Economic crisis hits new home buyers

Economic crisis hits new home buyers

JAKARTA (JP): Many home owners are finding themselves unable
to keep up with payments on loans taken out to finance the
purchase of their properties because of high interest rates,
chairwoman of the Indonesian Consumers Foundation (YLKI) Tini
Hadad said yesterday.

Tini said interest rates on loans taken out to purchase homes
had risen sharply since the borrowing agreements were signed.

Unfortunately, borrowers are being forced to pay more at a
time when their incomes have dropped as a result of the economic
crisis, Tini said in a dialogue meeting entitled "Protection of
Home Owners during the Crisis", which was opened by State
Minister of Public Housing and Settlement Theo L. Sambuaga.

She said data showed that 155 of 622 complaints sent to YLKI
between January and July this year pertained to housing problems.

Complaints range from delays in the transfer of title deeds to
difficulties in getting down-payments refunded after purchase
agreements were canceled. A number of people have also complained
to the foundation after their monthly loan repayments were
increased without prior notice.

Tini said that in the year beginning July 1997, YLKI had
received 677 complaints on housing loans.

She said the economic conditions had contributed to a rising
number of disputes between house buyers and banks and property
developers, adding that contract agreements invariably placed
consumers in a weak position and benefited developers.

"For example the agreements place a strong emphasis on buyers'
obligations but say very little about the developers'
responsibilities," she said.

She said that if consumers failed to meet repayment
installments they were threatened with even higher interest rates
and pointed out that developers were not subject to the same
punitive measure.

However, Tini was not able to say how many people were now
finding it difficulty to repay loans taken out to purchase homes.

Dana Sutikto, who bought an apartment from PT Indra Maju
Lestari in the Graha Lestari complex on Jl. Kartini Raya in
Central Jakarta, reported that he was only refunded half of his
down payment after the property developer abandoned the project
when the rupiah began to fall in value against the US dollar.

"We deposited our money in US dollars, but the developer
refunded us in rupiah with the exchange rate set at a pre-crisis
level. If we refused the offer the company threatened to withhold
50 percent of the funds we had paid.

"We demand that the developer return all our money to us in
U.S. dollars," he said.

Meanwhile, Lim Jaya, who owns an apartment in the Puri Gardena
complex in West Jakarta, said that Bank Tamara had raised the
interest rate on his house loan from 20 percent to 65 percent
without giving him prior notice.

"I sent a letter asking for dispensation, but have received no
response," he said.

Tini said the complaints showed that customers should read the
details of contracts more carefully before signing them and urged
banks to inform borrowers before raising interest rates. (ind)