Empowering house buyers
12/11/2005 Published in NST-PROP
A Buyer Watch Article by National House Buyers
A victory has been won in getting
names of errant developers posted on Housing Ministry's website
Consumers today have various forms of protection when they make purchases,
whether these are electrical appliances or motor vehicles.
They are able to get basic information about what they are buying, know the
cost beforehand and even examine the product they wish to buy.
Unfortunately, such protection is too often absent when it comes to buying a
house. In most cases, all buyers have for reference are glossy artist's
impressions of what they are supposed to get for their money.
Since changes may be thrust upon them at the last moment, buyers will have
no realistic opportunity to determine whether their vendor-developer would
be able to deliver the property on time, in good quality and with minimum
In order to expand home-ownership, it must therefore be ensured that those
who buy houses can avoid problems - such as getting stuck in an abandoned
Knowledge is power
Knowledge is the best protection against developers who have a history of
delayed or stalled projects, poor after-sales service, bad workmanship,
inferior quality and so on. One of the best ways to avoid problems and
promote home-ownership is to educate buyers about the process and
responsibilities of home-ownership, and how to avoid bad developers.
The increasing number of low- to medium-cost houses being auctioned is one
warning sign that all is not well with the group's purchasing such units.
House buyers thus need to be well prepared for all kinds of situations, and
the best defence is knowledge.
They must be made aware of the various incidental costs and expenses related
to purchase: Including legal fees, stamp duties, registration fees and
For many decades, the Latin phrase caveat emptor or "buyer beware" has been
the battle cry for the housing industry. It means simply that buyers should
do everything in their power to make sure that the properties they buy are
sound and with titles.
Why? Because at the end of the day, it is their money that is involved.
In the case of a completed property, it is important that the buyers consult
the relevant professionals to assist them in buying their houses.
The Housing and Local Government Ministry as well as other well-meaning
agencies have often advised buyers to check on the credibility and financial
capability of the developers before embarking on the purchase.
This concern came about because a large number of buyers have got into
trouble buying units in projects that were ultimately delayed or even
abandoned. However, we at the National House Buyers' Association (HBA) have
pointed out, time and again, that it is virtually impossible for buyers to
make any meaningful check on a developer. We have also said it is not
uncommon for those waiting for the completion of their houses to be in the
dark about the status of their projects.
Recent revelations (see PropertyTimes Oct 22, 2005, "Pillory the rogues")
have shown that despite the stringent Housing Development Act, the industry
is flush with 695 rogue developers that pose serious threats to naive and
unwary house buyers.
This figure is large in relation to the 4,500 developers licensed by the
ministry. Hence, there is a vital need for an avenue where buyers can check
on developers before they embark on a purchase.
The HBA has pointed out that the Housing Ministry's website is the best
place to post information about errant developers - those that have defied
awards handed down by the Tribunal for Homebuyers Claims; those that have
been taken to task and facing prosecution in court; those that
have breached the Housing Act and its regulations; and the worst of all,
those that leave behind a trail of abandoned projects.
Rationale for exposure
The compilation of a database will keep the public informed about rogue
developers taken to task by the ministry and buyers will be able to stay
clear of them.
The publication of such a database is not new in Malaysia, for there are
institutions that have released pertinent information to the public through
their websites (see accompanying table).
The publication of a similar database of errant developers by the ministry
will equip buyers with the necessary information to make a more informed
decision, as well as enable those making progress payments to monitor the
construction of their units.
There is no legal impediment to the publication of a database on errant
developers, since the information to be published is in the public domain
and forms part of public records. Once prosecution in a court of law begins,
the information is in the public domain and if a conviction is obtained, it
is also in the public domain.
Because of this, there can be no restriction against its publication in a
website hosted by the ministry. So long as the information - whether it
comes from the courts or from the Tribunal for Homebuyers Claims - is fair
and accurate at the time of its publication, the question of defamation will
ruth or justification is an absolute defence to any suit on the grounds of
defamation, libel or slander. If a statement is true, no amount of malice,
bad faith or belief in the falsity of the statement will make it actionable.
Exercise of transparency
The HBA has, for some time, been pressing for the database of errant
developers to be posted in the Housing Ministry's website. Finally,
Attorney-General Tan Sri Abdul Ghani Patail called for a meeting with top
ministry officials and HBA volunteers, which was held at his office on Oct
Ghani saw the need for transparency in this longstanding issue and in no
uncertain terms made it clear that information on errant developers should
be made available to the public.
The ministry acted quickly and in its website, www.kpkt.gov.my, posted lists
of developers that have committed various offences/defaults. The names are
listed under five categories:
* Developers prosecuted for non-compliance with Tribunal awards up to
* Companies charged with developing housing projects without a licence under
Sections 5(1) & (2) of the Housing Development (Control and Licensing) Act,
between 2003 and September 2005;
* Cases of developers charged with breaches of the Act and the Regulations
under it, from 2003 to September 2005;
* A list of developers compounded under the Act and its Regulations, from
2003 to September 2005; and
* A report on developers compounded under the Act and Regulations, from 2003
to September 2005.
Things can really move when given the right encouragement. Housing and Local
Government Minister Datuk Seri Ong Ka Ting and his team have responded
positively to the HBA's call to empower buyers.
Good governance and transparency can only be good for the industry. We
therefore ask all potential buyers to check the ministry's website before
making any commitment to purchase.
Besides this database, we have further urged that the names of the
directors, shareholders, past projects and audited accounts of housing
developers be made available to enable buyers to evaluate their proposed
If such information is not available for the time being, buyers can still
conduct their own independent checks at the Companies Commission of Malaysia
(Suruhanjaya Syarikat Malaysia) which has its website at www.ssm.com.my.
After all, the search fee is only RM10.
The National House Buyers Association (HBA) is a nonprofit, non-political
organisation manned by volunteers. It can be contacted at No. 31, Level 3,
Jalan Barat, off Jalan Imbi, 55100 Kuala Lumpur. Tel: 03-21422225 / 012-3345
676; Email: firstname.lastname@example.org; Website: www.hba.org.my