Pillory the rogue

NST 22/10/2005 National House Buyers Association (HBA)

The clamour for transparency in Government since the Approved Permit for vehicles fiasco broke out several months ago should have taught the Ministry of Housing and Local Government some lessons, considering that it had received so many pleas from aggrieved house buyers for such a long time.

The recent revelation by the director of the ministry's Monitoring and Enforcement Division, Dr G. Parameswaran, that there are a staggering 695 rogue developers operating in the country has come
as a shock, given the continuous pledges of the ministry to clean up the industry.

The ministry has vowed, countless times, to protect the interests of house buyers by strictly enforcing
the Housing Development (Control & Licensing) Act, 1966. The National House Buyers Association
(RBA) had always thought that the number would be much smaller, considering the numerous assurances from the minister, Datuk Seri Ong Ka Ting, and his officers about stricter enforcement and prosecution since the Act was revamped in 2002.

This figure of 695 rogue developers, responsible for various offences against house buyers and contravening the laws related to the housing industry, is not acceptable. The ministry's Control and Enforcement Division owes the public an explanation, since it was entrusted with the task of monitoring and enforcement in the strictest sense of the term.

According to Parameswaran, there are to date 96 developers including 16 bogus or unlicensed ones that have opened up offices and project sites and cheated house buyers of their deposits. Another 32 are facing action in court for not complying with awards handed down by the Tribunal for Homebuyers Claims, while 80 developers are being investigated for similar offences.

The ministry has also slapped 519 developers with compound fines for offences including failing to submit their biannual progress reports on their housing project, violating advertisement regulations and other breaches of the law,

According to Parameswaran, most of the unlicensed developers are concentrated in the Klang Valley, while the licensed ones that have flout- ed the laws are from all over the country, He has promised strict enforcement to protect the interes5 of house buyers, saying that "no mercy will be shown to developers who flout the law",

The ministry's records show there are 4,500 licensed developers in the country, It works out therefore
that the rogue ones make up 15,5 per cent of the total a figure that is by no means small.

Database

What then about those unreported cases as well as developers that do not come under the ambit of the Act such as those involved in building commercial properties? They could make the figure swell even more.

We have time and again called for a list of errant developers to be complied and posted on the ministry's' website, as this will keep members of the public informed about rogue developers taken to task. Such a database will enable house buyers to stay clear of those with a bad record.

The idea of this database is not something out of the ordinary. The Selangor Government has been bold enough to publish a list of developers that abandoned projects in the State on its website (www.mbselangor.net.my -"Senarai Nama Pemaju Projek Terbengkalai). The list includes those involved in commercial projects as well.

Other Government agencies, such as the Road Transport Department and Kuala Lumpur City Hall and eventhe Bar Council have also made public the names of those who have flouted the law on their websites. This move empowers citizens by providing them with pertinent information.

Between 2003 and September this year, 96 of these 695 developers were charged in courts with a total of 661 offences (see Chart 1).

Another 112 developers who failed to comply with awards handed down by the Tribunal for Homebuyers Claims face action under Section 16AD of the Act (Criminal penalty for failure to comply), which provides for a fine of up to RM5,000 or two years' jail or both, besides a fine of up to RM1,000 a day for every day that the offence continues.

There have been reports from house buyers that the ministry’s Legal Affairs Division has been slow to prosecute developers who have failed to comply with the awards made by the tribunal since 2002. While we have not ascertained the validity of this claim, HBA has obtained Statutory Declarations on this from the complainants.

Even if defiant developers agree to settle the awards, they have still run foul of the law by not complying with the court order right away and so must be convicted and punished.

There cannot be situation of "no further action" or the charge dropped.

The 16 unlicensed developers facing 37 cases of cheating house buyers of their deposits have clearly committed criminal offences. Such offences can be easily defined under the Penal Code- so why haven't police reports been made against them? If the ministry is sincere about enforcement, then it should ensure that crooks and thieves do not get away easily.

The 2002 amendment to the Housing Development Act saw the inclusion of wider powers for the ministry under Section 10A, including the "power of entry, search and seizure.

An Inspector of Housing can enter a developer's office, seize books and documents, and detain any person and search for evidence of Commission of an offence that may be tampered with, removed, damaged or destroyed. We wonder wheelie this all-powerful section has been activated to reflect the ministry's seriousness about enforcement.

HBA as 'eyes and ears

Also, between 2003 and September this year, a total of 519 developers were fined between RMl, 000 and RMl00, 000 each for various offences. The total amount collected was RM872, 900 for 875 compound cases (see Chart 2).

Of the total fines collected, RM32, 000 was the result from our volunteers' efforts in March this year, when we identified wayward developers part in the first Malaysia Property Exhibition (Mapex) of 2005 organized by the Real Estate and Housing Developers Association (Hehda) at the Mid Valley Megamall in KL. After all, aren't we also the "eyes and ears" of the ministry?

Though the ministry too had a booth at this Mapex event, its staff members were thereto "only man the booth", not to patrol or monitor what was going on, despite there being so many developers under one roof. What then of the ministry's proud proclamation on its website that it will at all times review developers' advertisements in newspapers, brochures, advertisement boards and other channels to see whether they comply with the laws?

It is good if officers from the Monitoring and Enforcement Division are present at major property events. This would give the impression to the public that the exhibitors have been vetted and that it is safe to buy in the projects promoted. It hasn't happened yet. At the second national Mapex 2005 held last month, we again detected various offences in developers' brochures and is now finalizing the complaints for formal filing with the ministry.

Delayed and abandoned projects. No matter how much the ministry attempts to tighten laws and regulations, rogue developers will always some how find loopholes and devices to circumvent the laws. Despite the 2002 amendments to the Act, housing projects continue to be abandoned meaning that the system that was put into place has failed.

HBA, in a dialogue with the minister, Ong Ka Ting, highlighted the projects concerned and informed him about several others in the pipeline that have been delayed and might even be abandoned. We can only hope that the necessary action is being taken to prevent more housing projects from being abandoned.

Together with our efforts to educate house buyers to become more responsible for their actions or inaction we expect the ministry to be transparent and identify the rogue developers. It is our contention that the publication of a database on errant developers that have been prosecuted and convicted will help house buyers carry out a "risk rating" when purchasing property.

Such a database should include the names of the developers, the directors and shareholders, project names, the number of buyers and the sections of the laws that were breached.

It is our contention that I once prosecution begins, all legal documentation on this, except for the investigation papers, belongs in the public domain. If a prosecution leads to conviction, it should also be in the public domain.

HBA believes the ministry should take proactive steps to empower the people with information for this will show its maturity and prove that it is able to act without fear or favor. We also believe that this sort of social regulation will make the housing industry more responsible and ultimately spell success for our country.

The National House Buyers Association (HBA) is a non- profit, non-political organization manned by volunteers.It can be contacted at No. 31, Level 3, Jalan Barat, off Jalan Imbi, 55100 Kuala Lumpur. Tel: 03-2142 2225/012-334 5676. E-mail: info@hba.org.my; website: www.hba.org.my