CFs must prevail

02/04/2005 Published in NST-PROP A Buyer Watch Article by National House Buyers Association

TWO distinct schools of thought have emerged since Prime Minister Datuk Seri Abdullah Ahmad Badawi made the call for Certificates of Fitness for Occupation (CFs) for completed houses be issued by the professional consultants working on these projects instead of by local councils, as is currently the case.

As a background, from December this year, as Housing and Local Government Minister Datuk Seri Ong Ka Ting recently announced, the CFs issued by local councils will be replaced by Certificates of Completion and Compliance (CCC), issued by a housing project's consultants.

The Prime Minister explained that his proposal is aimed at putting in place a system of governance that is more responsive to people's needs and is a step towards national integrity. After all, honour, responsibility, accountability and leadership are the hallmarks of professionalism.

The consultants, namely architects and engineers, have lauded the move, saying it is a bold step that will save time, cut red tape and improve the public delivery system.

However, on the flipside, we at the National House Buyers' Association (HBA) maintain our opinion that allowing a project's consultants to certify the fitness of the structures would be self-destructive and in fact, lead to more inferior quality buildings. As these consultants are in fact agents of a developer, whose priority has long been profit first, how independent can they be?

There are other reasons why we doubt that self-certification is a step in the right direction. Among them are:

Mutual trust

Currently, local authorities are responsible for enforcing the Uniform Building By-Laws (UBBL). While many developers comply with the law because it is the right thing to do, not many make an effort to
understand their legal obligations.

Recalcitrant developers are influenced by the notion that overburdened civil servants and lazy law enforcers will not catch them flouting the law, the severity of the penalties notwithstanding. They are even willing to take the chance should they be cited, they would not be successfully prosecuted.

Conflict of interest

There is a very real possibility that there could be conflict between the objectives of a developer and the declaration of its architect.

Because of the contractual nature of their relationship, the architect can be "influenced" to comply with the developer's demands, by way of a threat of damage to his professional reputation or the absence of  future work opportunities. The architect, after all, is just another agent of the developer.

Punishment after the deed is done, if it comes, will not alleviate the problem. Effective monitoring and enforcement at the worksite has to be carried out if false declarations are to be detected and those
responsible, punished.

The cost of false declarations will be high on house buyers, including:

• Delay in completion of their units if repair and remedial works need be done;

• The actual cost of the repair;

•  Legal and other costs in the run-up to holding the professional concerned accountable;

• A decline in the value of the building; and

• Physical and financial exhaustion as most buyers do not have the stamina or resources to seek claims and compensation in a court of law.

The Architects Act 1967 and the Architects Rules 1967 are not designed to protect house buyers but to deregister architects and bar them from practising in the event of professional misconduct. Therefore, they wouldn't help house buyers suffering the consequences of premature certification, non-adherence to or compliance with approved plans, shoddy workmanship and substandard finishing.

Aggrieved buyers wanting redress from wayward architects can only take them to court, but they must be prepared to pay the legal fees and costs.

Public interest

Where there is an element of bias, the Government cannot, as a matter of public interest, allow private sector interests to rule. Local authorities set the conditions for development approvals and are therefore responsible for the enforcement of the conditions.

This is why, we maintain, local authorities should retain responsibility for enforcing the UBBL and the issuance of CFs, since they are in the position to monitor compliance from the moment building plans
receive their approval.

Check-and-balance

Regulations work best when there are effective monitoring and enforcement procedures. The Government itself should deal with problems such as inefficiency, delays and corruption from within its departments.

It has already established "one-stop centres" to facilitate approvals from the various agencies and this set-up is also in force at the local authority level. The UBBL has been amended to include a "14-day rule" to ensure local authorities approve CFs within that period, failing which the CF application is "deemed to be approved". The procedure for issuing CFs was designed to ensure that housing units are completed according to the specifications provided in the building plans that were submitted for approval beforehand.

However, by removing this last tier of check-and balance, errant developers and professionals will have free rein to act in their own interest as they will be empowered to certify a building fit for occupation. Having promised the people a better public delivery system, should the Government now take a step back and pass this task to others?

Enough complaints have been filed with the Ministry of Housing and Local Government over the years to give it ample grounds against surrendering the power to certify housing as fit for occupation to the
agents of a developer.

Unanswered questions

At a public forum HBA attended in Kuala Lumpur late last year (Oct 14) at the invitation of the Housing Ministry, we raised our concerns about self-certification and made several recommendations to alleviate the problems that industry professionals face.

About three weeks prior on Sept 22, we lodged six complaints against certain architects and engineers for making questionable declarations, ranging from premature and incorrect certification to issuance of a
certificate of "partial" vacant possession.

In one instance, a "conditional certification of practical completion" was issued, while in another, documentary proof (called Form E) that an application for CF was lodged and accepted by a Municipal council was found to have been falsified!

We followed up on these issues raised at the forum with an official letter to the Housing Ministry on Oct 20, Among the questions we asked were:

1. Does the move for selfcertification mean the 14-day rule put in place for CF issuance is not working? If not, why? Is anything being done to make it workable?

2. Were the views of local councils sought? If not, why? After all, the local councils often bear the brunt of complaints from house buyersbecause developers tend to shift all blame to them.

3. Is there any feedback on HBA's specific complaints against the six architects and engineers and have these cases been investigated?

4. Is the Ministry aware that self-certification for CF is not working, either in New York or in many cities of the United Kingdom? Have studies on the reasons for their failures been made?

5. On-site architects and engineers have informed HBA that local councils do not exercise their "we can move in anytime to inspect" powers. There is even accusation that local councils "hardly do any
   inspection of construction in progress" or any form of enforcement. Is there truth in such allegations?

Unfortunately, we have not received answers to many of our queries. However, in a letter dated Feb 15 this year, the Ministry informed us that it is investigating the six reports we made against wayward
professionals.

Enforce to the fullest

We say the status quo must remain. Local councils should retain responsibility for the issuance of CFs and enforce the 14-day rule to the fullest. They are closest to what is happening in the building industry,
from the day approval for a housing project is granted, and are in the best position to ensure compliance with all conditions.

The pitfalls faced by consumers in buying a product that is just a plan - as our sell-then-build system of housing delivery provides for - have long been acknowledged by many, even the market players.
House buyers deserve a better system of protection for their hard-earned money, as their fears are real. The welfare and safety of the majority of house buyers should not be sacrificed for the sake of
convenience, for this would only serve to work in the interests of a minority that will stand to gain even more, to the detriment of society at large. No system can function without check-and-balance in place.

Recommendations

As both unreasonable delays by local authorities and the issuance of CCCs by project professionals are unacceptable, we recommend that the Government look into ways to improve the delivery system.
Among the steps that can be taken are:

• Compulsory monitoring of projects from building approval to completion;

• Ensure transparency: State Governments and local councils should provide information on the Internet on all housing projects, from the time plans are approved to the issue of CFs;

• Employ qualified professionals, beef up diligent staff in local councils and get rid of the corrupt; and

• Ensure that the 14-day rule is strictly adhered to.

The National House Buyers Association is a non-profit, non-governmental, nonpolitical organisation manned by volunteers. Check out its website at: www.hba.org.my or e-mail to: info@hba.org.my