26/04/2003 Published in NST-PROP A Buyer Watch Article by National House Buyers Association

The advent of large-scale public housing can be traced back to the days of Independence when demand soared on the back of a fast-growing population. To satisfy the need, and in the absence of a regulatory body, it wasn’t surprising then to see some developers build even on agricultural land.

To instil some orderliness in the burgeoning industry, the Housing Developers (Control and Licensing ) Act was enacted in 1966. That was 37 years ago. What is surprising is that today, we can still find cases similar to those of old.

Is it due to a blatant disregard for land usage as defined by the National Land Code, or to the inability of the powers-that-be to enforce the Act?

Laws would be of little use unless they serve their intended purpose and unless penalties commensurating with the degree of the offence can be strictly imposed.

We at the National House Buyers Association are in total agreement with Prime Minister Datuk Seri Dr Mahathir Mohamad that developers who blatantly ignore the laws of development should be prosecuted and put behind bars.

However, we wish to add that local authorities that do not exercise their responsibilities to monitor and supervise projects in their areas of jurisdiction and 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 both in terms of percentage and absolute numbers.

And the trend is escalating. Without a concerted effort by the authorities, we see that a time will come when the number of cases becomes so great it will overwhelm all the departments involved. Perhaps by then, the only solution would be similar to the “writing-off” of unsettled traffic summons! Clearly, somebody needs to press the panic button now.

HBA recommends the following action plan.

Ensure accountability
Errant developers that continue to ignore the law requiring them to apply for strata titles should be prosecuted by the Ministry of Land and Cooperative Development or its appropriate arm. After that, if they still persist in dragging their feet, then the directors of the offending companies should be held accountable.

In cases where developers/ proprietors have been wound-up or where the Ministry deems them incapable of applying for titles, the duty should then be handled by a vehicle similar to Syarikat Perumahan Negara that handles abandoned housing projects.

It would also be logical to submit strata title applications together with the application for building plan approvals.

Malacca is one state that has adopted this practice, and we are happy to acknowledge its government’s proactive approach. In such cases, the strata titles could be issued together with the Certificate of Fitness for Occupation (CF).

The age-old excuse of insufficient manpower and/or expertise in the various departments is unacceptable. If true, then action to boost human resource requirements must be immediately taken.

Meeting needs and expectations
Generally, the Malaysian way of selling houses is via the “off-the-plan” approach as opposed to the method employed in other countries such as the United States and Australia where houses are built first before being sold.

Our current course has left countless house buyers suffering in its wake. Abandoned developments; slip-shod workmanship; non fulfillment of promised facilities - these are but some problems with the “off-the-plan” method.

This being the case, HBA is of the view that the situation cannot be allowed to continue and that the “build-then-sell” system or a practical variant should be adopted.

The “build-then-sell” concept will also put an end to a host of other problems. These include the non-issuance of CFs and/or strata titles and the reluctance of developers to pay late delivery penalties.

Power of the Tribunal
A major feature of the recently implemented Housing Development Act is the creation of the Housing Tribunal where aggrieved house buyers can lodge claims against developers for amounts not exceeding RM25,000 per claim.

Since it was born less than six months ago, it has become an affordable and speedy alternative.

However, with regards to the finality of the Tribunal, there is word in the market that some of its rulings are being appealed in the courts.

If permitted, then we might see the demise of the Tribunal. The intention of Parliament in setting it up was to give downtrodden and financially spent house buyers a fast, economical way of seeking redress from big, financially strong developers.

For this objective to be achieved, the ruling of the tribunal must be final. Otherwise, there will come a time when financially strong and arrogant developers will appeal all rulings not made in their favour - if for no other reason than to buy time and frustrate complainants.

HBA fully understands and appreciates the vital role played by the housing industry in the nation’s social and economic development. It is for this very reason we have been extremely vocal and critical of the weaknesses prevalent in the industry.

Apart from humanitarian considerations, we believe the industry can only flourish in an environment of orderliness and good governance.

Sustainable growth and development can only come about when the bandits of the industry are weeded out.

In this respect, all industry players have a role to play, from the highest regulatory government body right down to the professional.

Regulatory bodies should exhibit neither fear nor favour. They must be steadfast in their approach and not succumb to temptations along the rugged path. Developers should have some humanitarian feelings and not be cold money-making machines.

Financial institutions should be less risk averse. Loans should be given to developers so that they can build houses. House buyers’ loan should only come in to pay for completed houses. Architects, engineers and all the professionals related to the building industry should be conscience-driven rather than give in to the demands of unscrupulous and greedy paymasters.