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The sad tale of Abu Seman

12/05/2007 NST-PROP Land Matters by Salleh Buang


High time a lop-sided law that continues to protect rogue developers is rectified


Twenty years ago, Abu Seman Saad embarked on a journey to realise a dream. It may not seem like a very big dream to some, but for the KTM Bhd worker, owning a single-storey home in Taman Kotawira in Taiping, Perak, was nirvana.


Today, that dream has become a nightmare. Abu Seman's hope of having a life-long investment that his children and grandchildren could inherit has become another statistic in the abandoned housing list and a debt that is slowly but surely choking him.


Now 69, Abu Seman's financier is still deducting RM157.74 every month from his pension to settle the RM29,884 loan he took for the house he now knows he will never occupy.


That amount may have been affordable when he began repaying the Finance Ministry's Housing Loans Division in 1988, but since his retirement in 1993, it has been draining. With a pension of RM300 a month, it only allows him to get by on a little more than RM140. And it's going to be like that until 2011 - when he's 73 and would have settled the debt.


Without a home to call his own, the pensioner has no choice but to live with one of his children in Machang Bubok, on mainland Penang.


Abu Seman's story won't be the last about how a developer has brought grief to a buyer. For as long as the Sell-Then-Build (STB) system of housing delivery is allowed to continue; for as long as consumers are at the mercy of developer's whims, more abandoned schemes will appear around the country, and thousands more will experience Seman's fate.


But because he is just a 'little person', chances are his suffering won't raise an eyebrow in the corridors of power.


Would it be any different were he a foreigner and not among the 'little people"?


Some weeks ago, I wrote about the plight of 95 Singaporeans who bought pricey properties in Johor Baru. Many of them were retirees who didn't need bank loans to pay for their units in Taman Permata.


Unfortunately, their developer, Focus Development Sdn Bhd, went bust in 2000 leading to the auctioning of the entire housing project by the bridging financier. So the short answer to my question is "No". It doesn't matter if a buyer is local or foreign; poor or rich - irresponsible developers will strike whoever, whenever.


And that means other powerful foreign investors who want to take advantage of our liberalised rules on residential property purchases and the freeze on Real Property Gains Tax payment, could also become victims.


I have been asked the bad luck of these 95 Singaporeans would have an adverse impact on the future of our country's property market, especially in south Johor's Iskandar Development Region.


I'm in no position to answer this. However, I can say that the only guarantee buyers have that they won't be left in a lurch is if they opt for a completed property - one delivered the Build-Then-Sell (BTS) way.


Even the government's recently introduces 10:90 scheme cannot guarantee that a project will be completed. After all, it isn't a BTS method - it's only a payment system where buyers can mitigate risk by placing a 10 per cent downpayment when signing for a unit and pay the balance once it has been completed.


Besides BTS, another safe scheme is the Home Builders Warranty Insurance that has been implemented in Australia and New Zealand (surf to for more information).


Another way the government can help people such as Abu Seman and the 95 Singaporeans is by scrapping the existing law that imposes a limit on the amount of damages buyers can recover from developers.


I have long felt that this piece of legislation restricting a developer's liability to just 10 per cent of a property's purchase price (as outlined the Housing Developers Regulations, 1989) has done great injustice to buyers.


The authorities should remove it and give buyers back their right to sue defaulting developers for losses naturally arising, which has for long been enshrined in Section 74 of the Contracts Act, 1950.


Little people such as Abu Seman need our help.


For far too long, the housing law has titled in favour of developers and made a mockery of the primary objective of the Housing Development (Control and Licensing) Act. Which, in case we've forgotten the words of former Lord President Tun Suffian Hashim, is "to protect house purchasers".


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