Housing law needs major revamp
18/03/2006 Published in NST-PROP A Buyer Watch Article by National House Buyers Association

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Widespread changes to the Housing Development (Control & Licensing) Act 1966 are needed to protect housebuyers, says the National House Buyers Association (HBA).

In a statement to Property Times, Chang Kim Loong, the non-governmental organisation's secretary-general, said voluminous recommendations have been forwarded to the Ministry of Housing and Local Government over a number of occasions.

Among the major points raised is the need for a wider definition of the terms "housing accommodation" and "housing development".

"We want these terms expanded to include 'serviced apartments' and 'vacant bungalow plots' offered for sale by developers," said Chang.

"This will prevent developers from circumventing the present law."

Currently, residential projects developed under the guise of "serviced apartments" can deprive unwary buyers of protection under the housing law.

Chang said HBA also wants the paid-up capital of a developer to be increased to "at least 30 per cent of the project cost".

"The paid-up capital for a firm to obtain a licence from the Ministry of Housing and Local Government is now insufficient - a mere RM250,000 and a cash deposit sum of RM200,000," he said.

"The proposed increase should reflect the developer's seriousness and ability to commit to building houses."

Another change the HBA wants is for the application for strata titles to be made together with that for building plan approval, to ensure that buyers who pay up the purchase price are not deprived of their title deeds.

Deeds of Mutual Covenants (DMCs) must also be standardised and regulated for all developers to adopt in order to ensure fair protection to residents.

"This will ensure that there is no uncertainty pertaining to house rules such as renovation deposits, the clearing of debris and refund of deposits'" said Chang.

"As it stands, there are complaints that car-parking bays have not been included in the deal when some purchasers buy apartments, but this only comes to light when the buyers take vacant possession of their units.

"How this has happened is by developers reserving exclusive ownership of the lots, usually via a clause cleverly embedded in the DMC."

On the issuance of Certificates of Fitness for Occupation (CFs), he aid the HBA believe it is time the market adopted the concept delivery of vacant possession together with CFs".

"This is needed because taking vacant possession without CFs is meaningless and detrimental to buyers, since they will not be able to move into their homes but the 18-month defect liability period will start to run down.

Also needed to be issued with CFs, said Chang, are common facilities found in stratified residential projects, such as swimming pools, play-grounds and gyms in order to "prove they are completed and certified fit for use".

"Our recommendations are merely an interim measure, pending the Government's acceptance of our proposed 10:90 concept of housing delivery, and our long-term plan for the industry to adopt the build-then-sell system for housing delivery," h e said.

"When that time comes, more legislation need not be necessary as buyers will know exactly what they are purchasing."

HBA Editor's Note: These recommendation were made on 12.10.2001 vide HBA's Memorandum.