Changes to Housing Act favour buyers

Sunday Star 01/12/2002 By Foong Pek Yee and Clarence Chua

PETALING JAYA: Housebuyers can now terminate their sales and purchase agreements and get refunds for their payments from developers under the Housing Developers (Control and Licensing) (Amendment) Act 2002 which takes effect today. 

They only need to prove that they cannot obtain financing and forfeit only 1% of the purchase price to the developers for the termination to take effect. 

Developers must give the refund within 21 days of the termination. 

Previously, buyers who were unable to obtain a loan were obliged to continue with the transaction. 

Housing and Local Government Minister Datuk Seri Ong Ka Ting said in an interview the Act had taken into consideration the welfare and interest of buyers and developers. 

“It is good for the housing industry and country’s economy in the long run,” he said. 

“Honest and responsible developers should not worry over the amendments which in fact will help to uphold the industry’s good name. 

“Developers should help ensure its effective implementation,” he said when responding to a joint statement on the amended Act by his ministry’s legal adviser Shamsulbahri Ibrahim and advocate and solicitor The Sek Hock yesterday. The Act also extends to 21 working days the previous 14-day deadline to pay progressive payments to developers. 

The longer deadline is to provide for a more reasonable time frame for the disbursement of loans by the buyers’ financier. 

Interest in late payment can only be charged by the developer after the expiry of the 21 working days. 

As an added protection to buyers, the developers are not allowed to charge buyers interest on late payment of instalment if the delay is not caused by the latter. 

Generally, the reasons for the delay are attributable to the developer and not the buyers. 

A developer, who declined to be named, admitted that reasons for such a delay were mostly “administrative and technical in nature” and occ-urred during the process of disbursing the payment and the parties involved were the lawyer handling the loans, the banks concerned and the developer. 

A buyer who welcomed the amendment said she had to pay about RM500 in late interest payment because the lawyer for the loans was slow in disbursing a cheque for the progress payment to the developer. 

The lawyer’s reason for sitting on the cheque was that it was a long weekend followed by Christmas and New Year and his office was closed. 

She had to pay interest to the bank which had released the cheque and was charged interest irrespective of whether the cheque had been cashed. 

She also had to pay interest to the developer who had received the cheque after the 14-day deadline. 

Meanwhile, buyers who want to sell their units before completion, would only be subjected to a consent fee of RM500 or 0.5% of the purchase price or whichever is lower, and not other fees. 

Prior to this, developers usually imposed a consent fee or administrative charges of up to 1% to 2% of the sub-sale purchase price before consenting to sub-sales and assignments by buyers.