to see any success story out there where the developer helped the purchaser with a much needed loan.

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I have a chance to work on developer's loan, but was told that these loans are only available to foreign purchaser only. Hahahaha. 

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@ Lee. Oh, Foreign purchaser. Which means they are only eligible to buy property which are more than RM1mil?

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That depends on the location, have to check with the state. Haha...and each state foreign purchaser might be subject to a different criteria as well. But that's not of our concern...LOL 

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You mean like how each state have different rates for BUMIPUTERA discount on property?

Recently Selangor is removing the 10% BUMIPUTERA discount on certain property types right?

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Hmmm...not sure about Bumiputra thingie though, haven't do much on Bumi's cases. 

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If the developer's loan is being offered to only foreign investors, then what's the point of shouting out loud without being clear from the start that it's for foreigners only :-/  It's still not helping to resolve the issue for people who genuinely want to buy but can't get approval for bank loan.

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Malaysian citizens should be put in the top most priority list in terms in 1st house ownership assistance...

Not just benefit the developer by introducing measures to boost their sales.

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Well, I don't see any real benefit of developers' loan being offered to locals as most locals can easily qualify for the bank loans. And the purchaser didn't even meet the banks' score, not sure how will they be qualify to the developers loan which most likely to charge even higher than a bank. 

Just my 2 cents...

To me the best way to help the locals getting a house have to start from creating more jobs opportunities for the locals and to keep the local talents locally. But this is way out of topic. HAHAHAHHAAH

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my 2cents.... all collateral / non collateral loan there are a certain percentage of Risk. Developer would preferably like to minimize their risk and maintain their cash flow so that they can utilize the available cash flow to developed a new project. 

If there are defaulters the time and energy required to perform proclamation of sales tremendous and they might probably need to hire extra man power for all these unnecessary paperwork.

If i owned a developer company, I might not want to venture in providing housing loan to the buyer, a partnership with the financial institution yes but definitely not taking this piece of cake from the financial institution.

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LOL! Shun Zhong, good one! :) But seems like times have changed, back then there wasn't enough job opportunities, but now it's different. Gen-Y or Millennial are so picky, there are tons of job opportunities out there for them now as compared to back then, but they only want one which is easy job with cool office environment, higher designation and high pay. 

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no wrong to choose a good pay job with comfortable environment if can. 

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Best to obtain and evaluate your own Credit Rating from Bank Negara... before we even venture out and hunt for deals which are far beyond our reach... if you don't even know the range of properties you should be aiming for, you will be hunting in the "dark".

What you all think?

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@domng, that's true. I agree with you. Also depending on individual monthly commitment and affordability.

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@domng it is important to know how much we can affort and bank preference before hunting for your dream home :)

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I wonder if so far if any developer has given out loans (@ higher interest) after banks reject them...

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@domng never heard any agent mentioned about that.

even WIP/PRIMA project also never hear about it

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As I understand, most of these developers' loan only given to foreigners who had trouble in getting loans from our banks here. Never heard of such thing being offers to the locals though~ 

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My 2 cents is: fist developer is not a financial institution, and even if they are allowed to, would they willing to take such a risk in the first place? Not to mentioned like all businesses, developer have share holders and board of directors, and would this be a really profitable business to them during such economy situation?

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Maybe Country Garden is offering these financial assistant for potential investors for its developments such as Forest City @ Danga Bay @ Central Park who cannot secure a bank loan... for both local or overseas investors.

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@admin_ps thanks for sharing