Empowering house buyers
12/11/2005 Published in NST-PROP A Buyer Watch Article by National House Buyers Association

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 hassle.

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 project.

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 financing.

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.

Legal grounds

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 not arise.

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 25, 2005.

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 September 2005;

* 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 purchases.

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: info@hba.org.my; Website: www.hba.org.my