Assurance in enforcement
Published in NST-PROP
A Buyer Watch Article by National House Buyers
The House Buyers
Associations stresses the need for adequate subsidiary rules and
regulations to the Housing Development (Control & Licensing) Act
In certain advanced countries, property developers
proudly compete for the covetous task of building quality housing for the
state. However, here in Malaysia there appears to be no signs of growing
pride in building high-calibre houses for the masses.
On the contrary, the industry appears to be showing
visible signs of rapid deterioration that can only be halted if stiff laws
are applied consistently and efficiently to keep a check on irresponsible
developers and other key players. It the House Buyers Association's firm
opinion that no effort should be spared to instill some orderliness in the
industry as spelt out under the newly amended law governing housing
So precisely what assurances are there for the
protection of house buyers' rights, following the amendments to the
Housing Developers (Control & Licensing) Act 1966 that have also seen it
renamed the Housing Development (Control & Licensing) Act 1966?
There are mixed feelings from the public. Many want an
assurance that the bad experiences encountered in the past with respect to
home purchasing will not recur under the new Act.
They are waiting to see if the Ministry will take the
bold step of enforcing the changes to the law.
A good example of a positive step as evidenced by the
new Act is the setting up of a Tribunal to hear cases of disputes between
house buyers and developers for monetary claims up to RM25,000. The
Tribunal will ensure that the bureaucratic process of litigation is
simplified and both time and expenses may be reduced compared with taking
grievances to court.
Other plus points are the stiff measures and the
toughening of rules, such as requiring developers to deposit increased
cash capital and to submit bi-annual reports. These are aimed at
minimising the chance of housing projects not being launched within the
stipulated time frame or worse still, being abandoned.
Another feature in the amendments is the one that
allows the Ministry to terminate the sale and purchase agreements of any
particular housing project with the agreement of the developer and 75% of
the house buyers. This measure is aimed at tightening control so that only
bona fide developers are licensed to undertake public housing
The amendments to the Act also extend to co-operative
societies and statutory bodies undertaking housing developments. Prior to
the amendments, these organisations did not come under the purview of the
The amendments also empower enforcement agencies to
enter the premises of errant developers to check on their affairs. Thus if
there are adverse reports lodged on discrepancies, irregularities or other
deceitful modus operandi in developers' operations, enforcement
agencies can now enter the premises to check on transactions documents and
build up circumstantial evidence against the developer. In terms of
deterrents, the amendments have also led the penalties imposed on errant
developers to be increased to five-fold which is bound to have a stronger
effect than the amount imposed before.
In the past, words of persuasion and stern warnings
directed at errant developers to urge them to refrain from shoddy
workmanship and from taking advantage of unsuspecting house buyers largely
fell on deaf ears. But with the new amendments, this category of developer
will no longer be able to avoid the long arm of the law. It is to be hoped
that the additional stringent conditions for the issuance of developer's
licences and the imposition of more meaningful duties and obligations
required of a licensed housing developer will give added protection to all
Enforcement of the revamped Act, however, can only be
executed after the date it comes into force. Furthermore, subsidiary
regulations arising from this amendment need to be put in place by the
Ministry. The old regulations forming part of the original Act are
inadequate to cover the wider scope of functions created under the new
provisions of the revamped Act. As an example, the Tribunal that the Act
has provided for would be incomplete and improper without its own
Regulations that set out its operational procedures, how claims are to be
made, the composition of members of its court and so on.
Ambiguities in the Regulations in the past have
invariably led to developers making loose or wrongly interpretations,
resulting in house buyers being at the losing end. To put a stop to such
practices, new regulations with clearer definitions that are consistent
with the new amendments are essential.
Stringent rules should be imposed before licences are
issued to genuine housing developers with adequate financial back up and
good track records. In the same process, bogus developers with
questionable intentions should be weeded out before they get the chance to
default on unsuspecting house buyers and cause irreparable damage.