A firm hand

16/02/2002 Published in NST-PROP A Buyer Watch Article by National House Buyers Association

Strict enforcement of the Housing Development Act can help reform the industry into a no-nonsense one that inspires public confidence.

The amendments to the Housing Developers Act 1966, which was renamed the Housing Development Act to be more reflective of its role in governing the industry, have been passed by Parliament. 

The passing of the Act is an indication of the government's  compassion for the house buying public, many of whom have had home-owning dreams shattered, or are lumbered with serious problems related to their purchases. In many cases, the prospective homeowners started off with innocent dreams of owning their own homes, but instead ended up victims with financial ruin staring them in the face from having to pay for a property that never materialised.

This is what happens when housing projects are abandoned and the victims are saddled with ever-increasing debts, with compounding interest and no immediate remedy in sight. Some of these abandoned projects are the result of  business failures, and their perpetrators may be forgiven for being incompetent housing developers or businessmen.

However, there are also wayward developers whose schemes are loaded with fraud right from the word "go". Rules are either blatantly breached or cunningly avoided in their ill-intended projects and they collect vast sums of money from unwitting house buyers. In most of these cases, the perpetrators know that the chances of getting away with their fraudulent schemes are indeed very good. The attraction of substantial quick gains makes it worthwhile for them to "have a go". And they are aware that the likelihood of getting away with tens of millions of ringgit far out-weighs the remote risk of being caught and prosecuted and convicted, they will probably be slapped with a mediocre fine that's a small price to pay for the enormous amount of money that they would have collected.

The Housing Buyers Association has all along been advocating a stricter penalty for such developers and we strongly feel that the degree of punishment should commensurate with the seriousness of the offence (meaning the amount of money involved). Just think, petty thieves who pilfer a small amount suffer the consequences of their crime in prison, which the "big timers" who cause untold misery and cause hundreds to lose their life savings get away with just a small slap on the wrist. Is this just?

HBA urges for the resoluteness of the Minister and his enforcement agencies as well as the Courts to mete out exemplary punishments to reflect the gravity of the offence. We reiterate that offenders should face the full wrath of the law.

While HBA understands the role played by the housing industry in the economic development of the country, adopting a compromising and forgiving attitude towards wayward developers is a myopic stance. No doubt, excessive use of the big stick can deter many players in the construction business. However, we are of the view that this is inevitable and is the most effective way to make the industry players toe the line - and it is in our country's long term interest to have an orderly housing industry.

In other sections of the economy, although fraud committed by industry players has caused losses to consumers, these are nowhere as severe or as traumatic as in the housing industry. We back this statement through our frequent dealings with aggrieved house buyers while attempting to find solutions to their problems. Whenever a housing project is abandoned, the buyers involved suffer serious consequences. What redress have they got?

It often takes years before a project can be revived - if there is such a revival. Revivals usually come with a set of conditions, usually at the cost of a loss of time and compensation to the buyers. What happens to those buyers who housing projects are deemed not viable for revival? What happens to the monies they paid? Whom do they seek for a refund? There is no provision for a refund should the project be deemed abandoned.

In safe guarding house buyer's interests, we need to take a hard look at where we went wrong in allowing projects to be abandoned. A study should be made on the profiles of developers that abandon projects and how the situation came about. Then the laws should be tightened to prevent future occurrences.

The housing industry is probably the single industry that generates the biggest volume of domestic monetary transaction. Against such a backdrop, isn't it reasonable that the public expects the Housing Ministry to be more resolute in the enforcement of the Housing Development Act? This will then be in line with the compassion shown by Parliament when is so promptly voted into place additional and wider-ranging power for instilling order in the housing industry to the Housing Minister through the amendments to the Act.

The housing industry is now at the crossroads. With the gazetting of the amendments to the Act, the journey ahead is slightly clearer. But we can either prod along following the old path by maintaining a laissez-faire mentality with its inherent weaknesses or we can reform the industry into a no-nonsense professional business of providing homes to Malaysians. This is one opportunity for the Government to salvage the badly battered image and regain the trust of the people so that they are assured that buying a home is not a risky venture.