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 04/11/1999 NST

When the number of complaints against housing developers doubled to 1,150 last year, the Housing Ministry said it will introduce a colour-coded demerit system to arrest the problem, the Housing Developers Association said it is setting up a Tribunal on Housing Complaints, while a group of concerned citizens formed the House Buyers Association to act as an industry watchdog.

YONG TIAM KUI reviews the situation.

For many years, house buyers have had no avenue for redress or compensation from errant developers unless they are willing to take them to court - a costly and time consuming process that by no means guarantee a favourable outcome.

Recently, a group of concerned citizens came forward to help protect the rights of housebuyers by forming the House Buyers Association.

Protem committee chairman Datuk Zainuddin Bachik says the association aims to act as an industry watchdog and hopes to work with Housing Ministry, Land Office, local authorities and other agencies to update regulations governing the industry.

He is still awaiting the go-ahead from Registrar of Societies but already has been receiving a deluge of letters from housebuyers and housing associations nationwide with enquiries, complaints and pledges of support.

"We have been getting so many complaints from housebuyers. There are so many abandoned housing projects. People have been living houses for five years and still have no certificate of fitness. Some have complained that developers are not building in accordance to plans approved by local authorities.

"Some buyers have paid up to 75 per cent of the price, but the houses have still not been completed, They have had to service the loans and pay rent."

Complaints about shoddy workmanship have also flooded the association.

"People complain about tilting walls and uneven flooring. Most of the foreign workers who are working in the industry were farmers not artisans. They are good maybe for the estates but not the construction industry.

"I think the Government should screen workers. They should at least be given basic training in an institute run by the HAD."

The ideal, says Zainuddin, would be for developers to be allowed to start selling houses only after they have been completed.

"In Australia, you pay 10 per cent downpayment upfront and you don't pay a cent more until the house is completed.

"Once the house has been completed, the buyers has the option to exercise his right to not go ahead with the purchase if he is not happy with the house. He is refunded the full amount of downpayment without interest.

Zainuddin claims that the committee has been writing to the Housing Ministry to complain about errant developers but had been told that the Ministry has not authority to act against developers.

"They advised us to take legal action against developers. There is no denying that some developers are very good. But the Government should take action against the culprits. Errant developers should be blacklisted and have their licences taken away or they do more harm."

He feels that the Ministry should take logical move of drafting legislation to give it the authority to act against unscrupulous and unethical developers.

"Singapore has a very good set of legislation. So does Hong Kong. We can also look to Britain. The Ministry should look into the problems and come up with watertight legislation to look after the interests of housebuyers.

"I hope they take into account all the suffering that so many house buyers are going through.

"This has been going on for so many years and all those cries of protest have fallen on deaf ears. People are getting very fed-up."

Retired academician Dr Goh Ban Li, meanwhile, feels that there is a need for serious review of all laws and regulations governing the housing industry. He says there are too many of them and adds that something should be done to find out why is such a high degree of non-compliance on the part of developers.

"Goh, who has been doing research on the industry, says problems faced by housebuyers are basically caused by non-compliance on the part of developers and he doesn't understand why they have been able to get away with it for so many years. He says the Housing Ministry and local authorities should use all means at their disposal to enforce compliance.

"I think there are already too many regulations governing the industry. The whole housing industry is very regulated because the Government doesn't trust the developers.

"There has to be a serious of all the laws and regulations governing the housing industry. Is it possible that the standards required are too high, that they cannot be met? If they are not too high, why isn't there compliance? Why can't they be enforced?"

"I don't know the answer to that one. The question I am still asking is how many developers have been punished for going against the law?"

Ultimately, Goh says, he lays the responsibility for making sure that developers comply with the law strictly on the professionals, i.e. the architects, engineers, surveyors and lawyers.

"The Government can't keep an eye on every housing estate. I would place the responsibility on professionals. Developers cannot do anything without the advice of consultants. It is mandatory for them to seek the advice of engineers, architects, surveyors and lawyers.

"They (the professionals) are very handsomely-paid to make sure that things are done right. They have to play that role. They must make sure that all laws and regulations are complied with," Goh said.

Housing Developers Association Malaysia president Datuk Eddy Chen Lok Loi, meanwhile, says HAD is opposed to the Housing Ministry's recently announced colour-coding and demerit system for developers because the association doesn't think it will solve any of the problems faced by house buyers.

The system involves giving developers in good standing a blue coding, developers with bad reputation yellow, first-time developers white, and black-listed developers red. The Ministry devised the system largely in response to the doubling of complaints against the developers to 1,135 last year.

Chen says HDAM has been urging the Housing Ministry to come down hard on errant developers for a very long time but he thinks the demerit system is unjust, too punitive and gives semi-judicial power to whoever makes the decisions.

"A big-time developer who builds 1,000 houses and gets 10 complaints will get blacklisted even though that only represents one per cent of the total number of housing units he has built.

"But a developer who builds 100 housing units and get nine complaints will still be alright even thought that represents nine per cent of total built-up units. Who is going to verify whether the complaints have any merit?"

Chen also complains that once a developer is given demerit points he is stuck with them.

Even people who are sent to jail are cleared after they serve their sentence. But once a developer is given demerit points, it's a journey of no-return. Once a yellow, always a yellow.

Chen is also very unhappy with the fact that first-time developers will be coded white.

"White means they are rookies so it is going to be very difficult for them to sell houses. A developer that gets a white coding may be a subsidiary of a big development firm with a lot of experience in housing. But they will have the task of explaining to buyers that they are not rookies.

In response to the Ministry's move HDAM is now setting up a Housing Complaints Tribunal to deal with complaints against its members.

Chen says the tribunal which will have 10 to 15 members will be totally independent and will include retired developers, retired top government servants familiar with the industry, lawyers, architects, engineers and a consumer representative.

However, Chen adds, that the tribunal has no judicial powers and will only perform the role of referee between housebuyers and developers who must agree beforehand to abide by its decisions.

Chen says HDAM has been asking the Housing Ministry to set up a tribunal with judicial powers for some time and adds that it decided to set up its own tribunal to help solve problems faced by house buyers while the Ministry takes time to mull over the proposal.

"We will certainly look into complaints about our members. We will need to make sure that the complaints are genuine and not emotionally-driven. We will referee between the housebuyers and the developer. Hopefully we can solve the problem in the most efficient way instead of the parties involved having to go to court.."

Chen also claims that the HDAM has on average received complaints for only one per cent of housing units built by its members. He also adds as far as he knows no HDAM members are involved in abandoned housing projects.

He says the association has dealt with a number of complaints from housebuyers about HDAM members in the past and helped find solutions but to date no member has been expelled for breach of ethics.

"If members are found to be errant, we warn them by way of persuasion. If there is a breach of ethics we can expel them from the association."

Chen says HDAM ahas also been urging the Government to make it mandatory for developers to join the association so that developers can begin to self-regulate just like architects, engineers, lawyers and land surveyors. HDAM has some 800 members who are responsible for some 80 per cent of the housing development in the country.

"Once membership is compulsory, we will have a much more disciplined industry. We will be able to expel errant developers and they will have to leave the industry."

Zainuddin says the Government should also resolve the strata title issue which has been hanging over the heads of flat and apartment owners as soon as possible. This is because owners without strata titles will not receive any compensation from insurance companies if anything happens to their homes.

Asked for HDA's view, Chen says the main problem lies with the severe shortage of staff in Land Offices.

"The backlog keeps building and there is no way they can solve the problem unless the land councils hire more staff. We have offered to hire private surveyor to do the surveying and all the proper documentation. All the Land Office will have to do is endorse the document.