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Stranded ...
01/12/2003 Malaysian Business-Housing & Property By National House
Buyers Association of Malaysia
What happens when your house is uncompleted and what you
can do about it
When Mohamad Sukran bought a a RM112,00 single-storey house in October 1997 after
scrutinising the show unit at a property launch, he happily thought he had fulfilled his duty as the man of the 'house'. His
wife had just two months earlier given birth to twins.
According to his sale and purchase agreement (SPA), his house should be completed in 24
months, that is, by October 1999. However, to date, the project is only 45% completed, and his letters to the developer give him
no indication as to when the project can be handed over. In the meantime, he is renting a small apartment and paying a monthly
rental of RM800. He now has another child, making the apartment too small for his family.
'Every time I contact the developer's office, they promise to complete the project, but
up till now, nothing has been done, whereas other projects by the developer has been completed with keys handed over, says
Mohamad. 'My request to substitute another house in the completed project was not entertained. Please advise me on how to get
help.'
This is the dark side of housing development. What happened to Mohamad and many other
property buyers is one of the worst nightmares in buying 'off-plan' which is the delivery system in Malaysia on purchase of new
property. Projects are abandoned all over the country.
In all the buyers' predicament we have heard or read about, there is a constant theme:
no communication from the developer or authorities. When the developer reneges, the result is untold aggravation, despair and,
often, financial hardship.
Protection
Under the stipulated SPA (Housing Development (Control & Licensing) Regulations, 1989,
there is no provision for purchasers of abandoned projects except on late-delivery claims. This is no consolation to house buyers
as claiming for late delivery is another legal tussle. A delay of a few months is acceptable and easier to handle by both vendors
and purchasers but there is no legitimate excuse for being years late in delivering a home. House buyers are left at the mercy of
the developers.
Explanation
There are several explanations on this sad situation. First, anyone can call himself a
housing developer and build homes for sale - the required licensing is no test for competency, financial solvency or even
literacy. If the developer is incompetent, there is no one to stop him or make him correct the mistakes made.
Second, many developers are under capitalised. The economic slowdown affects them, as
seen from the frequent excuses given by such errant developers. When legally challenged, they can always file for bankruptcy or
court protection.
Ministry of Housing & Local Government's role in reviving stranded housing projects
From the information retrieved from the Ministry's website (www.kpkt.gov.my/artikel/perumahan/menu.html),
abandoned housing projects are defined as:
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All work at site has ceased for
at least six months or work has yet to completed after the scheduled date
of completion as stated in the SPA;
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The developer admits to his
inability to complete the project; and
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The Ministry feels that the
developer cannot fulfil his obligations as a developer.
After the Ministry has identified the uncompleted or delayed projects, it begins to
gather details on these proejcts before identifying the parties that can revive them. This is usually done with the help of the
original developer, a new developer, the financier of the project or the house buyers' action committee.
Nevertheless, the Ministry has its share of problems in its revival and rehabilitation
efforts, such as:
-
The number of house buyers is
too low;
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Foundation work has not begun
or is still in its infancy stage;
-
The original developer has
wound up his business and the financiers of the projects have up the land
up for auction. In this case, the new developer taking over the projects
has to start the process all over again, including issuing new SPAs;
-
Parties with vested interests
such as the landowner, developer, creditors and buyers often do not want
any negotiations and prefer to settle the matter in court.
What buyers can do
For unfortunate buyers of uncompleted projects from licensed housing developers our
advice is to form an organised group to liaise with the Ministry of Housing & Local Government for action to be taken. We, at HBA,
have assisted numerous groups, and you may visit our website or attend our "Meet the Public Sessions" on Saturdays. However, you
have to be open minded and work hard as an action group to see progress. |
