Ministry can only play the role of mediator in disputes

26/05/2008 The Star

SINCE 1990, only 1% of the 2.3 million units of residential properties in the country had not been completed.

Housing and Local Government Ministry Secretary-General Datuk Ahmad Fuad Ismail ( picture) said another 3% were delivered late.

He said a high delivery rate was achieved as most of the developers in Malaysia were responsible, and also because they were governed under the Housing Development Act 1966.

The law makes it mandatory for developers to submit a progress report every six months, or face a minimum penalty of RM50,000 to a maximum penalty of RM250,000, or three years jail term, or to both.

“Besides going through the report, we also do onsite inspections,” he said. And if the consultant who prepared the report was found to have falsified the details, the architect or engineer concerned would face a RM100,000 penalty or imprisonment for a term not exceeding five years, or to both.

Ahmad Fuad said it was also mandatory for developers to submit a financial report annually, or face a maximum RM250,000 fine.

The Ministry is also empowered to freeze the account of errant developers.

“We have to act fast, because by the time we want to freeze their account, the money would have been taken out from the account. Even the board of directors would have changed.”

Ahmad Fuad advised buyers to do their research before purchasing property.

He said the contract is between the developer and the house buyer, and the Ministry is not a party to the agreement.

“Anyone can be a buyer, sign the sales and purchase agreement (SPA), pay 10%, arrange for a bank loan and own a house. The Ministry is not involved.

“They don’t ask if their (the developers') business is viable or not. Buyers are expected to know what they are doing. If they don’t know, (then) they should ask.

“Buyers come to us and ask, 'What is the Ministry doing?' But our powers are limited (in issues relating to abandoned projects). The Ministry can only play the role of a mediator.

We do not want to frustrate the buyers. We want to facilitate matters so that there is a good outcome for them,” he said.