K signed a sales and purchase (S&P) agreement for a house in 1991 which was completed in 1992. Only a temporary certificate of fitness (CF) was issued by the local authority as the developer has not tackled several outstanding issues. The temporary CF expired in 1993, but K has yet to get the full one.

L signed his S&P agreement in March 1997 and was promised that the project would be completed in two years. Until September this year, it was only 65 per cent completed. L later told that delivery would be made on March next year. Work had apparently delayed as the developer was uncertain about the water source for the housing scheme.

S bought her apartment when she was 22. Six years later, the 28 year old has yet to move into her unit in the 138 mixed light industrial shoplots and apartment blocks. Although completed in 1996, no CF has been issued for the project. Shoddy workmanship and low water pressure makes things difficult for those who moved in.

Only the slight bending of rules by the local authority saw some 144 condominium owners able to lay their hands on their CFs. Even then, they had waited for seven years for the developers to resolved the matter. The latter had failed to comply with land conversion requirements from agricultural to commercial. There was also no proper access to the condominiums.

Buyers are always made to suffer from a lack of professionalism in the conduct of some developers.

Shoddy workmanship, disregard for after-sales service, neglect of local authorities' requirements, lackadaisical attitude in following approved plans and other grouses are quite often thrown in the wake of developers.

As in other industries, there are black sheep in the flock and these are, in most instances, the root cause of the problems afflicted on the buyers.

The boom in housing development saw developers, many without real experience in the industry, jumping on the bandwagon and joining the fray. A company only needs to put in RM250.000 in paid-up capital to qualify as a developer.

Tempting especially for an industry reputed to bring in an average profit margin of between 25 and 40 per cent.
Sri Hartamas Berhad managing director Wong Hock Seng said this means that the business will be highly geared, especially if you only put in the required paid-up capital.

"Imagine having to get financing from the start of a project. The meagre sum of RM250.000 could well go into downpayment for a piece of land for the development," he said.

This would also mean that the risks involved with the business are not shouldered by the developer but the buyers and end financiers.
According to Wong, the popular way of financing a project is through the sales generated, which then goes to cover for the costs of the on-going phases of the development.

"That is only if everything goes well great sales, no delays in shipment of materials, contractors are efficient and so on. But what happens when there is a slack somewhere?"

The cost structure of a project is in such a way that trouble will be met by developers without any contingency funding in the later phases of the construction.

Making it mandatory for developers to cater for a minimum of 10 per cent of the construction cost of each phase in the development would force companies to be financially strong.

Wong said financial strength does not necessarily mean that the developer would need to come up with 100 per cent of the project's funds.

'What it does mean is that you can cover up if your sales are slower or some changes are made midway."

Changes? Wong noted on one occasion where Sri Hartamas had to make some rectifications in its housing development plans when sewerage management went to Indah Water Konsortium.

"The change saw a new set of requirements which does not meet the original plans. So we had to make some changes."

Infrastructural works, as mentioned by Wong, is one of the reasons why there are cases of delays in the issuance of CFs as it involves the developer with having to put some funding upfront.

"If the company is not financially strong, they will put off such construction and concentrate instead on building houses and apartments as these generate sales."

The unmitigated exercise of discretionary decision is another bone of contention among developers and homeowners.

A low density housing area can suddenly see the approval of apartments or low-cost flats which increases the ratio of people to area and reduces the value of neighbouring properties in one stroke.

Wong was spot on when he said discretionary decisions meant compromises.

"What should happen instead is the application of any required changes on a global basis. That is, change the rules and then enforce them strictly."

He welcomes Housing and Local Government Minister Datuk Seri Ong Ka Ting's assertion that local authorities should not pegged additional requirements for CF issuance.

"Admittedly, developers' defaults account for perhaps most of the delay, but sudden changes imposed on developers by local authorities is also a factor."