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A season of hope ...
14/01/2006 NST-PROP By Salleh Buang

High on my wish list for 2006 is an end to the perennial problem of abandoned housing. The reason is that while I am an optimist by nature, past events have made me realise that the build-then-sell concept becoming reality stands a very slim chance.

The realist in me says that for as long as we stick to our old practice of selling, then building abandoned projects will continue to feature in our landscape in the years ahead. Despite being mooted by none other than Prime Minister Datuk Seri Abdullah Ahmad Badawi early last year, I have no confidence at all that build-then-sell will gain momentum - or get past Cabinet to become a brand new Executive policy.

It is not that the National House Buyers Association (HBA) and other NGOs have not done their work. They have, and I believe they still are, working hard to get rid of the sell-then-build mode of housing delivery. Or, at the very least, trying to get it modified to some extent to strike a fair balance between developers and purchasers.

However, the housing industry’s lobby in the corridors of power is still a force to be reckoned with and so for the HBA and the others, the uphill battle continues.

Will the status quo remain in 2006 or will it change? While my heart hopes so, my head tells me otherwise. While you ponder your own response, let us look at some official statistics provided by the Housing and Local Government Ministry.

In 2004 alone (the figures for 2005 have not been posted yet) the ministry issued a total of 1,070 new housing developers’ licences and renewed another 354. During the last 15 years, from 1990 to 2004, a total of 12,076 developers’ licences were issued, while another 5,639 licences were renewed.

In the area of abandoned schemes, the ministry said in 2004 alone, 227 projects were neglected, affecting 75,356 housing units. Unfortunately, the data does not specify the types of houses, their price range and so on.

What we are told is that these abandoned houses are in every State - from up north in Perlis, where three projects were abandoned, to the south in Johor, which has 19 projects abandoned. As expected, Selangor accounted for the highest number, with 55! Yes, the country’s only developed State has the dubious honour of having the highest number of rogue developers.

Second comes Penang (24 projects), followed closely by Negeri Sembilan (22), Pahang (21) and Perak (19).

The financial cost of these 227 abandoned projects is RM7.03 billion.

The Housing Ministry has repeatedly told house purchasers that not every abandoned housing project can be rehabilitated. Abandoned projects are generally divided into two categories - the first is described as those with the “potential” of being rehabilitated, while the second is said to be projects “beyond hope”.

According to the ministry’s data, the number of abandoned housing projects “berpotensi dipulihkan” (with potential of being rehabilitated) covering the 15 years between 1990 and 2004 is 1,412.

Despite this volume, the ministry said the actual number of abandoned housing projects successfully rehabilitated, complete with issuance of Certificates of Fitness (CFs) or temporary CFs, during the same period is 3,565.

The only explanation for the discrepancy in these annual figures is that actual rehabilitation work in any given year must also take into account the cumulative number of projects abandoned prior to 1990.

Statistics, though helpful in our survey, cannot reveal the agony and tears of those who have suffered at the hands of rogue developers. Last month, a media report told about the sad tale of 47 house buyers of Taman Kencana Phase three near Ampang in Selangor.

These people had been waiting for more than 10 years for their dream houses to be completed. They signed their Sale and Purchase Agreements (SPA) with the developer in 1993, with the view of occupying their units by 1995. They did not. In 2000, the developer folded up and the Official Receiver took over.

What is regretful, according to one of the affected purchasers Husin Abdul Ghani, is that despite having taken over the affairs of the developer some five years ago, the Official Receiver has not given the purchasers any feedback on the status of the project.

I discussed this matter with a senior lawyer, asking him about the seemingly indifferent attitude of the Official Receiver to the plight of the purchasers. He is of the opinion that the real problem is that the receiver - a Government official - does not have any clue as to the steps he should take to resolve the problem.

Obviously, that officer needs an urgent refresher course in housing law, an area in which he apparently lacks. A real tragedy indeed - if my friend’s assumption is correct.

The Ampang case is not the only story of a public agency’s inability to help purchasers victimised by rogue developers. Another story I came across in August 2004 concerns the Tribunal for Homebuyer Claims, which was established when the Housing Developers Act was revamped in 2001.

In the report published by a leading Malay newspaper, a tribunal spokesman said the panel “is in no position to give any help or provide any legal remedy” to purchasers whose housing projects have been abandoned by developers.

Such purchasers cannot file their claims with the tribunal. Their only remedy, the spokesman said, would be to report the matter to the ministry’s Enforcement Division, which would then initiate the necessary resolution.

This response came in the tribunal’s reply to a query raised by one of the purchasers of the Lembah Beringin housing project, undertaken by a subsidiary of the Land & General Group of Companies. The project began in 1997 but has since been abandoned.

As you peer ahead into 2006, the question would be, “So, what else is new?”

You buy a house from a developer, persuaded by claims published in a glossy, illustrated brochure. Many years later, after spending a lot of money, the project is abandoned. Bankruptcy had caused the developer to fold up, or simply disappear.

You go to the Official Receiver for help, but you do not get any. You go to the housing tribunal, but you are told that under the law, it is unable to help. So you go to the Housing Ministry, which says that your housing project has “no potential” of being rehabilitated!

You planned to buy a dream home, but you ended up with a big debt and bigger heartache.

The only thing left for you to do is get together with the other distressed and angry purchasers and stage a demonstration in public, putting pressure on the developer (if it is still around) to do something. And, pray that the developer will respond favourably.

The last thing you will expect is a RM50 million defamation suit filed against you by the developer. But that is what happened in Bukit Mertajam in December 2005. However, this is another story.

If this collection of tragic tales does not convince you of the need for the build-then-sell system of housing delivery, then I do not know what else will ... .

Salleh Buang is senior advisor of a company specialising in competitive intelligence. He is also active in training and public speaking and can be reached at


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