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HOUSE BUYERS FORUM:
CONSUMER EMPOWERMENT
Presented by President
of National House Buyers Association (HBA),
Dato’ Hj Zainuddin bin Hj Bachik
at the National Housing & Property Summit
“Revitalising the Property Section as a Key Engine of Growth”
27 & 28 March, 2003, Mutiara Hotel Kuala Lumpur
A. Introduction
Mr. Chairman Sir, Learned Audience, the Academicians, Ladies & Gentlemen,
the Organizer;
Thank you very much for inviting HBA to this forum.
HBA was setup in 1999 by a group of aggrieved house buyers and is officially
registered under the Society Act. HBA is a voluntary, non-profit, non-political,
non-governmental organization manned by volunteer members. Our objective
is to strive for the rights and interests of other house buyers.
In this august assembly of people who are experts in their own field of
profession in the housing industry, HBA humbly seeks your patience to expound
our views on the unsatisfactory state of affairs in the industry as shown
from first hand experience and the experiences of the numerous house buyers
who have lodged complaints with us.
My talk today would dwell on three (3) important issues that require the
prompt attention of industry players and the relevant authorities to put
things right before they get out of hand.
1. What House buyers expect from developers.
Problems of house buyers due to lack of enforcement of the Act
The history of large scale housing for the public dates back to the early
days of independence when there was an increasing demand from the fast growing
population. Hence it was not surprising that in an environment of lack of
regulatory institution some developers even build houses on agricultural
land. The Housing Developer (Control and Licensing) Act was enacted in 1966
with the objective of instilling some orderliness into the fast growing
housing industry. That was 37 years ago. What is surprising is that today,
we still come across similar cases.
We question as to how and why such shocking phenomena can still exist today.
Was it due to the blatant disregard for land usage as defined in the Land
Code?
Was it due to fraudulent omission to enforce the Act? Your guess is as good
as mine.
Whatever reasons there may be, there is no excuse for not complying strictly
with the laws in order to contain deceitful and dishonest operations.
Legislations would be a mockery unless they serve the very purpose for which
they were intended and prosecution must impose penalties commensurate with
the degree of offence committed.
HBA is in full praise of the call made by YAB the Prime Minister that developers
who blatantly ignore the laws’ terms and conditions of development should
be prosecuted and put behind bars.
Local authorities that do not exercise their responsibilities to monitor
and supervise projects in their areas of jurisdiction and to bring offenders
to book should likewise suffer the same fate.
The problem of non-issuance of strata titles remains the major complaint
among house buyers. For the second year running it tops the list of complaints
both in terms of percentage and absolute numbers. And the trend is escalating.
Yet we see no serious or concerted effort being taken by the authorities
to curb this disturbing trend. In fact, we anticipate that a situation will
be reached when the number becomes so great that it will be beyond control
and unmanageable. At this stage it will be too late to mend.
HBA would like to suggest the following action plan.
For those errant developers who continue to ignore the law that require
them to apply for strata titles, the Ministry of Land and Cooperative Development
or its appropriate arm should prosecute them for such breaches.
If they continue to drag their feet, then the directors of the offending
companies should be held accountable.
In cases where the developer/proprietor have been wound up or where the
Ministry deemed them incapable to apply for the titles, such a requirement
should then be handled by a vehicle similar to the Syarikat Perumahan Negara
which handles abandoned housing projects.
It would also be logical if strata title applications are submitted simultaneously
when the application for building plan approvals are made. Here we are glad
to mention that the Malacca state government had taken the lead in such
a practice. In such cases the strata titles could be issued together with
the CFO.
The legendary excuse of lack of manpower and/or expertise in the various
departments is unacceptable. This is a lame excuse and appropriate measures
must be taken to remedy the situation.
2. Meeting the needs and expectations of House buyers.
In Malaysia the trend in the housing industry is selling houses “off-the-plan”
.coupled with glossy and attractive sales brochures as opposed to those
in other countries such as the USA, Australia and some others where houses
are built first before they are sold to the intending buyers.
