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In the name of speed
12/02/2005 Published in NST-PROP A Buyer Watch Article by National House Buyers Association

Should we risk our safety, even lives, just for 'faster' housing delivery?

THIS week, the HBA rebuts arguments supporting self-certification of completed housing units from the Association of Consulting Engineers Malaysia and Persatuan Akitek Malaysia, and reiterates the problems and
its fears.

We are all house buyers. Concern about the delivery of housing to the people must be discussed and addressed constructively, if we are to find effective solutions. Therefore, the question of whether the issues that we raised in the PropertyTimes issue of Jan 8 are "the sentiments of house buyers at large" does not arise.

Simply put, we should not take the easy way out by abolishing the existing mechanism of "check-and balance" in the issuance of Certificates of Fitness for Occupation for completed housing units (CFs).

The argument that doing away with this formality relieves Government servants of a burden does not hold, because what happens is that if self-certification by professionals is allowed, these "project consultants" will get a free hand to rule the day.

The Association of Consulting Engineers Malaysia (ACEM) and Persatuan Akitek Malaysia (PAM) must be looking at the "honour system" of self-certification from the commercial point of view: The commercial interest of the developers (their clients) against the public interest of house buyers.

However, we do not blame the professional bodies for coming out strongly against our reservations because they have to defend the interests of their members and their professional integrity. We do admit, though, that not all professionals are wayward.

It is a mistake to focus solely on increasing the speed of housing delivery through self-certification, as this is only one aspect of the existing problems. Let us at this point consider the statement by an expert in land laws, Salleh Buang, in his article Balancing speed with safety (PropertyTimes, July 3, 2004), where he expressed concern that "the abolishing of CFs for housing could open a new can of worms". When a project or a building fails, everyone suffers, whether or not the buyers are professionals or civil servants. If the market is anywhere near maturity, we should see a situation where buyers are given fair deals rather than heartaches and frustrations. To have this last protective shield removed just to expedite the procurement of CFs is not the way.

Current legislation on CFs

In the Sale and Purchase Agreements regulated under Schedules G and H of the Housing Development (Control and Licensing) Act and the Regulations that come with it, housing developers have to support the notice of vacant possession given to the buyers with "... a letter of confirmation from the appropriate authority, certifying that Form E (application for CF), as prescribed under the Second Schedule to the Uniform Building By-Laws 1984, has been submitted by the vendor and checked and accepted by the appropriate authority".

This procedure was made mandatory because of the bad experiences many house buyers have suffered: Errant developers, through their appointed (and equally wayward) project consultants, declare they have "applied for the CF" when in fact they had not. They then deliver vacant possession to the unsuspecting buyers.

Without the local council accepting the Form E and without the delivery of vacant possession to the buyers, a developer will not be able to collect the final 20 per cent payment on the purchase price, and could even face the prospect of paying compensation claims for late delivery.

To enhance CF issuance, Section 7(i) was included in the housing law, which requires a developer to "inform the Controller of Housing if the appropriate authority has refused to accept the submission of CF". This is to end the suffering by developers of any delay, deliberate or otherwise, caused by a local council.

The Uniform Building By-Laws, 1984 (UBBL) was also amended and a "14-day rule" put in place to ensure that local authorities approve any CF applied

for within that period, failing which it would be "deemed as approved". Have all these amendments to the laws come to nothing? Are we all sceptical about the Government delivering what it promised? Are we now to embark on abolishing established procedures because they are allegedly not working?

Laws are made by humans, for humans to obey and be ruled by. Strict compliance and enforcement are required, not the removal of tiers designed for "check-and-balance". We are as comfortable with the abilities of the professionals in the construction industry as we are with the abilities of accountants in the commercial sector. But does this mean that we can do away with auditors?

Stretching this argument, dare we suggest that the Customs Department be done away with because it is not able to stamp out smuggling? Or do we do away with the Police Department because crimes continue to occur? Few will disagree that there'll be anarchy without these agencies.

