TODAY ONLINE : We'll look into loan loophole: Mah

We'll look into loan loophole: Mah

05:55 AM Apr 28, 2010

by Esther Ng

SINGAPORE - Housing and Development Board flats are not meant to be used as collateral for loans, legal or illegal. But credit companies and real estate agents, targeting flat owners in financial difficulties, are exploiting a loophole.

Besides lending money to these owners at exorbitant interest rates, they get a lawyer to file a caveat against the property with HDB. The property then cannot be transferred until the debt is settled.

All this is legal, but once the flat is sold, credit companies get first charge to the proceeds and the flat seller usually has little or nothing left, said MP for Jurong GRC Halimah Yacob in Parliament yesterday.

Minister for National Development Mah Bow Tan acknowledged this "loophole" and announced that these malpractices are being looked into, even before regulations to professionalise real estate agents are finalised. He is treating it "as a matter of urgency because there have been abuses and people have been exploited".

While most real estate agents are professional, there is a need to raise the standard of the industry as a whole.

"We're looking into whether we should have a formal form of registration for real estate agents, what are the mediation avenues available. If not, what are the dispute resolution mechanisms available, if not, what punishments can be meted to those who flout the rules," said Mr Mah.

A mandatory examination is one component under consideration.

Currently, real estate agencies are licensed by the Inland Revenue Authority of Singapore (Iras). It has received a total of 154 complaints against real estate agents in the past three years. In 2007, it received 47 complaints, followed by 63 in 2008 and 44 last year.

Mr Mah was responding to Mdm Halimah's enquiry on the number of complaints MND had received against property agents in the last three years.

The current licensing regime does not empower Iras to investigate agent misconduct. It usually refers the complaints it receives to the Singapore Accredited Estate Agencies (SAEA) for investigation and resolution, if the agent is from an SAEA-accredited agency. Otherwise, Iras will refer the complaints to the estate agencies directly, said Mr Mah.

Where there are serious allegations, for instance, of cheating or falsification of documents, Iras will advise the complainant to make a police report. Consumers have also lodged complaints with the Consumer Association of Singapore. There were 1,055 complaints in 2007, followed by 1,100 in 2008 and 1,079 last year.

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