This current practice has resulted in a trail of havoc suffered by countless
house buyers when the dream houses that they had purchased remained illusive
dreams when the developers abandoned the construction. In the meanwhile
they continue to rent houses to house their loved ones. Worst still, most
of them would have spent all their life savings. They are further compelled
to continue servicing the interests on the loans that they had taken. This
is the situation brought about by the “Buying-off-the-Plan” system. HBA
is of the view that the situation cannot be allowed to continue. Clearly
the “Build then Sell” system should be adopted so that such kind of misery
would not burden the house buyers.
The Built then Sell concept involve the shifting of the risk factors from
the buyers to the developers and the financial institutions. Presently,
house buyers carry a large proportion of the business risks involved. They
start paying even though the houses that they have purchased are nowhere
near completion. They continue paying progressive payments until such time
when the houses are completed. If for whatever reason the construction of
the houses are disrupted or abandoned, they are the ones who bear the brunt.
House buyers should not carry the risks because they are not business proprietors
like the developers and the financial institutions.
We would like to see a situation where financial institutions fund the developers
to build houses. When the houses are completed, then the financial institutions
finance the buyers to pay for the completed houses.
The Build then Sell concept will also put an end to a host of other lesser
but nevertheless serious problems faced by house buyers. These include shoddy
workmanship, non-issue of CFOs, non-issue of strata titles and the reluctance
of developers to pay late delivery penalties (LAD). It will also compel
developers to build quality homes commensurate with their prices and not
resort to cost-cutting measures using sub-standard material and employment
of cheap unskilled labour force. Presently errant developers are fully aware
and promptly exploit the fact that house buyers do not have a way out without
incurring heavy losses.
Some quarters have been calling the era before the revamp of the Housing
Development Act a situation of “Buyers Beware or Caveat Emptor” and the
situation after the revamp a situation of “Sellers Beware or Caveat Venditor”.
Caveat Emptor or Caveat Venditor, BUILD THEN SELL is THE VICTOR.
3. How effective will be the Housing Tribunal?
The recently implemented revamped Housing Development Act has plugged some
of the loopholes, rectified inadequacies and even some questionable and
grey clauses that existed in the original Act. The procedures for control
and licensing of housing developers have been made more stringent so that
non-bona fide developers would be marginalised. The effectiveness of the
revamped Act remains to be seen. It would only reflect its effectiveness
after a period of time. However, much depends on the degree of enforcement
to be carried out.
A major significance is the long awaited inception of the Home Buyer’s Tribunal
where aggrieved house buyers can lodge their claims against developers in
cases where the amount per “cause of action” is less than RM25,000. The
Tribunal provides an affordable and speedier alternative for house buyers
to seek judgment in their disputes with the developers. We are delighted
to note that since its recent inception, it had promptly convened and dispensed
with a number of cases.
A lingering question remains in our mind. This is with regards to the finality
of the Tribunal. There appear to be some dissatisfaction among certain quarters
about this ruling and they wish to make appeals to higher Court of Law.
If this is allowed, then we see the demise of the Tribunal. The intention
of Parliament in setting up the Tribunal is to accord downtrodden and financially
spent house buyers a speedier and affordable avenue to seek redress from
the big and financially strong developers. For this objective to be achieved,
the ruling of the tribunal must be final otherwise we see a situation where
those financially strong and arrogant developers would appeal to all rulings
that are not made in their favour, not for anything other than to buy time
and to frustrate complainants. It also challenges the authority of the Tribunal
and belittles the Award of the Tribunal Chairman.
CONCLUSION
HBA fully understands and appreciates the vital role played by the housing
industry in the nation’s social and economic development. It is precisely
for this very reason that we have been critical of the weaknesses that are
prevalent in the industry
We believe that the industry can only flourish in an environment of orderliness
and good governance. .
On this aspect, all players in the industry have a role to play. From the
highest regulatory government body right down the line to the professionals,
must play their part. Regulatory bodies should exhibit neither fear nor
favour. Development enterprises should have some humanitarian feelings and
social obligations to serve the people and the nation. Loans should be given
to developers so that they can build houses. House buyers’ loan should only
come in to pay for the completed houses. Architects, engineers and all the
professionals related to the building industry should be conscience driven
and display true professionalism of their trade and not to succumb to their
unscrupulous and greedy paymasters who are bent on amassing quick profits.
Our views are based on solid facts and genuine cases of house buyers’ woes.
They deserve adequate protection under the Law and not merely sympathies.
Thank You.
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