Enforcement remains the key
NST 03/01/2007

THE National House Buyers Association (HBA) lauds Minister of Housing and Local Government Datuk Seri Ong Ka Ting for boldly putting in place amendments to housing legislation, reported in "Three Bills a boon for home buyers" (NST, Dec 25). We are thankful to the minister for his sensitivity to the plight of house buyers and his continuing search for remedies and adoption of pre-emptive measures, knowing the state of affairs of the housing industry.

Having said that, we would also like to express some of our concerns. We have repeatedly stated that any law is only as effective as its degree of enforcement. To enact all these Acts in Parliament and to sit back and expect the industry players to tow the line whereby house buyers' rights and interests are protected, is a naive dream.

The ministry should now back it up by serious enforcement. Stricter enforcement and custodial sentences against errant developers will help clean up the industry.

But has the "cure-all" formula for the consumer finally arrived?

For what it was worth, the original Housing Development Act was brought into existence in 1966, and amended several times including the 2006 amendments.

But look at the problems house buyers still face.

The crux of the problem lies in the system of delivery, ie. the sell-then-build system. Buyers are totally exposed to the business risks of developers and left at their mercy. This is the key reason why the government has to enact laws in its attempt to "protect" house buyers.

Yet, looking at the number of abandoned projects and the number of house buyers who are suffering various degrees of financial hardship, we surmise that no amount of legislation would totally eradicate the problems cased by wayward developers.

When a housing project fails, the buyers are in a fix. Unfortunately, no amount of legislation can guarantee the success of any  housing project; or, for that matter, any business venture. And since the success or failure of any housing project cannot be guaranteed by any party, it is only fair for the people to expect the government to institute a system that totally, or to a large extent, insulates house buyers from such business risks and uncertainties.

One such system is the Build-then-Sell variant, the so called 10-90 system.

In June last year, the deputy prime minister announced that the 10-90 mode of house delivery would be allowed to co-exist with the long-practised sell-then-build mode. He even announced the various incentives that the government was offering to housing developers who would adopt the 10-90 mode.

Nevertheless, it still remains an option, and if industry players are not prepared to reform, then there is nothing the government can do under the present legislation.

Soon the various mechanics to facilitate the 10-90 mode of house buying and selling will be put in place by the Ministry of Housing. It will be interesting to see if the builders are prepared to accept the incentives and to adopt the 10-90 mode of delivery, now that they are given a choice, with incentives.

The HBA has even suggested to the government to offer those participating developers more incentives in the form of tax structures, rebates and easy foreign labour recruitment. We hope this will be the beginning of a road map to compel developer to adopt this system mandatorily with a long-term view towards an absolute build-then-sell mode.

Brig-Gen (R) Datuk Goh Seng Toh
Vice-President, National House Buyers Association