Mr. Chairman Sir, Learned Audience from the Legal Profession, the Academicians,
Ladies & Gentlemen, the Organizer;
Thank you very much for inviting the HBA to this conference. I am the President
of the House Buyers Association (HBA). HBA was setup in 1999 by a group
of aggrieved house buyers and officially registered with the ROS in 2000.
The HBA is a voluntary, non-profit, non-political, non-governmental organization
manned by volunteer members. Our volunteers work hard to pool their resources
together to strive for the rights and interests of other house buyers. Very
soon, HBA will be known as the National House Buyers Association, Malaysia
and will be branching out to various State Capitals.
In this august assembly of people who are most knowledgeable in their own
field of profession in the housing industry of this era, the 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 come to seek our help.
B. HOUSE BUYERS WOES
When you buy a loaf of bread or a new car, you can sleep at night knowing
that the government has legislation and regulations in place to ensure these
products meet certain health or safety standards. The general perception
of the public is that no building can be built without the rigorous control,
monitoring and inspection by the relevant authorities. This trust is misplaced
when house buyers encounter problems and find it hard to have it resolved
expediently and amicably. They are perplexed at the protection that was
supposed to be in place.
The myriads of complaints both from our own hands-on experience and through
the experience of our members and from those who have contacted us – complaints
that ranges from orphaned projects, late delivery, no CF, shoddy workmanship,
defects not attended to, no after sales service, no strata titles, deviation
from agreement/plans/sales brochures, etc – proves that protection is not
adequate enough. This litany of horrific experiences, personal tragedies,
and dashed dreams is a challenge to the integrity of the industry and to
the professionalism of those who operate within it.
The real tragedy, however, is the impact on people’s lives. House buyers
after house buyers revealed how the situation has done to them, not only
financially, but domestically, emotionally and medically. Despite the fact
that we possess the skills and abilities to produce world-class construction,
a major consumer and industry problem has been allowed to grow to terrible
Some house buyers have become ashamed to even talk about one of the most
significant financial crises they are facing. They are afraid to appear
foolish or devaluing their asset. Some members of the housing industry have
become defensive and aggressive in attempting to reflect responsibility.
This attitude destroys trust. Just asked any house buyer who has the misfortune
to choose a bad developer if he would buy another unit from the same developer
or from other developers. Would you, if you have experienced the same?
Attached to this presentation, are some of the emails from house buyers
that we have received highlighting the inadequacies of the protection.
C. DEFINITION OF ‘ADEQUATE’
The Websters’ Dictionary defines the word “adequate” as enough in quantity,
or good enough in quality, for a particular purpose or need. The Bahasa
equivalent is ‘cukup’ tak kurang, tak lebih tetapi cukup. Then arises the
question – Are the amendments to the Act adequate? HBA think not; how many
of you here, honestly think that the amendments are adequate? It is grossly
D. BUYERS PROTECTION: HOW ADEQUATE IS THE ACT?
The Housing Development (Control & Licensing) (Amendment) Act 2002, though
passed by Parliament and later gazetted on the 31st January 2002 has yet
to be implemented. Nearly six (6) months have passed and we are still debating
the pros and cons of the Amendments and how it will protect the house buyers
and purportedly give housing developers a harder time.
While the amendments are considered expedient, in the circumstances, and
vital as a stop gap measure to curb undesirable trends presently practiced
by errant housing developers in the building industry, it is HBA’s considered
opinion that for the long term, a complete review should be carried out
on the existing Act or to replace it totally with one that suits the present
day conditions in order for it to take us through the new millennium.
This contention is prompted largely on the basis that the existing Act,
which was passed in 1966, might be construed as having surpassed its effectiveness
over such a long period of time and in the chase taken by developers to
build houses to cater for the market.
We see the amendments as a small degree of deterrents to developers who
had deliberately flouted the laws by taking advantage over ill-protected
house buyers. It was on these premises that HBA would like to contribute
by making some comments on the amendments for whatever they are worth, they
represent our views which, we believe is representative of thousands of
house buyers who have always been on the losing end in their dealings with
Here, we have picked up some, though not exhaustive, sections of the Act
which we feel is inadequate or not providing protection at all to the house
D.1. Definition of ‘housing accommodation’.
The amendment to the original definition on “housing accommodation’ has
taken a retrogressive step into the ‘twilight zone’. Here, we quote our
good friend, Dato RR Sethu, a senior member of the Bar from his article
“Changes to the Housing Development Law – a promised panacea or disappointed
...“The original definition is amended and as amended is as follows (and
the amendments is shown in italics):
“housing accommodation” includes any building, tenement or messuage which
is wholly or principally constructed, adapted or intended for human habitation
or partly for human habitation and partly for business premises but does
not include an accommodation erected on any land designated or approved
for commercial development;
It clearly means that the legislation will not apply to houses on a commercial
development. Would shop houses or apartments above a shopping block be excluded?
