Blind to victims

15/04/2006 Published in NST-PROP A Buyer Watch Article by National House Buyers Association

Related Articles:
Cost of revival

The buck stops here

Even with all the supposed protection embodied in the Housing Development (Control & Licensing) Act, hundreds of thousands of house buyers continue to grapple with problems such as shoddy workmanship, late delivery, deviation from approved building plans and non-issuance of title deeds.

To find the root of all these issues, and more, we only have to look at the current “Sell-then-Build” (STB) mode of housing delivery where developers are allowed to collect money upfront even before starting on their projects. However, these setbacks pale in comparison with the devastating effects of housing projects that are abandoned.

Over and above the derailment of their plans to own a home, they have to continue paying for the housing loan (plus interest), as well as rent for a house to live in.

Such a scenario is downright unacceptable – how can they be expected to simply shrug their shoulders and accept their predicament as a bad buy, or as “fate”?

The average working person who buys a house does so in anticipation of owning one of the most precious investments he’ll ever make. He doesn’t do so thinking that one day, he might be involved in some form of litigation, or forced to approach the Tribunal for Homebuyers Claims to get his legitimate rights.

It should not be forgotten that for every buyer involved in a problematic project, there are three or more family members or dependants who will also suffer the consequences. The Government of the day, if it is at all caring, must surely be sensitive to the sufferings of victims of abandoned housing projects.

More than just monetary loss

Their loss is more than just financial, and is far worse than what may be reported in the media. Buyer after buyer has revealed to us in the HBA how they have not just been financially ruined, but also suffer on the family, emotional and health fronts.

Clearly, this is untenable. How can a country that can develop world-class infrastructure still not be able to overcome a major consumer and industry problem, allowing it instead to fester?

Abandoned housing projects should be at the foremost of the Government’s concern. Is there anywhere else in the civilised world where one pays for a house but never gets to live in it?

Even the police

Stretched out across Malaysia, from Kuantan in Pahang to Mersing and Segamat in Johor and in Kinarut, Sabah, are 12 incomplete police projects, mostly houses. They lie in shambles, some without electricity and plumbing, some without roofs and some with just a mass of foundation columns.

They were to have been RM500 million worth of houses where 2,670 police officers and men could live in. However, as things have turned out, they are now just eyesores to those living near the projects and sources of embarrassment to a Government pursuing a 21st Century developed nation dream.

If even the police can face such problems, what hope does the ordinary buyer have in avoiding the ills that can come about with the STB system? In other words, if irresponsible developers or contractors can cheat the Government of Malaysia, what protection can the ordinary buyer hope for?

Figures tell

In 2004 alone, 227 housing projects were abandoned in all the States of Peninsular Malaysia, involving some 75,356 houses worth RM7 billion. Selangor topped the list, with its band of rogue developers abandoning 55 projects, followed by Penang (24 projects), Negeri Sembilan (22) and Perak and Johor (19 each).

Two years earlier in 2002, though, the Ministry of Housing and Local Government said there were 544 abandoned projects involving 125,646 units and 80,070 victims. Elaborating, it said the total value of the projects was a whopping RM9,496,675,000!

The contrast between the two sets of data has led us at the HBA to feel that the present-day figures have been “toned down”. Is it believable that 317 abandoned housing projects can be revived in just two years?

Recently, the Selangor Government revealed that the number of abandoned projects in the State increased to 61, affecting 18,000 house buyers. A total of 17,512 buyers were affected when Selangor was faced with 55 abandoned projects in 2004 – so, does this mean that just 488 buyers were affected by the six freshly abandoned projects? The numbers just do not add up!

The figures also do not include projects undertaken by cooperative societies and State Agencies as they were governed by the Housing Development Act until the 2002 amendments came into force.

Simply put, despite the numerous amendments to the Act, the last being on Dec 1, 2002, the abandonment of housing projects continues to be a major problem.

Conclusion

Prime Minister Datuk Seri Abdullah Ahmad Badawi gave RM2 billion to Syarikat Perumahan Negara Bhd (SPNB) last year to revive abandoned housing projects.

Should taxpayers continue to shoulder the burden of the defaulting developers? Should such developers be allowed to continue to do business under a different name?

Will the Government ever work to end the misery of victims of abandoned housing projects?

Why should house buyers take all the risk and bear the brunt of the pain and suffering caused by the current method of housing delivery?

The focus should be clear – the prevention of projects from abandonment. The only way to achieve this is to adopt a “pay for a completed property” system. This is far better than attempting to plug up the shortcomings in the law.

Editor’s Note:
In the Government’s assessment of the Build-Then-Sell (BTS) method of housing delivery as a means to prevent future buyers from facing grief caused by project abandonment, Housing and Local Government Minister Datuk Seri Ong Ka Ting on March 30 said it must not disrupt the availability of affordable homes.

Having read all the documents submitted by the various parties on the BTS method, he said, the Government would also pay attention to two other factors: Better protection for house buyers; and a guarantee that the housing industry would not be hampered by a lack of capital or financing difficulties.

Related Article: Cost of revival