Govt warns against developers-turned-land brokers

JAKARTA (JP): The government is currently investigating allegations that many housing developers have simply become land brokers, selling out parcels of land after they were assisted by the local authorities to procure and clear the area.

The practice of selling parcels of land by developers is illegal, State Minister of People's Housing Akbar Tanjung told reporters yesterday, citing a 1992 government regulation.

If the allegations are proven, developers will be punished, Akbar said, stressing that developers have been licensed to build and sell properties, and not simply sell land.

Akbar said his office is not equipped to investigate the allegations but he will ask the local authorities to conduct the probe on his office's behalf. He warned members of the public not to buy parcels of land directly from developers because the sale would be considered illegal.

His statement, made after a meeting with President Soeharto at the Merdeka Palace, is the latest warning against developers already widely criticized for neglecting their obligations.

Last week, Akbar said the government will freeze developers' permits to build luxury houses because they have not been building enough low-cost houses as stipulated in their licenses.

Yesterday he said the government is resolute about compelling developers to fulfill their commitment to build six low-cost houses for every three medium-cost houses and one luxury house.

The 6:3:1 concept introduced in the 1980s had been treated as simply a guideline and there was no sanction if developers did not comply. Most developers have neglected the concept and focused on building luxury houses where the profit margins are big.

Now with the nation pressed to build more houses to provide shelter to its growing population, the government intends to enforce the concept. Akbar said his office is now establishing agencies in the regions to oversee its implementation.

He acknowledged that part of the problem in the business of low-cost houses is financing, and to remedy this, the government has introduced a new home-ownership loan scheme, with a state subsidy.

The government also plans to restrict loan amounts for luxury houses and intends to divert the money to loans to help the less wealthy members of society purchase their homes.

Akbar said he had checked with the monetary authorities who said there is still ample funds for home ownership loan schemes.

During the meeting yesterday, President Soeharto also suggested that to further reduce the costs of building low-cost houses the developers will be encouraged to use timber that the government confiscated from illegal loggers.

The government is now drafting the regulation to auction this timber, Akbar said.

Akbar said his office is now also drafting a guideline on the contract to purchase houses, stipulating the rights and obligations of buyers and sellers.

This guideline is seen necessary to protect consumers given the increasing practice of people buying property before it is built.

He said he had received complaints from the public about developers not living up to the promises they made during sales promotions. (emb)