What began as an all-inclusive definition (i.e. by the use of “includes”)
is now restricted. The question is what is a “commercial development”? It
is not defined in the Act. It refers to “designated or approved” but there
is no reference to the source of that designation or approval; nor is there
any identification of the authority responsible for such designation or
approval. What is the rationale for the exclusion of the protection?
At the moment there are residential development, commercial development,
mixed development and sometimes township with golf courses. In respect of
pure commercial development there is no doubt – there is no protection.
Where any of these include housing accommodation why should the protection
be excluded? Is it a move to deny protection for those who buy living accommodation
in commercial areas? Then mixed development should never be approved. In
what category would golf resorts fall?
After all, it is the developer who seeks approval of the development and
it is he who describes the development the way he wants. There is no inkling
as to why this amendment (or exclusion) was necessary. This is one way of
avoiding the protection intended for “home buyers”, a phrase used in the
Act. A “home” is a home irrespective of where it is located or situated.
The Government must explain the rationale and reasons for this change. Purchasers
of housing accommodation in a “commercial development” will feel that they
have been short changed.”
The re-definition will have more cumulative problems as it would exclude
those having property that are built as commercial properties, examples
of existing ones - Pudu Plaza, Pearl Point Condominium, which are mixed
residential and commercial buildings, although the land is for commercial
development. Consequently, the purchaser of a three storey building where
the ground floor is a shop premise and the second is an office, the third
is a residential unit, the development will not be governed by the Act.
Similarly, buyers of ‘serviced apartments’ ,etc for residential purposes
are denied this protection although they are buying housing units.
A legal loophole has been created to allow housing developers to contract
out of the Act. Then where is the protection? The house buyer’s position
vis-à-vis the developer is governed purely on Contract Law – to which ‘caveat
emptor’ applies. Here lies, as always, the potential for abuse of the weaker
party by the stronger party. Would all house buyers know whether they are
protected by the Act? Then where is the adequacy?
D.2. Increased Paid Up Capital – Amendments to Section 6
We cannot comprehend why the cash deposit should be “not less than” RM200,
000 when it equates to a drop of water in a tea-cup to the developers in
addition to the mainstay paid up capital of RM250, 000. Housing developers
are not petty traders and a cash deposit of RM200, 000 is only a small sum.
This requirement is such a meager sum that anyone can become a developer.
Even a single storey home in Puchong costs more than that. We do not understand
the rationale for such a minimal imposition when the cost of houses has
increased many folds since the inception of the Housing Act, 35 years ago.
HBA’s stand is that to enable developers to be serious in their commitment
in the housing development, they must have a paid up capital of at least
20% of the land and project cost of that particular project. For instance,
if the project and the land cost is RM100 million (which is merely a medium-sized
housing scheme) the paid up capital should be RM30 million. This would make
the housing industry open to those developers who are serious and experience
enough to take up projects.
The developer cannot simply rely on the purchaser’s deposits and progressive
payments to roll and fund the projects. If this is the case, projects are
doomed to fail right from the start, if there are not enough buyers to fund
the projects. The developers should have their own funds to be converted
to investment capital while the balance of project funds would normally
come from the Bridging Financiers who would in the current trend grant a
margin of 70%. Even the Minister of Domestic Trade and Consumer Affairs,
Tan Sri Muhyiddin Yassin has increased the paid up capital of multi-level
companies for the protection of the public. Consumers of multi-level marketing
have more protection as these companies require a paid up capital of up
to RM2.5 million with a low of RM500,000. The requirement for the lowest
paid up capital is still higher than the housing mandatory paid up capital!
D.3. Duties of a licensed housing developer
HBA concurs with the amendments. It would have given house buyers further
protection had the following be made mandatory that the developer should:
“Provide a copy of the list of purchasers, their addresses and telephone
numbers (if any) and the same to be conspicuously exhibited on the notice
board of the Ministry of Housing and the sales office of the developers.”
This is to reflect transparency and to ensure that the true situation on
‘sold’ units, in particular the ‘bumi-lots’. It will also prevent developers
from creating artificial ‘hot demand’ to unfairly entice buyers. House buyers
can also refer to these lists to form ‘watch groups’ to keep an eye on their
investment and also to act as ‘eyes and ears’ of the supervisory authorities.
As you know, the number of house buyers far exceeds the population of civil
D.4. Statutory Termination of Sale and Purchase Agreement – New Section
This Section allows the developers to apply to the Ministry to terminate
the Sale and Purchase Agreement (SPA) earlier if: -
(a) Six (6) months after the execution of the SPA the developer has not
commenced works; and
(b) 75% of the Purchasers have agreed in writing to terminate the SPA.
