The year after
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  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
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
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.