KUALA LUMPUR (May 13): The Real Estate and Housing Developers' Association (Rehda) Malaysia has expressed support for the proposed introduction of an "Option to Purchase" (OTP) clause under the new Real Property Development Act, according to a press statement issued on May 13.
Rehda president Datuk Ho Hon Sang said the association welcomes the proposal by Housing and Local Government Minister Nga Kor Ming to include the clause in the legislation intended to replace the Housing Development (Control and Licensing) Act 1966.
"While the mechanism has yet to be finalised and there are still many uncertainties about the clause, in principle, the OTP mechanism is beneficial in protecting prospective home buyers who intend to purchase a specific residential unit. At the same time, it provides them with an opportunity to reconsider their purchase decision should their circumstances change," said Ho.
Under the proposed mechanism, both purchasers and developers would have the option to withdraw from a transaction before a sale and purchase agreement is signed.
The clause provides purchasers with the flexibility to walk away from a purchase should their circumstances change or if they change their minds about the property.
Developers are also given the flexibility to exit from projects that may no longer be commercially or financially feasible.
Ho added that developers could also utilise the OTP mechanism to better gauge genuine market interest from potential purchasers before signing binding commitments and before construction begins.
The association noted that the OTP introduction could potentially provide a practical solution to issues such as abandoned housing projects.
"The OTP introduction could also potentially provide a practical solution to the various issues both parties faced, including concerns relating to abandoned housing projects, as mentioned by the minister during his announcement," said Ho.