HOUSE BUYERS FORUM:
CONSUMER EMPOWERMENT
Presented by President of National House Buyers Association (HBA),
Dato’ Hj Zainuddin bin Hj Bachik
at the National Housing & Property Summit
“Revitalising the Property Section as a Key Engine of Growth”
27 & 28 March, 2003, Mutiara Hotel Kuala Lumpur
A. Introduction
Mr. Chairman Sir, Learned Audience, the Academicians, Ladies & Gentlemen,
the Organizer;
Thank you very much for inviting HBA to this forum.
HBA was setup in 1999 by a group of aggrieved house buyers and is
officially registered under the Society Act. HBA is a voluntary,
non-profit, non-political, non-governmental organization manned by
volunteer members. Our objective is to strive for the rights and interests
of other house buyers.
In this august assembly of people who are experts in their own field of
profession in the housing industry, HBA humbly seeks your patience to
expound our views on the unsatisfactory state of affairs in the industry
as shown from first hand experience and the experiences of the numerous
house buyers who have lodged complaints with us.
My talk today would dwell on three (3) important issues that require the
prompt attention of industry players and the relevant authorities to put
things right before they get out of hand.
1. What House buyers expect from developers.
Problems of house buyers due to lack of enforcement of the Act
The history of large scale housing for the public dates back to the early
days of independence when there was an increasing demand from the fast
growing population. Hence it was not surprising that in an environment of
lack of regulatory institution some developers even build houses on
agricultural land. The Housing Developer (Control and Licensing) Act was
enacted in 1966 with the objective of instilling some orderliness into the
fast growing housing industry. That was 37 years ago. What is surprising
is that today, we still come across similar cases.
We question as to how and why such shocking phenomena can still exist
today.
Was it due to the blatant disregard for land usage as defined in the Land
Code?
Was it due to fraudulent omission to enforce the Act? Your guess is as
good as mine.
Whatever reasons there may be, there is no excuse for not complying
strictly with the laws in order to contain deceitful and dishonest
operations.
Legislations would be a mockery unless they serve the very purpose for
which they were intended and prosecution must impose penalties
commensurate with the degree of offence committed.
HBA is in full praise of the call made by YAB the Prime Minister that
developers who blatantly ignore the laws’ terms and conditions of
development should be prosecuted and put behind bars.
Local authorities that do not exercise their responsibilities to monitor
and supervise projects in their areas of jurisdiction and to bring
offenders to book should likewise suffer the same fate.
The problem of non-issuance of strata titles remains the major complaint
among house buyers. For the second year running it tops the list of
complaints both in terms of percentage and absolute numbers. And the trend
is escalating. Yet we see no serious or concerted effort being taken by
the authorities to curb this disturbing trend. In fact, we anticipate that
a situation will be reached when the number becomes so great that it will
be beyond control and unmanageable. At this stage it will be too late to
mend.
HBA would like to suggest the following action plan.
For those errant developers who continue to ignore the law that require
them to apply for strata titles, the Ministry of Land and Cooperative
Development or its appropriate arm should prosecute them for such
breaches.
If they continue to drag their feet, then the directors of the offending
companies should be held accountable.
In cases where the developer/proprietor have been wound up or where the
Ministry deemed them incapable to apply for the titles, such a requirement
should then be handled by a vehicle similar to the Syarikat Perumahan
Negara which handles abandoned housing projects.
It would also be logical if strata title applications are submitted
simultaneously when the application for building plan approvals are made.
Here we are glad to mention that the Malacca state government had taken
the lead in such a practice. In such cases the strata titles could be
issued together with the CFO.
The legendary excuse of lack of manpower and/or expertise in the various
departments is unacceptable. This is a lame excuse and appropriate
measures must be taken to remedy the situation.
2. Meeting the needs and expectations of House buyers.
In Malaysia the trend in the housing industry is selling houses
“off-the-plan” .coupled with glossy and attractive sales brochures as
opposed to those in other countries such as the USA, Australia and some
others where houses are built first before they are sold to the intending
buyers.
This current practice has resulted in a trail of havoc suffered by
countless house buyers when the dream houses that they had purchased
remained illusive dreams when the developers abandoned the construction.
In the meanwhile they continue to rent houses to house their loved ones.
