Housing Development Accounts must be scrutinised

24/06/2006 NST

I REFER to the Viewpoint column titled "Housing Ministry on the ball" published in NST-Property, May 13, 2006, which detailed the actions and inactions of the Ministry of Housing and Local Government (MHLG) in dealing with abandoned housing projects.

It's true that the ministry has little power to revive abandoned housing projects - it cannot do it on its own, for its role is that of a mere mediator.

Unless all vested parties give their consent, there is nothing much it can do except keeping discussions "on- going".

With many players involved- the developer, landowner, banks and purchasers - it is a difficult task to reach consensus on reviving a project. Despite these shortcomings, MHLG has revived many projects in the past and it should be comended for this.

Having said that, we should also look at what the MHLG has done to prevent housing projects from being abandoned.

The Housing Development (Control and licensing) Act 1966 and its Regulations have been amended many times to protect house buyers.

For example, the Housing Development Account Regulations 1991 was created to require developers to open a bank account for every project they undertake. Progress payments collected must be used to complete the projects and banks should ensure that developers do not manipulate the account for other purposes.

In my view, these regulations represent the check- and-balance mechanisms needed to ensure that housing projects are not easily abandoned. If strictly enforced, there is little chance a project will end up "abandoned".

Yet, MHLG's records show that many projects have been forsaken since the regulation came into force. Why? Is it because developers are not complying with the rules?

The ministry has not disclosed any case of such non-compliance; neither has it said any developer has been charged with non-compliance and therefore, we don't know whether the MHLG is strictly enforcing the rules.

In order for the ministry to issue a developer with the sales and advertising permit required before initiating a project launch, proof must first be shown that it has opened a Housing Development Account. However, who ensures that the developer complies strictly with the Housing Development Account Regulations after getting the permit? In this respect, I presume MHLG is empowered, under the Housing Development Act, to check the accounts of the developer.

If investigations show any irregularities, the ministry can and should enlist the help of Bank Negara to further probe the banks, and where necessary, bring wrongdoers to task.

S. Kartigesu
Butterworth