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The year after

29/11/2003 NST-PROP By Salleh Buang

One year is too soon for the ideal state of affairs contemplated by the amendments to the housing laws to be achieved

How time flies. Pretty soon it will be exactly one year after the recently amended Housing Development Act came into force (which, in case you have forgotten, was Dec 1, 2002).

While we grapple with the question to what extent the revamped law has actually changed the housing landscape, purchasers suffered an initial setback in a case (Puncakdana Sdn Bhd v Tribunal for Homebuyer Claims & 50 Ors [2003] 5 AMR 570) handed down by the High Court recently with regard to the jurisdiction of the Tribunal for Homebuyer Claims.

In his decision, handed down on Sept 4, 2003, the trial judge said "there is no clear indication in the Amendment Act for a retrospective application of Part VI which established the Tribunal." Consequently, he held that "the Tribunal has no jurisdiction to hear and adjudicate cases where the sale and purchase agreement was entered before Dec 1, 2002". The Tribunal has since appealed to the Court of Appeal.

This matter is now sub judice because the Court of Appeal has yet to hear the appeal and determine the issue.

One of the stated objectives of the amendments was to ensure a strong housing industry. Only the best and the fittest should be allowed to stay, with the others weeded out.

There was a suggestion that the paid-up capital of a licensed housing developer should at least be RM1 million. When the amendments came, many were disappointed to see that the paid-up capital requirement had in fact remained the same - RM250,000 in the case of a registered company. What the new law requires is that the company should deposit with the Controller of Housing a sum of "not less than RM200,000 in cash or such other form as the Minister may determine". The deposit required of a firm (which previously was RM100,000) was also increased to RM200,000.

A developer asked me a little while ago: "Since the phrase says 'not less than', does this mean that the Controller can ask for a deposit that is more than RM200,00 in any given case if he wants to do so? My answer was: "In theory, yes." Whether in practise he will do so (in the near or distant future) is a matter of speculation.

The revamped law also intends to create and maintain a "clean and competent" housing industry. For that purpose, section 6 has been amended extensively. The existing subsection (1), which had only four paragraphs, had been enlarged with the addition of three more paragraphs.

Under the revamped law, a company applying for a housing developer's license must ensure the following:

(i) no director, manager or secretary of the company had been previously convicted of an offence under the Act and sentenced to a fine exceeding RM10,000 or to imprisonment;

(ii) no director of the company had in the past been "directly concerned in the management of the business of a licensed housing developer which has been wound up";

(iii) none of the company's architect or engineer had his license to practice being revoked by their respective professional bodies.

To sum up, the amendments aim to create a local housing industry that is not only financially strong, but also competent, and managed by people whose honest and integrity are beyond question.

Strengthening and cleaning up the industry alone is not enough. The interest of the purchasers must also be safeguarded. For that purpose, section 7 (which sets out the duties of the developer) has also been revamped with the addition of four more paragraphs.

The ultimate purpose of these new paragraphs is to enable a purchaser gets his keys as well as the Certificate of Fitness and title to the property if not simultaneously to the property if not simultaneously, at least very shortly thereafter. One year is too soon for us to tell whether this pleasant and ideal state of affairs can come true. We have to wait a little longer.

Section 8A is brand new. It gives the purchasers the right to terminate the sale and purchase agreement (SPA) if the developer fails to commence his project within six months of the date of the SPA being signed. There is, however, an important pre-condition. At least 75 per cent of all the purchases must so agree to terminate the SPA and the appropriate notice of their intention must be given to the developer. Unfortunately, the matter does not end there. The developer must first agree to the termination, after which he will then refer the matter to the Housing Minister for his ultimate decision.

Thus, while in principle the right to terminate is good for the purchasers (who will then be able to get back their money and buy their houses from some other developers), the complexity and inevitably delay involved might become a deterrent.

This does not seem to fit in with Datuk Seri Abdullah Ahmad Badawi's recent call to reduce bureaucratic red tape. Why the need to bring it up to the Ministerial level when it could be very well be disposed of at the Controller's desk?

Another new feature under the revamped law is Part IV, which provides for the quasi-police powers of the Housing Ministry's inspectors. These powers (of entry, search and seizure, examine persons, protect informers) are intended to ensure a clean, efficient and responsible housing industry. Over the past years, there has been no media report yet of any action being taken by the authorities under this new Part against any developer.

 

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