New bank entity pushed to handle housing dev’t funds

The government should create or designate a new banking entity to specifically handle housing development funds, a top architect and real estate consultant said.

Gilbert Yu, the architect of some of the country’s prominent building establishments, said many housing development projects have been abused since the developers handle the funds directly.

He said this could be attributed to the absence of any government supervisory agency that oversees developers and ensure the completion of their projects.

Yu pointed out that most developers have been able to obtain huge lump sums by mortgaging their projects to the banks and, at the same time, are able to secure advanced payments from the buyers.

Since the developers are not subject to any supervision, they oftentimes use the funds to start other projects even though they have not yet completed the project for which the funds were originally intended, Yu said.

Hence, in case something goes wrong and the project is not completed, the buyers end up with nothing while the lending bank merely foreclose on the land.

In other countries, Yu said all funds for housing development projects are placed in a designated bank which then carefully monitors and disburses funds to developers.

He said such practice ensures that the project is completed and the interest of the buyers are also safeguarded.

With all the funds safely kept and handled by the escrow bank, buyers would have some recourse in case the project is not completed, Yu added.

He stressed that government should start paying attention to the housing sector since no reform has been undertaken in the construction and real estate sector since the 1997 property crisis.