Acting on housing woes

 04/03/2006 NST Editorial

THE move to raise the ceiling on awards made at the Tribunal for Homebuyers’ Claims from RM25,000 to RM50,000 should be welcomed.

The current cap on claims is in many ways too restrictive because it does not cover all the costly repairs due to shoddy workmanship, or the financial hardships as a result of unreasonable delays in delivering finished homes.

Some may indeed argue that even RM50,000 is too low a cut-off point. Whatever the case may be, there is no doubt that increasing the maximum limit will allow many more aggrieved buyers to seek redress at the tribunal rather than in the civil courts.

At the moment, the tribunal can only hear a claim that is worth more than RM25,000 if both parties agree in writing. Otherwise, the homebuyer has to institute legal proceedings at the Sessions Court. This means hiring lawyers, paying a few thousand ringgit in legal fees, and waiting several years to receive restitution.

Some cases may even get bogged down in legal quagmires with dim prospects for settlement. In contrast, no legal representation is necessary at the hearings before the tribunal — except in cases where complex issues of law may be involved. The fee for filing a claim is only RM10, and disputes are resolved with considerable speed.

The tribunal has been able to settle 90 per cent of the complaints referred to it since its establishment, three years ago. Indeed, the tribunal was set up with the express aim of making it easier, faster and cheaper for homebuyers to claim compensation from developers for substandard work, failure to comply with specifications, or other breaches of the sale and purchase agreement.

The revised ceiling will make it possible for more housebuyers to have access to a dispute resolution mechanism which is fair, simple, inexpensive, and quick.

While the speed in which the tribunal has been disposing cases has been commendable, what has been less impressive is the record of the developers when it comes to paying up. It is worrying to note that more than 220 developers have still not complied with the orders for compensation handed down by the tribunal.

There is a need for the Housing and Local Government Ministry to come down fast and hard on the culprits who still owe the house purchasers. In this context, while the two-year prison term seems stringent enough, the maximum fine of RM5,000 for not adhering to the tribunal’s decision seems a mere slap on the wrist by comparison.

The Housing and Local Government Minister feels that the Housing Development Act — last amended in 2002 — could be improved further. The penalties for holding back compensation is one area that seems in need of "improvement". Since most problems with homes happen within the first few years after construction, there is also a need to extend the period in which a homebuyer can bring a claim to the tribunal.

However, what is most absent in the Act are provisions for a legal remedy to purchasers whose housing projects have been abandoned by developers. It is time to implement the build-and-sell concept because it appears to provide a workable solution to this long-standing billion-ringgit problem.