This Section appears to give developers the notion that the business of
housing development is a ‘no risk venture”. It gives the housing developers
the opportunity to collect vast amount of money from house buyers solely
for their own gains. They can then declare that they are unable to proceed
with the project and then apply to the minister to invoke Section 8A for
the nullifying of the SPAs. The funds that were collected and utilized would
then be returned to the house buyers free of interests.
The following issues should be addressed: -
• In the event that the Minister invokes the statutory termination of the
Sale and Purchase Agreement, shouldn’t the cash deposit of RM200, 000 referred
to in New Section 6A be utilized to compensate the aggrieved purchasers
as to their expenses incurred (legal fees and stamp duties on SPA, legal
fees and disbursements on the loan documentations, processing fees etc)?
• What about the interest paid to service the bank account should the purchaser
have taken a 100% loan margin?
• Shouldn’t the developer bear the legal cost and expenses for the removal
of the bank’s charge/assignment?
• Shouldn’t the Banks’ consent be first had and obtained prior to the termination
of the SPA?
• Shouldn’t there be a time frame imposed, say, seven (7) days to refund
D.4.a Ironic Situation
The proposed New Section 8A (11), should be amended to read as “Any licensed
developer” instead of “Any person”. If it is not amended, it would mean
that any person who fails to comply with any of this Section shall be guilty
of an offence and shall on conviction, be liable to a fine not exceeding
RM50, 000 and a further fine not exceeding RM5, 000 each day during which
the offence continues after conviction. The poor house buyer, who does not
have a house that he had purchased, ironically might land himself in jail
if he disagrees on the statutory termination of the SPA by the Ministry!
D.5. Tribunal for Homebuyers Claims – New Section 16A
The spirit of the inception of a tribunal for home buyers is good as it
is intended to allow those aggrieved buyers to seek redress at the tribunal
as an alternative to civil courts where cases are often bogged down. The
capping of the claims at RM25,000 will not help those buyers who have claims
of more than that. We have our reservations. However, time will tell on
the effectiveness of the tribunal once it has been in placed.
D.6. Powers of the Housing Minister
Generally the new sections 8A, 10A-10J, 11, 16AI & 24, have given the Minister
vast powers and HBA is certain that the Minister would exercise the power
entrusted to him cautiously with fair and balance treatment to house buyers.
We urge the Minister to exercise his powers to amend the Housing Developers
Regulations, Schedules H & G and to provide for a standardized Deed of Mutual
Covenants to ensure better protection for purchasers and to ensure that
there is no uncertainty of house rules.
We also urge the Minister to consider re-regulating Clause 23 of Schedules
H & G – Manner of Delivery of Vacant Possession – which has caused a lot
of problems to buyers. Vacant possession should only be given upon issuance
of Certificate of Fitness.
We take this stand based on the following grounds:
• The taking over of vacant possession without the CFO is meaningless and
detrimental to the house buyers because they are still unable to move into
their homes, even after having paid in full for them;
• From the date of ‘deemed’ taking over of vacant possession, the house
buyers take over the responsibilities of the security of their property.
How can they do so, when they are not allowed to occupy their home yet?
Their new homes are at risk of vandalism, thefts, and other hazards.
• While waiting for the CFO, the defect liability period starts running
and gets shorter and shorter. How are the buyers able to identify any defects
when they are not allowed to stay in the houses while waiting for the CFO?
In extreme cases, where the CFOs has been delayed by eighteen (18) months
or more, then the defects liability period would have run out before the
buyers could even occupy their homes!!
D.7. Liquidated Ascertained Damages Claims – Clauses 20(2) & 22(2) of
Sch. H & G respectively.
D.8. Right to initiate and maintain action – New Section 22C line 11
Another common problem is the rights of the house buyers being compensated
for the liquidated ascertained damage (LAD) when the delivery of their property
has been delayed. The wordings appearing in these clauses use the words
– “Shall”, which means “mandatory” / “immediately” literally meaning “without
But in reality, house buyers are forced to sue the developer for the LAD
even though it is clear that the right to be compensated is mandatory and
immediate. The amendment, has failed to address this problem and the developer
continues to take advantage of the situation and the weaknesses in the Act
and in most cases refuses to pay the full LAD to the house buyer.
