KUALA LUMPUR (Aug 21): The Housing and Local Government Ministry (KPKT) said it is planning the setting up of escrow accounts for housing projects, in order to ensure payments by homebuyers are used exclusively for housing projects that they have bought.
An escrow account is an account in which funds are held by a third party or in trust, while two or more parties complete a transaction.
“This means that all money paid by homebuyers will be used exclusively for the intended project,” Minister Nga Kor Ming said in a statement on ministry initiatives and matters of abandoned housing projects.
“Currently, without escrow accounts, a developer can transfer funds from Project A to Project B, leading to Project A becoming abandoned.
"After this amendment, such practices will no longer be permitted,” Nga said in the statement on Wednesday.
In the statement, Nga also revealed a proposal submitted by KPKT to the Ministry of Finance to provide up to RM30,000 in deposit assistance for first-time homebuyers.
The proposed initiative, dubbed the Madani Deposit, is aimed at alleviating the monthly payment burden of the first-time purchasers, especially youth buyers in the B40 (Bottom 40%) and M40 (Middle 40%) income groups, he said.
“This is to ease the monthly payment commitment for first-time homebuyers, especially the youth among the B40 and M40 groups, and to realise the ministry's 'Shelter for All' aspiration of providing every citizen with a place to live,” Nga said.
The Madani Deposit initiative is one of 33 proposals put forward by KPKT to the Finance Ministry for Budget 2025. Other proposed initiatives include the creation of 100 Madani recreational parks, the transformation of retention ponds and the introduction of electronic property sale agreements with e-stamping.
Addressing the issue of abandoned projects, Nga said that since January 2023, his ministry has successfully revived 704 sick or abandoned projects, with a total gross development value of RM58.94 billion. This has helped over 65,000 homebuyers secure their desired homes.
“We aim to ensure there are no more abandoned housing projects by 2030. KPKT will amend the law to ensure that developers found guilty of fraud will not be allowed to leave the country,” he said.
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