More than was
in NST-PROP A Buyer Watch Article by National House Buyers Association
Continuing the discussion on why build-then-sell
should be the way of the future
We at the National House Buyers' Association (HBA)
sometimes can't blame buyers who have unwillingly
"married" errant developers to vent their
frustrations on us, even though it is our assistance
After putting their hard earned money
into the downpayment, the least they expect is a
home that can fulfill their dreams - not one that
will become their nightmares. And so, they turn to
us, expecting us to be some kind of marriage counsellor.
But for as long as the sell-then-build (STB)
method of housing delivery is practised, this
problem will always exist to haunt buyers.
As it now stands, buyers saddled with defective
houses and uncooperative developers have to end up paying more to
undertake remedial work, simply because they cannot check
workmanship quality before their units are handed over to them.
Furthermore, they have no right to refuse taking vacant possession.
Unlike developers, buyers cannot terminate their
Sale and Purchase Agreements and have their monies refunded in full
if their units are shoddily built, delivered late, or do not adhere
to the original building plans. Their rights can only be exercised
in a court of law, which means having to waste time, incur more
heartache and fork out more cash.
But that's only if the house is completed in the
first place!. Statistics from the Ministry of Housing and Local
Government revealed that until 2002, 544 housing projects were
abandoned. The number might appear small compared to the number of
projects launched, but nevertheless, it means that we have a
situation where our fellow man has been subjected to torment -
suffering that can happy to any of us, or our loved ones, too!
Besides this, abandoned projects are also taking
their toll on all of us through the way the Government has to
channel our tax-ringgit into reviving some of them. Billions
have been poured into agencies such as Syarikat Perumahan Negara Bhd
(SPNB) to revive them - money which could have been better spent if STB wasn't adopted.
The method is also not one that displays fairness
and equity. For instance, buyers are given numerous deadlines to
adhere to when it comes to making their progress payments - miss one
by just a few days, and immediately late payment penalties will be
incurred. However, developers have a wider berth, as can be seen
from the numerous cases where their buyers have had to wait for
months and even years to receive their liquidated ascertained
damages resulting from the developers' late delivery of the units.
Furthermore, while developers might be able to
satisfy their financiers by offering them security in the form of
collateral, buyers 'trapped' by errant builders are often left with
a 'shell' company that is insolvent and not practical to sue. In
cases of insolvency of the developer's company, buyers are ranked as
STB also allows developers to take risks with
buyers' money. Many use special purpose companies to limit their
financial risks, but buyers have no such 'protection'. As a result,
many people who thought they were buying property actually ended up
The housing industry has had ample time to address
and overcome the problems faced by the buyers and the public
deserves a more effective system of delivery, quality control and
consumer protection than STB can provide.
The first step is to place responsibility where it
belong, and that certainly isn't on buyers laps. Developers must
construct and deliver their products based on their own financial
capabilities. Secondly, buyers' rights have to be better protected
through an improved method of sale and purchase - only by doing so
will construction quality show improvement and housing delivery be
made more efficient.
Thirdly, in order to encourage change, the
Government should create legal, administrative and market based
frameworks that allow only responsible, qualified developers to
succeed. Doing so will ensure the country can reach developed nation
status within the expected time frame.