However, even going to court is no guarantee that the house buyer will recover
their LAD despite the clear wordings in the SPA. The developer to frustrate
the house buyer’s action raises various issues. The most common and ancient
issue that is still raised by Developers, which remains a “mystical” problem
for house buyers is the issue of the house buyers’ locus standi to bring
an action against the developer, in cases where the house buyer has assigned
their property to a bank for financing their purchase. Why is it ‘mystical’
problem? It existed since 1984 when the Federal Court in the case of Nouvau
Mont Dor (M) Sdn Bhd – vs.- Faber Development Sdn Bhd ruled that the house
buyer has no locus standi to sue because of the assignment, which was held
to be absolute. Because of this decision which was followed and adopted
by subsequent judges, developers know that they can get away with not paying
LAD immediately as the buyers would have an uphill battle in court.
The ‘mystical’ question is why, wasn’t the Act amended earlier to resolve
this issue that has deprived the house buyers of their rights since 1984?
Recently, with the case of Pak Ki Yau & Anor – vs.- Kumpulan Promista Sdn
Bhd., the High Court Judge ruled in favour of the house buyer and clothed
the house buyer with the locus standi to sue. This was subsequently followed
by Max-Benefit Sdn Bhd –vs.- Phuah Thean An & Anor, where Justice KC Vohrah
held that the assignment was conditional and not absolute and thus the house
buyer has locus standi to sue the developer. But in recent decisions, one
High Court Judge says that he is bound by the Federal Court’s decision and
held that the house buyer has no locus standi to sue.
This yo-yo judiciary position is of no help to the house buyers. The recent
amendments introduces a new Section 22C which in essence give the house
buyers the locus standi to sue but the consent of the Financier must
first be obtained. The question is – What happens if the Financier refuses
to give their consent?
We propose that instead of having to obtain the Financier’s consent, house
buyers’ rights would be better protected if the new Section 22C only requires
the house buyer to give “written notice” to the Financier.
We feel that to adequately protect the house buyer, the following phrase
be added at the beginning of Clauses 20(2) and 22(2) – “Notwithstanding
anything contained in any written law or any rule of law…” to avoid ambiguity.
E: DOES THE ACT RESOLVE THE CURRENT PROBLEMS FACED BY HOUSE BUYERS?
Here we highlight some of the complaint cases that HBA has received and
has helped to a certain extent.
(i) Abandoned Project Case
Facts of the case:
Location: Sentul, Kuala Lumpur.
Developer: Joint venture project with several landowners.
Type: 3 Blocks – 374 Apartment units
Price: Medium Cost – Around RM99,000
Date of SPA: Around 28 July 1997
Schedule date of Completion: July 2000
Payments made: 10% of Purchase Price
Complaints: There was no sign of any construction since the signing of SPA.
We first helped the buyers to form an action group, which they called the
Sentul Indah House Buyers Pro Tem Committee (PTC). Through HBA, a memorandum
was submitted to the Ministry of Housing & Local Government (MHLG) on the
18th September 2001. Subsequently, a dialogue was convened by the MHLG between
our representatives, and the office bearers of the PTC on the 22nd January
2002. During the dialogue, it was acknowledged by the MOH that this project
has been classified as ‘abandoned’. Our representatives made the following
• That the developer be placed on the black list;
• That the developer be prosecuted for breaching the sale and purchase agreement
– the statutory form Schedule H
• That the Syarikat Perumahan Negara (SPN) be requested to intervene to
study the viability of reviving this project;
• That instructions be given to the Land Office to lodge a ‘Pendaftar Kaveat’
on the Master Title to prohibit the developer from disposing of the title;
• That the investigations be done on the developer for any wrong doings.
The buyers of this project and the HBA are still anxiously waiting for the
outcome of the MOH’s investigation and possible solution to their dilemma
since the dialogue six months ago.
The PTC recently informed us that the same developer has been issued a fresh
developer’s license expiring April, 2006.
Where is the protection here?
(ii) Case of developer under the Protection of Corporate Debt Restructuring
Facts of the case:
Location: Sentul, Kuala Lumpur.
Developer: A subsidiary of a Public Listed Company, which has sought protection
under the Corporate Debts Restructuring Committee
Type: 2nd Phase
Number of purchasers: About 1,000.
Price: Medium Cost – Around RM98,800
Date of SPA: Around January 1994
Schedule date of Completion: January 1997
Payments made: Up to 65% of the Purchase Price on the Architect’s Certification.
Complaints: Construction works has stopped since 1998 leaving the buyers
in the lurch and having to continue servicing their bank loan and yet unable
to take possession of the homes they have bought. Their problems are compounded
by the fact that to sue the developer for the LAD, they have to do it by
January 2003 before the claims are statute barred under the Limitations
Under these circumstances, the buyers’ questions are:
• How are they to sue in view of the fact that the developer has sought
protection under the CDRC?
• What is there to sue when the developer is going through a process of
debt restructuring which gives priority to secured creditors – namely Banks
and Financial Institutions?
