When ignorance isn’t bliss
12/05/08 NST-PROP By G. Umakanthan

So, you’re pretty riled up that your first attempt to have a cosy little place to call your own ended on a bitter note. Perhaps you’re so infuriated that you’re even thinking of asking a lawyer to sue the shirt off the back of the developer that cheated you ….

But before you head in that direction, take a step back and ask yourself: Did you step into the deal clearly knowing the procedures involved in house buying? Or were you so fascinated by the colourful brochures, smooth talking salespeople and raft of incentives that you were “smitten” into signing on the dotted line?

Given the intense competition among developers nowadays, especially in the urban centres of Penang, the Klang Valley and Johor, it’s not unusual for buyers to be assailed with all kinds of “marketing ploys”. Unfortunately, many who were unable to see through the hype and appraise a deal for its fundamental qualities have been left with bitter tastes in their mouths.

In 2006, just one organisation, the National Consumer Complaints Centre (NCCC), received 1,578 complaints against developers. A number of these had to do with grievances such as late delivery, abandoned housing and shoddy workmanship, but a sizeable chunk – 225 cases or 14 per cent – involved misleading advertisements.

NCCC director Darshan Singh said he has come across many cases where developers refused to honour their promised incentives because of “questionable non-compliances” by buyers.

“We also found many misleading housing advertisements that say buyers can own a home for a token sum of, say, just RM1,000,” he said.

“This is actually just the booking fee … which is in direct violation of Section 11(2) of the Housing Development (Control and Licensing) Regulations 1989.”

The section states that no housing developer “shall collect any payment by whatever name called, except as prescribed by the contract of sale”.

In standard sale and purchase agreements, the first payment that can be received is the downpayment amount equivalent to 10 per cent of the purchase price, which is payable only once a developer has obtained the necessary permits and licences.

However, to make things “easier and less burdensome for buyers”, many developers are accepting the token amount, even though they may not be allowed to.

Darshan added that “it is important for buyers to research the background of a developer before committing themselves … search not just the company developing the project, but also its parent as well”.

“Developers often undertake their projects via subsidiary companies whose names might not ring any alarm bells.

“However, by digging deeper, it might be revealed that the subsidiary is controlled by a developer with a tarnished record ... doing a bit of homework could thus avert a disastrous outcome.”

National House Buyers Association (HBA) secretary-general Chang Kim Loong advised first time buyers to “read the advertisements carefully” and if they have any doubts, to either consult people in-the-know or email the HBA at info@hba.org.my

When inspecting the showhouses built at site by developers, he suggested that they be “viewed with a pinch of salt” as many have been “artfully decorated” to make the units more desirable than the actual finished product.

“Ask what will come as standard specifications with the house,” Chang said.

“Like all competitive sports, the development game can be rough on first-timers until they know the ropes.

“The dangle of carrots such as ‘guaranteed rental returns’ or ‘free built-ins’ are lures … that could either lead to genuine good deals or traps.”

If it ends with the latter, buyers still have hope for justice with the Tribunal for House Buyers’ Complaints.

However, the Housing and Local Government Ministry’s statistics said that as of Dec 31 last year, developers that were found liable in 329 cases did not comply with the Tribunal’s decisions.

These have since been referred to the courts – which means more anguish and wasted cost for the aggrieved buyers