Govt warns against developers-turned-land brokers

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)