Hold back final payment to developers

The Star 5/7/2004

I NOTE with interest the various responses to the proposed amendment to the issuance of Certificates of Fitness (CF) for buildings.

The Government should be commended for the proposal, which will certainly help avert potential corruption in the housing industry.

There are enough stories about black sheep in the local authorities, who have “helped” speed up the issuance of CFs.

At the same time, the fears of house buyers are very real. Hence, I would like to suggest that the proposed amendment be implemented together with some form of check and balance over developers, architects and engineers.

Perhaps, end-financiers can withhold the release of the last 10% to 20% payment for a year.

During the one-year holding period, the developer will have to undertake repairs to any defects.

These repairs, in turn, should have a six-month warranty period.

At the end of the deferment period, the satisfied house buyer can then authorise the release of the final payment.

Under the existing system, it does not make sense that financial institutions readily release payments to developers when it is the house buyer who is the borrower.

In this way, the welfare of the majority of house buyers will not be sacrificed for the gain of the unscrupulous minority.

W.Y.Y.,
Kuala Lumpur.
(via e-mail)