Sunday, March 21, 2010
Low Cost Flats
It is common practice for developers of large housing estates to get their development permit with the condition that they set aside some land for construction of low cost flats for the poor. Usually, the cost of these flats ranges from RM20,000 to RM60,000 depending on the size and location. So, what happens then when the prices of these low cost flats appreciates and the owner now wants to sell it? Or what if investors want to buy them for investment purposes?
If you are the investor, the answer is, don't touch it even with a barge pole. Low cost flats are for the poor and the title can only be transfered to the poor. Earlier I have seen many auctions involving low cost flats. There has been cases where investors went in for the auction, bid and won. Later, they found that the title could not be transfered because they obviously, being investors, do not really qualify to be poor. So, the sad story is, the deposit is forfeited....
The land office have to consent to title transfer in any property transactions. In the case of low cost flats, one must fulfil the following criteria:
2. Husband and Wife combined income must be less than RM2500/month
3. Both Husband and Wife have no other property or have taken out a mortgage
Moral of the story is, do not buy low cost flats unless of course you are poor and you do not currently have a roof over your head. If let's say you are poor, you bought a low cost flat and then you work your way up to overcome your poverty - you can still keep the flat... but, if you want to sell your flat, your market is only those who qualify the 3 criterias above. That means, although you might be able to sell it easily considering there are many poor people in this country, you may not be able to sell it at a very high "market" price.