Imposing even greater penalties on wayward professionals is fine, but what good does this do for aggrieved buyers? There is little point punishing fraudulent certification unless there is an effective system to detect such frauds. Vesting the issuance of CFs in the hands of local councils certainly instils added caution upon the professionals, and serves to remind them of their responsibilities.

We are certain the existing situation will deteriorate without this last tier of protection. It is an established fact that in situations where a conflict of interest can arise, it is the presence of an external system of check-and-balance that keeps those involved on the correct path. Take the authority away and the law of the jungle will prevail.

Unanswered questions

At a public forum the HBA attended in Kuala Lumpur on Oct 14 last year at the invitation of Housing and Local Government Ministry's Department of Local Government (DLG), we raised our concerns about self-certification
and made several recommendations to alleviate the problems the industry professionals face.

It was against this backdrop that on Sept 22 last year we lodged six complaints against certain architects and engineers for making CF certifications, ranging from premature and incorrect certification to issuance of a certificate of "partial" vacant possession.

In one instance, a "conditional certificate of practical completion" was issued, while in another, documentary proof of the Form E being lodged with the Majlis Perbandaran Subang Jaya (MPSJ) was provided, with MPSJ's acceptance "endorsed". However, in this matter, we obtained evidence otherwise.

We followed up on our complaints with an official letter to the Housing Ministry on Oct 20, in which we raised several questions, among them:

1. Does the move for self-certification mean the 14-day rule put in place for CF issuance is not working? If not, why? Is anything being done to make it workable?
2. Were the views of the local councils sought? If not, why? After all, these councils often bear the brunt of complaints from house buyers, because developers pass all blame to them.
3. Is there any feedback on our specific complaints against certain architects and engineers that was lodged with the DLG on Sept 22 last year? Have these cases been investigated? If not, why?
4. Is the DLG aware that self-certification for CFs is not working, either in New York or in many cities of the United Kingdom? Have studies on reasons for such failure been made?
5. On-site architects and engineers have informed us that local councils do not exercise their "we can move in anytime to inspect" powers. There is even accusation that local councils "hardly do any inspection of construction in progress". Is there truth in such allegations?

Unfortunately, we have not received any reply to these pertinent questions. So much for accountability!

No end to cheating

A group of bungalow plot buyers in Negeri Sembilan have it in their agreements that "infrastructure works" including "water reticulation as well as the sewerage and water treatment systems" would be in place prior to delivery of vacant possession.

The buyers paid the full purchase price for their plots after the site engineer certified the completion of works, notwithstanding the "non-availability of sewerage and water treatment systems". The developer is now in liquidation. So, how can these buyers proceed to build their bungalows?

Another case referred to us involves deviation from building plans, a problem many house buyers would be familiar with. Apparently, when complaints were raised, the certifying architect's reply was that "it doesn't matter whether the wall is crooked, so long as it has been built"!

The professional who issued the Certificate of Completion (of construction works) added salt to injury, saying: "... this is what you get for the price that you are paying ... don't expect too much".

The standard reaction of the ordinary house buyer is to blame the Government agencies for their lack of supervision and enforcement. Is this something we don't know? Have civil servants who've heard harsh words not passed the message up?

Which brings us to the next pertinent question: Should the Government continue to bear its obligatory responsibilities in the delivery of housing fit for occupation to the citizens? Or should it move for self-certification of CFs, and appear blameless for delays?

Enforce to the fullest

We say the status quo must remain. Local councils should retain responsibility for the issuance of CFs, and enforce the UBBL to the fullest. They are closest to what is happening in the building industry, from the day approval for a housing project is granted, and are in the best position to ensure compliance with all conditions.

Let us not forget that project consultants are in the payroll of developers. Let us not forget that they can only make guarantees in their individual capacities. Let us not forget that we are dealing with housing for the masses, not the construction of an automated factory!

What happen next depends very much on the report the Housing Ministry will submit to the Cabinet. We hope that our reasons are coherent enough to convince our leaders that no system can function without a check-and-balance in place.

* The National House Buyers Association (HBA) is a non-profit, non-government and non-political organisation manned by volunteers. Its website is www.hba.org.my. E-mail: info@hba.org.my

 

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