• The legal process is time consuming and the buyers are reluctant to throw
‘good money’ after ‘bad” in an attempt to possibly recover some form of
compensation for the late delivery of their homes (if ever completed and
delivered). They doubt that the litigation process will be of help to them
for their sufferings.
How are the house buyers here to be protected whether under the existing
Act or under the newly revamped Act?
(iii) Orphaned Project
Facts of the case:
Location: Medan Duta, Sri Hartamas, Kuala Lumpur
Original Developer - Sri Hartamas Development Sdn Bhd – In liquidation in
In 1990 – project was taken over by TPPT Sdn Bhd (Tabung Pemulihan Projek
Terbengkalai) setup under the auspicious of Bank Negara Malaysia who in
turn appointed Financial Consultants, Ernst & Young, to look into the viability
of the project.
1994- Mawar Tiara Sdn Bhd was appointed to revive the project.
Substituted Developer: Mawar Tiara Sdn Bhd – Under Special Administrator
Type: Walk-up apartments
No of Purchasers: Est. 514
Price: About RM42,500
Date of SPA: Around November, 1986
Schedule date of Completion: Around November, 1989
Payments made: Between 10 to 20% of the Purchase Price
The players have changed but not the project. Now this City Homes buyers
are again left in the lurch when Special Administrator was appointed for
Mawar Tiara Sdn Bhd by Pengurusan Danaharta Nasional Berhad since 18 October,
In the land that boasts of the highest twin tower in the world, such neglect
of house buyers’ rights should not have happened. So, where is the protection?
Even the ‘white knights’, appointed by the authorities, may not be for the
(iv) Case of circumventing the Standard Schedule G with a ‘supplementary’
Facts of the case:
Location: Cheras, Kuala Lumpur
Developer: Saktimuna Sdn Bhd.
Type: Phase 2 - Medium cost terrace house
Price: Around RM57,500
No. of Purchasers: 107
Date of SPA: Around September, 1995
Schedule date of Completion: Around September, 1997
Payments made: Between 10 to 20%
We first helped the buyers to form an action group, which they called the
Lingkuran Nur House Buyers Pro Tem Committee (PTC) consisting of 107 buyers.
This group of buyers had signed their SPA with the developer sometime in
1995. Simultaneously, with signing the SPA (Sch.G) the buyers were required
to sign a Separate Supplemental Agreement with the developer’s so-called
contractor purportedly for the ‘up-grading’ work costing RM12,300. A search
at the Registry of Companies revealed that the shareholders and directors
of both the developer and their contractors are the same people.
The individual titles available were charged to United Merchant Finance
Bhd, sometime in September, 1995 and were the subject of a Public Auction
on 10 May, 2001 at the Bangi Land Office which was subsequently aborted
by timely intervention.
HBA in several dialogues convened by the MHLG and the PTC recommended the
• That there was clear intention of circumventing the SPA and should be
• That the developer be blacklisted.
• That the MHLG should investigate their licences and their sale and advertising
• That the SPN be requested to intervene to study the viability to revive
These house buyers (taxi-drivers, hawkers etc) have been suffering in silence,
and financially drained for the last seven years. All they want is a shelter
for their families. Failure to address their problems promptly, would only
make people suspicious. MHLG should apply transparency and accountability.
Should the developer still be in the business of housing development?
Is there adequate protection in the eye of the public?
(v) Defiant developer case
Facts of the case:
Location: Setapak, Kuala Lumpur
Developer: A subsidiary of a Public Listed Company
Price: Between RM190,000 to RM350,000
This condominium group of buyers approached HBA in April, 2001 for help,
whereupon a memorandum was submitted to the MHLG.
The following are the list of their complaints:
I. Shoddy workmanship.
II. Excessive maintenance and management charges.
III. Sinking fund.
IV. No transparency and accountability.
V. Some common facilities not available as per SPA.
VI. Common facilities not in usable conditions.
VII. Poor maintenance.
VIII. Developer controlled managing agent cutting off water supply
There were several dialogues between the developer, their managing agent
and the residents’ group presided under the auspicious of YB Dato Peter
Chin Fah Kui, the Deputy Minister of Housing & Local Government. The developer
remained defiant of the directives of the Minister. There was a proposal
for a trial Joint Management Establishment (JME), however, the developer
refuses to cooperate with the Ministry.
The Building & Common Property (Maintenance & Management) Bill was mooted
as far back as 1997 by the then Minister of Housing and will continue to
be archaic news. It will remain so, until the new Bill is presented in Parliament
How effective is the directive of the Minister if not exercised in writing
under Section 11 of the HDA?
Would the proposed Bill provide adequate protection for house buyers?
