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Problematic builders
17/08/2002 Published in NST-PROP A Buyer Watch Article by National House Buyers Association

It's time errant developers are brought  to task for cheating buyers of their due.

Last week, we brought to your attention three cases in which house buyers suffered distress and financial loss when their much anticipated homes were not delivered to them.

Today, we outline another three, which are cases involving errant developers who have failed in their obligations to purchasers after having collected money from them.

Case 1: Going around the Act

More than 100 purchasers signed Sale and Purchase Agreements with a developer sometime in the third quarter of 1995 for medium-cost terrace houses pegged from RM57,500 in Cheras. At the same time, they were required to sign a separate Supplemental Agreement with the developer’s contractor, purportedly for “up-grading” work costing RM12,300.

A search at the Registry of Companies revealed that the developer and its contractors had the same shareholders and directors.

The buyers waited eagerly for their houses but found instead that the project had been abandoned by the irresponsible developer.

The individual titles for the project 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, but this was subsequently aborted by timely intervention.

The House Buyers Association helped the bereft purchasers to form an action group - the Lingkuran Nur House Buyers Pro Tem Committee (PTC).

HBA in several dialogues convened by the Ministry of Housing and Local Government and the PTC recommended the following:

• That the developer be prosecuted for deliberately circumventing the Housing Developers Act.

• That the developer be blacklisted.

• That the Ministry should investigate the developer’s licence and its sale and advertising permits.

• That the Syarikat Perumahan Negara (SPN) be requested to intervene to study the viability of reviving this project.

We’ve been told by sources that the SPN has re-opened the file on the project to study the feasibility of reviving it. To date, however, no concrete action has been taken. We also recently heard that the developer is back in business, and is in the process of applying for a licence with a view to bidding for certain government projects in the area.

The house buyers, who included taxi-drivers and hawkers have been suffering in silence, and have been financially drained for the last seven years. All they wanted was shelter for their families. Failure to address their problems promptly will only make people suspicious. The Ministry should apply transparency and accountability in dealing with this case.

Case 2: The defiant developer

This case relates to the maintenance and management of a condominium development in Setapak, Kuala Lumpur and the failure of the developer, which is the subsidiary of a public listed company, to come through on its promises. The buyers claimed that for the RM190,000 to RM350,000 they had paid, they were not getting their value for money.

Their list of complaints contained the following allegations:

• Shoddy workmanship.

• Excessive maintenance and management charges.

• No transparency and accountability in managing of sinking and other funds.

• Some common facilities not available as per SPA, while others that were provided were not in usable condition.

• Poor maintenance.

• The developer’s appointed managing agent had cut off water supply.

There were several dialogues between the developer, its managing agent and the residents’ group presided over by Deputy Minister of Housing and Local Government Datuk Peter Chin Fah Kui. The developer remained defiant towards the Ministry’s directives. There was a proposal for a trial Joint Management Establishment (JME) to be set up, but the stubborn developer refuses to cooperate with the Ministry.

We’d like to ask how effective is the directive of the Minister if not exercised in writing under Section 11 of the Housing Development Act?

Case 3: The unlicensed developer

In the reported case of Arab Malaysian Finance Bhd vs Chan Sai Mee, Justice Datuk Dr. R.K. Nathan ruled that SPA was illegal because the developer had not obtained a developer’s licence nor a sale and advertisement permit from the Ministry of Housing and Local Government at the time the SPA was signed. The Court also found that Majlis Perbandaran Kajang (MPKj) had not approved the building plan for the subject property.

The building had been erected some seven years ago and at the stage, 80 per cent of construction work had been carried out right under the nose of MPKj. Was it ignorant to these goings-on or was it merely indifferent?

HBA would also like to ask where is the so-called scope of supervision, inspection and enforcement as professed in the websites of both the Ministry of Housing and Local Government ( kuatkuasa) and the Clients’ Charter of the MPKj.

Numerous complaints have been made against certain developers, their associates, subsidiaries and parent companies. Our check with the Ministry’s Supervision and Enforcement Division confirmed that specific developers topped the complaint chart.

Yet, these same developers enjoy fresh launches and the issuance of new project licences. Michael Chong of the MCA Public Complaints Section has even informed the Ministry that the same type of complaints pertaining to the same developers have been recorded.

We feel the Ministry, being the governing body for the industry, should provide adequate information for the public to make informed decisions before they make a purchase or for buyers who are facing problems in order for them to follow up.

Information on licences and sale and 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 Ministry to penalise or prosecute the errant developers - these can be made available on the Ministry’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?


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