More protection for house buyers
Developers made more liable for projects, penalties increased

NST 27/09/2001 By Carolyn Hong

The Cabinet has approved extensive changes to the law to better protect house buyers, including holding developers responsible for their projects even after their licences have lapsed.

Fines would be increased five times across the board, more stringent conditions imposed on developers, and a housing tribunal set up to make it easier for buyers to seek redress.

The amendments to the Housing Developers (Control and Licensing) Act would focus on preventive measures and better consumer protection, as well as enhancing the authorities' enforcement powers.

Housing and Local Government Minister Datuk Seri Ong Ka Ting said today the Act would be renamed the Housing Development Act to reflect its new focus.

The amendment Bill would be tabled in Dewan Rakyat for the first reading on Oct 8, and was expected to be passed in the same sitting.

We hope that it would come into force by early next year, he told a Press conference, adding that it would, however, not be back-dated.

The major proposed amendments are:

* Developers' deposit raised from RM100,000 to RM200,000, to ensure that they have a sound financial standing;

* Tighter restrictions on issuance of licences. Licences would not be issued to developers who had been fined over RM10,000; directors of developer companies which had been wound up; and architects or engineers who had been struck off their professional rolls:

* Fines for all offences increased five times across the board. Fines, which currently range from RM5,000 to RM100,000, would be raised to RM25,000 to RM500,000 (Ong said this would have a strong impact as developers who had been fined over RM10,000 would be barred from getting a new licence);

* Developers whose licences have lapsed would continue to be liable for their projects, to prevent unscrupulous developers from deliberately letting their licences lapse to avoid their responsibilities.

The responsibilities include applying for certificates of fitness, and completing abandoned projects. (Ong said there were a number of sick projects where developers had let their licences lapse so that they fell outside the Act's purview);

* Formation of a Housing Tribunal for claims of up to RM25,000. This would enable house buyers to seek redress speedily and cheaply. No lawyers are allowed and the tribunal's decision is final;

* Housing inspectors given powers of entry, search and seize of evidence like account books for court proceedings;

* Minor offences compounded to clear the cases faster. This includes offences relating to advertising and sales permits;

* Appointing a Deputy Housing Controller and delegating powers to government departments and local authorities. This is to speed up processes like issuance of licences, and advertising and sales permits;

* Developers required to report to the Ministry on the status of strata title applications for their projects; and if their company was to be sold or restructured;

* Minister given the power to terminate sales and purchase agreements if a project was not begun within six months; or if 75 per cent of the buyers and developer agree to abandon a project which they feel has become unviable. All monies paid would be refunded to the buyers;

Ong said the Ministry hoped that the amendments would reduce the number of problematic projects and complaints.

At present, there are 1,520 active developers. Last year, the Ministry received 1,823 complaints, a steep rise from the 737 in 1997 and 446 in 1990.

The complaints were on defective work, no certificates of fitness, late delivery of houses, violation of the agreement, fraud and lack of infrastructure like access roads and drains.

A total 99 cases were filed in court from 1985 to 1990. This increased to 935 from 1991 to 2000.

Last year, 859,480 houses were built by the private and public sectors.