(vi) Unlicensed Developer Case
In the reported case of Arab Malaysian Finance Bhd –vs.- Chan Sai Mee, Justice
Datuk Dr. RK Nathan ruled that the Sale and Purchase Agreement (SPA) is
illegal because the developer had at the date of the SPA being executed
did not have developer’s licence and sale & advertisement permit from the
Ministry of Housing & Local Government. The Court also found that Majlis
Perbandaran Kajang had not approved the building plan for the subject property.
The building had been erected some seven (7) years ago and at the stage
of 80% construction works right under the nose of Majlis Perbandaran Kajang,.
Has the authorities been complacent or was this sheer ignorance or indifference?
Where is the so-called scope of supervision, inspection and enforcement
as professed in the websites of both the Ministry of Housing & Local Government
(www.kpkt.gov.my/kuatkuasa - Legislation to protect house buyers) and the
Clients’ Charter of the MPKJ.
(vii) Shoddy workmanship, late deliveries, deviation from building plans,
Facts of these cases:
Numerous complaints have been made against certain developers, their associates,
subsidiaries as well as their parent companies. Our check with the MHLG
(Supervision & Enforcement Division) confirmed that certain developers topped
their complaint chart. Yet, these same developers enjoy fresh launches and
issuance of new project licences were not withheld. Michael Chong of MCA
Public Complaints Section, even informed the MHLG that the same type of
complaints topped their chart from the public with house buying woes! Mr.
Michael Chong and the HBA are still waiting for a pro-active reaction from
The MHLG being the governing body should provide adequate information in
which the public can make decisions before they make a purchase or for buyers
who are facing problems in order for them to follow up on steps taken by
the MHLG in resolving the problems.
Information like licences / sale & advertisement permits approved for all
projects; particulars of the projects including all the facts and figures;
problems faced in a particular project; complaints received on a particular
project; steps taken by MHLG to penalize or prosecute the errant developers
etc., that can be made available on the MHLG’s website.
Has any developer been prosecuted under the relevant sections that carries
an imprisonment term? How are the house buyers to be sufficiently protected
if information that they require on their purchases is not readily available
from the governing body, which has approved the licence to the developers
to market their products?
F. ENFORCEMENT – LAX OR LACK?
Our fundamental belief is that even the best of legislation to counter a
particular situation would just remain as ornamental pieces unless strict
enforcement are carried out against offenders without fear or favour so
as to instill into them the respect and fearful feeling that the law commands.
The recent amendments to the Housing Development Act and the Strata Titles
Act are expected to bring some changes in the protection of house buyers’
interests but sad to say, until today, no positive results have yet been
achieved. Where does the fault lie?
The house buyers’ confidence, that was building up in anticipation of the
protection changes, that their woes would be attended to, continue to be
in helpless predicament.
The present Minister of Housing and his ministry has done a relatively good
job in reviving the element of consumerism in the new Act. This long awaited
amendment after 35 years is seen as a major breakthrough for house buyers.
Our input in the current law was accepted to a good certain degree. However,
we feel that the Act will have optimum impact if part of the enforcement
is ‘retrospective’ in nature. This may provide some comfort and relief to
those already disadvantaged by the existing situation. It will also ease
the Ministry’s frustration on the claim that they ‘currently do not have
the teeth to bite’. The manpower in the enforcement directorate should be
increased proportionately with the number of housing developments in the
We reiterate our stand that no amount of law will be able to eliminate or
solve the problems faced by house buyers unless they are strictly enforced
or self-regulated. As the saying goes, ‘the law is only as good as its enforcement’.
In ending, I would like to take this opportunity to wish the Conference
organizers and all participants and industry players present, every success
in your endeavors and may you now have a better understanding of house buyers
plight. I am sure that the Conference will serve to stimulate the meaningful
and insightful discussion on the future of housing.
EXCERPTS OF LETTERS FROM HOUSE BUYERS
Subject: Service Apartments
I am very concerned over the Housing Laws that I feel is not protecting
the buyers adequately.
I purchased one unit of service apartment in USJ 19, Subang Jaya. The project
has stopped work for 5 months and the developer has failed to deliver vacant
possession as per S & P agreement signed.
What can I do now? I am also worried about the strata title as according
to our council, it is a commercial land title. What rights do we as buyers
have now? The developer has also mentioned that there will be an increase
of maintenance fees.
I feel angry as many of us are unaware of what course of action to take.
Moreover, our lawyers are the developers’ panel of lawyers as well. Who
protects us now?
