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
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
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
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
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
“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
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