The Star 16/12/2002 By Clarence Chua

PETALING JAYA: With the demand for service apartments on the rise, many buyers of such property are unaware that they do not enjoy the protection accorded to purchasers of condominiums, apartments and other non-commercial property under the law.  

National House Buyers Association secretary-general Chang Kim Loong said service apartments were considered commercial property and under the definition of “housing accommodation” in the amended Housing Development Act, it puts them outside the legislative ambit. 

He said a possibility could also arise where developers use the ‘commercial’ loophole to circumvent the stringent requirements of the Act. 

Thus, the only legal recourse against the developer is the contractual agreement between both parties.  

Chang, however, said most buyers were also unaware of the unfavourable clauses that were ‘hidden’ in the sale and purchase agreement for service apartments. 

He said the conditions of the agreements, which were again not regulated by the Act, tended to favour the seller. 

“Unlike condominiums, late payment penalties could sometimes vary from 8% to 12%, contrary to the standard 10% under the Act, and there is no mention as to who should apply for the strata titles. 

“In some cases, the buyers’ right to late delivery penalties may be waived or he may only be entitled to 8% interest, while the developer charges 10% interest for late payments,” he said. 

Using another example, Chang said, payments for new houses were usually made progressively and “upon completion” of a particular stage in a housing development.  

But in some service apartment agreements, it was worded “upon the commencement of work” which meant that purchasers had to pay as soon as the developer starts work, he said. 

Among those caught unaware was Lim Wai Hoong who bought a service apartment three years ago only to find that his Serdang Skyvilla property did not fall under legislative protection until construction was halted a year ago. 

“I didn’t realise it was a commercial property when I bought the apartment. In the brochures it looked like a normal apartment,” he said. 

Responding to the problem, Deputy Housing and Local Government Minister Datuk Peter Chin said a committee had been formed by the Cabinet to look into areas not covered by the Act.