15 January, 2002
Subject: Projek rumah tergendela
Ayah saya (56 tahun) ada membeli rumah di taman bukit tembakau 1985 (dijangka
siap 1987) tetapi ianya tergendela sehingga tahun 2001 apabila pemaju baru
mengambil alih. Ayah saya berhutang dengan kerajaan sehingga tahun 2011
sebanyak RM300/bulan (hampir semua wang pencennya). Masalahnya, pemaju baru
mengeluarkan sebut harga baru yang hampir 2 kali ganda (RM76K) dari asalnya
untuk ayah saya bayar. Jika ayah saya tidah bersetuju dalam tempoh 2 minggu
(telah tamat) rumah itu akan di jual kepada orang lain. Adakah itu boleh
terjadi? Adakah rumah itu masih hak ayah saya lagi? Apa yang patut saya
lakukan? Untuk pengetahuan, kes ini telah dibawa kepada 3 Menteri Besar
hingga kehari ini tapi masih tiada tindak belas.
07 February, 2002
I purchased an apartment & signed the
sales & purchase agreement on the 2nd Dec 1998. Today, I received a notice
from the developer for delivery of vacant possession, which is obviously
late by 4 months plus. They are also asking for the final payment. In the
developer's letter, they did not mention at all about paying the apartment
purchasers 10% liquidated ascertain damages for the late delivery.
My questions are:
1. From far away, my block of apartment looks ready. However, the other
block of apartment (where my parking lot is) is still not ready yet, with
the crane still hanging in the air. The main gate entrance into the apartment
blocks is also not done yet. Is it right for the developer to demand for
the final payment from me now?
2. The notice also says that i am deemed to have taken delivery of vacant
possession upon expiry of 14 days from the date of this notice whether or
not i have actually entered into possession or occupation of the property.
Thereafter, they will not be liable far any damages & loss to the property
& the fixtures & fittings. Is this common practice among developers? Purchasers
can't move in now and the developer is not responsible to protect their
apartments? Isn't the developer responsible to protect the purchasers' apartments
until purchasers move in?
3. The developer's notice mentioned that they are delivering vacant possession
now but without the certificate of fitness of occupation issued yet. Wasn't
the C.F.O. supposed to be handed over at the same time with the vacant possession?
The developer's staff said that I will only be given a temporary C.F.O.
later, because the permanent C.F.O. will need to wait for the whole housing
project to complete. Is this true?
4. According to an article in the press, i can approach the local council
to check whether the developer have applied for C.F.O. Who's the local council
in this case? I only know the building plan approval authority is Dewan
Bandaraya Kuala Lumpur.
5. How do I claim for liquidated ascertain damages / late delivery? What
are the procedures? Do I need to write a formal letter or just communicate
verbally to the developer? Is the LAD claim 10% based on the whole purchase
price or based on the remaining outstanding balance only? When should i
be getting my LAD claims, before, upon or after settling my final payment?
6. Can the local housing ministry help in these matters ? Where are they
Actually, I have a lot of things more to clarify and time is running short
for me. The developer's letter stated that I need to settle the final payment
in full within 14 days or else they will impose 10% interest charge for
I am really upset & angry after receiving their letter. Can you please answer
my questions above before the 28th April 2002.
I also hope that your organization as well as the Local Housing Ministry
will work out better rules & procedures in future to protect property buyers
from unscrupulous housing developers.
24 April, 2002
Subject: Abandoned project in prestigious
I would like to know who are the strong people in this society? I want to
ask what can be done with apartments that have been fully paid but the work
was only 80% completed then abandoned more than 2 years. A good example
is the condominium at Taman Tun Dr. Ismail. How do I act on this?
21 July 2002
Subject: How to get refund from irresponsible housing developer
I am from Penang. About 6 years ago, I bought a light industrial building
in one taman from an irresponsible developer. The sales and purchase agreement
stipulates that the development shall be completed in 3 years failing which
the buyer shall be paid compensation at 10 per cent per annum of the building
price. However, the developer is not complying to the agreed terms and keeping
Is the Ministry going to help people like us?
I understand that the current government law do not protect buyers of bungalows,
light industrial buildings, shop houses etc. If this is such, the government
is indirectly encouraging developers to cheat innocent buyers of their hard
Anyway, a group of about 40 odd buyers is now suing the developer for compensation
which I feel is unnecessary and unjust because we have to spend more money
to get back what we entrusted the developer to provide.
Why is it that those who did not pay 40 cents parking fee get summoned quickly
while developers who defaulted on millions of ringgit get away scot-free?
20 July 2002
Subject: Advise Please
I’m very sure I’m amongst the thousands of house buyers caught in the same
situation and I am hoping HBA could provide some advise on how to handle
Attached is the chronological of events for HBA’s perusal.