Worst still, most of them would have spent all their life savings. They
are further compelled to continue servicing the interests on the loans
that they had taken. This is the situation brought about by the
“Buying-off-the-Plan” system. HBA is of the view that the situation cannot
be allowed to continue. Clearly the “Build then Sell” system should be
adopted so that such kind of misery would not burden the house buyers.
The Built then Sell concept involve the shifting of the risk factors from
the buyers to the developers and the financial institutions. Presently,
house buyers carry a large proportion of the business risks involved. They
start paying even though the houses that they have purchased are nowhere
near completion. They continue paying progressive payments until such time
when the houses are completed. If for whatever reason the construction of
the houses are disrupted or abandoned, they are the ones who bear the
brunt. House buyers should not carry the risks because they are not
business proprietors like the developers and the financial institutions.
We would like to see a situation where financial institutions fund the
developers to build houses. When the houses are completed, then the
financial institutions finance the buyers to pay for the completed houses.
The Build then Sell concept will also put an end to a host of other lesser
but nevertheless serious problems faced by house buyers. These include
shoddy workmanship, non-issue of CFOs, non-issue of strata titles and the
reluctance of developers to pay late delivery penalties (LAD). It will
also compel developers to build quality homes commensurate with their
prices and not resort to cost-cutting measures using sub-standard material
and employment of cheap unskilled labour force. Presently errant
developers are fully aware and promptly exploit the fact that house buyers
do not have a way out without incurring heavy losses.
Some quarters have been calling the era before the revamp of the Housing
Development Act a situation of “Buyers Beware or Caveat Emptor” and the
situation after the revamp a situation of “Sellers Beware or Caveat
Venditor”. Caveat Emptor or Caveat Venditor, BUILD THEN SELL is THE
VICTOR.
3. How effective will be the Housing Tribunal?
The recently implemented revamped Housing Development Act has plugged some
of the loopholes, rectified inadequacies and even some questionable and
grey clauses that existed in the original Act. The procedures for control
and licensing of housing developers have been made more stringent so that
non-bona fide developers would be marginalised. The effectiveness of the
revamped Act remains to be seen. It would only reflect its effectiveness
after a period of time. However, much depends on the degree of enforcement
to be carried out.
A major significance is the long awaited inception of the Home Buyer’s
Tribunal where aggrieved house buyers can lodge their claims against
developers in cases where the amount per “cause of action” is less than
RM25,000. The Tribunal provides an affordable and speedier alternative for
house buyers to seek judgment in their disputes with the developers. We
are delighted to note that since its recent inception, it had promptly
convened and dispensed with a number of cases.
A lingering question remains in our mind. This is with regards to the
finality of the Tribunal. There appear to be some dissatisfaction among
certain quarters about this ruling and they wish to make appeals to higher
Court of Law. If this is allowed, then we see the demise of the Tribunal.
The intention of Parliament in setting up the Tribunal is to accord
downtrodden and financially spent house buyers a speedier and affordable
avenue to seek redress from the big and financially strong developers. For
this objective to be achieved, the ruling of the tribunal must be final
otherwise we see a situation where those financially strong and arrogant
developers would appeal to all rulings that are not made in their favour,
not for anything other than to buy time and to frustrate complainants. It
also challenges the authority of the Tribunal and belittles the Award of
the Tribunal Chairman.
CONCLUSION
HBA fully understands and appreciates the vital role played by the housing
industry in the nation’s social and economic development. It is precisely
for this very reason that we have been critical of the weaknesses that are
prevalent in the industry
We believe that the industry can only flourish in an environment of
orderliness and good governance. .
On this aspect, all players in the industry have a role to play. From the
highest regulatory government body right down the line to the
professionals, must play their part. Regulatory bodies should exhibit
neither fear nor favour. Development enterprises should have some
humanitarian feelings and social obligations to serve the people and the
nation. Loans should be given to developers so that they can build houses.
House buyers’ loan should only come in to pay for the completed houses.
Architects, engineers and all the professionals related to the building
industry should be conscience driven and display true professionalism of
their trade and not to succumb to their unscrupulous and greedy paymasters
who are bent on amassing quick profits.
Our views are based on solid facts and genuine cases of house buyers’
woes. They deserve adequate protection under the Law and not merely
sympathies.
Thank You.
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