Govt to take fundamental re-look at real estate industry

The government is taking a “fundamental re-look” at the entire real estate industry.

Speaking in Parliament, National Development Minister Mah Bow Tan said this includes strengthening measures to curb unscrupulous practices and abuses.

Among the measures, the government plans to plug a loop hole on using public housing flats as collateral for loans.

Public housing flats are not meant to be used as security for any loans other than the mortgage to finance the unit’s purchase.

Yet, Parliament was told that some owners have fallen prey to such abuses.

“One current practice that is very common is that of credit companies filing caveats against HDB flat owners who had borrowed money from them at very high interest rates, so that when these HDB owners sell their flats, the credit card companies will get the first bite,” said Halimah Yacob, Member of Parliament (MP) for Jurong GRC.

In response, the National Development Minister said the government is working to plug the loophole.

“Unfortunately there has been a loop hole that has allowed legal money lenders to lodge such caveats, that is the reason why my ministry is now looking at how we can prevent this from happening,” said Mr Mah.

“This is going to be done even before the regulations for the real estate agents are finalised. I am treating it as a matter of urgency because it is obvious there have been cases of abuses, people have been exploited, and in this regard the role of some rogue estate agents should also be examined.

“We have received feedback that some moneylenders provide loans on the condition that the borrowers repay the loans from the sales proceeds of their HDB flats. We are currently working with the relevant authorities on appropriate measures to curb such abuses.

Complaints against real estate agents have risen in the past few years, according to figures from the Consumers Association of Singapore.

There were 1,079 cases last year, higher than 1,100 complaints in 2008 and 1,055 in 2007.

Meanwhile, the Inland Revenue Authority of Singapore, which is the licensing body for real estate agencies, received 154 complaints against agents in the past three years.

Mr Mah said existing rules are not enough to deal with potential abuses by errant property agents. He added that the industry needs to be better regulated, especially in the current climate where there are temptations for some agents to take short-cuts.

He said: “We are looking into whether we should have a more formal form of registration for real estate agents, what are the mediation avenues available, if not what are the dispute resolutions mechanisms available and if not what are the punishments that can be meted out to those who flout the rules.”

A new regulatory framework is expected to be announced shortly.

Source: Channel News Asia, 28 Apr 2010