Sequence of Events / Background Information
1. Entered and signed the S&P dated 04 April 1998.
2. The Star (23rd & 24th February 2000) reported by Frederick Fernandez,
“Structural Defects in 300 houses” i.e. the above property purchased is
one of the 300 houses.
3. Letter from the Vendor dated 2nd March 2000 confirming the delay in handing
over the Building according to the S&P. The letter further stated that they
would honour what had been agreed upon (S&P) and underlined clause 20(2)
on the Liquidated ascertained Damages (LAD). The letter also stated that
the Building would be completed early 2001.
4. Letter from vendor dated 5th July 2000, reaffirming the Vendor’s commitment
to deliver a quality home as well to honour what was agreed upon (S&P) i.e.
5. Letter from Vendor dated 20th July 2001, indicated that the Building
will be ready for hand over on 3rd August 2002.
6. Based on site visit and meeting with the Marketing and Administration
Manager of the Vendor, the Building WILL NOT be completed as plan yet again.
Damages Seek from Vendor
a. LAD at 10% per annum of purchased price i.e. RM 14,488 per annum w.e.f.
5th April 2000 i.e. 24 months after S&P was signed to the day the Building
is handed over as per S&P.
b. All the Housing Loan Interest paid from the last disbursement by the
Bank to the Vendor.
c. The 3% of the Purchaser’s Annual Income commencing 5th April 2000 to
the day the Building is handed over as per S&P. The 3% is the sum being
burden to the Purchaser (employer declares as benefit in Kind for Income
Tax purposes), that the Purchaser has to bear due to the time overshot by
The Developer hinted at offering me 30% of the LAD (when ever the handover
20 July, 2002
Thank you very much for having this column for public benefits.
I am a resident in Kampung Kuantan, Klang who is looking forwards to your
attention and assistance on my problem specified below.
I have bought a house in Taman Klang Indah located at Kampung Jawa, Klang
and is currently facing the CF problem. Delivery of the vacant possession
had been conducted in November last year. I would say that the developer
has wisely protected themselves from any legal compensation claimed. Since
then, I have been following up with them on the CF progress but so far there
is not any positive outcome at all.
Obviously this is not a fresh new issue but a very conventional and ‘traditional’
problem that many parties have been talking about but without practical
solutions. The worse is purchasers are always at the ‘lose’ end that they
have to bear the mistakes and inefficiency of others.
I am just a fixed salary earner that cannot afford to pay both new house
installments and existing rented premises. Therefore, I am seeking your
kind assistance and advise to get rid of this dilemma as soon. I need help
April 29, 2002
Subject: No/Slow Progress
This project is delayed more than 10 years, and the developer cannot give
an expected completion date, citing financial difficulties. This is most
unfair as buyers have waited far too long, having invested their savings
in a home they cannot call their own. The owner of this particular house,
for example, is almost 50 years old, works as a maid and is illiterate.
According to her attorney, the developer only finishes individual houses
of buyers who place pressure on them.
11 April, 2002
Subject: Late Delivery
I bought a bungalow lot when it was first launched in a housing project
in Kulim in 1997.
I've so far paid 10% down and till now, there is no sign of the project
being continued. Its supposed to be completed and handed over to us in 3
years (year 2000) but work stopped when the downturn came and not all lots
were sold off.
I'd written to the developers a couple of time to tell them that since it
looks like the project is on hold and they are not able to tell me when
it will be revived, I'd like them to refund me my 10%. In the beginning
I was only asking for my 10% without the 10% annual interest due to me after
However, they wrote back to me offering me a bigger piece of land at a cheaper
price and proposed that I take up this offer instead. I turned them down
of course, not wanting to go in deeper, but they continue to ignore my request.
Recently, I found out that they'd sold this project to someone else and
it now has a new name. When I checked with them on my project, they told
me that it may probably start again next year!! What would you suggest that
I do to get back my 10% payment from them?
Do you think that I should engage a lawyer to try and get back my money
with interest - what are my chances like? Surely there must be some written
law that states that buyers have the right to get a refund of monies paid
if the developer fails to deliver the property in a certain time span. Does
this mean the developer can delay the project indefinitely and hope for
an upturn in economy before reviving the project? As you know, under normal
circumstances, if the buyer were to delay even a month, the developer starts
charging interest - does this not also apply both ways?
Any feedback/advice you can give me will be appreciated.
11, April, 2002
From: Sally Lee
Sent: Sunday, March 24, 2002 10:41 PM
Subject: Re: HOUSE BUYER PROBLEMS
Thank you very much for replying my mail. I am very pleased and meaningful
to receive this mail. My impression told me that as a voluntary organisation,
you sure have a lot of enquiries and problems need to attend and will take
times to answer my mail. It is really impress me when I receive fast response
from you. Great job. Well done.