Freeze order on new serviced apartments

NST-Prop 26/11/2005 By Fadzil Fauzi

All new applications for the development of serviced apartments in Kuala Lumpur have been frozen in yet another move described as "intended to protect purchasers".

According to KL Mayor Datuk Ruslin Hasan, City Hall (DBKL) received a directive from the Cabinet last month to impose a 'temporarily freeze".

"However, projects that have been approved will not be affected," he said earlier this week.

The reason for the directive, Ruslin said, is to prevent buyers from facing problems in the future "because they do not enjoy the protection accorded to purchasers of condominiums, apartments and other non-commercial property".

Serviced apartments are commercial property and can only be built on land zoned for commercial use. As such, they fall outside the term "housing accommodation" as defined under the Housing Development (Control and Licensing) Act.

In the event of any dispute, the only legal recourse a buyer will have is the terms of the contractual agreement with the developer.

The Cabinet directive has so far been issued only to DBKL. Checks with the Town and Country Planning Departments of the municipal councils of Petaling Jaya (MPPJ) and Subang Jaya (MPSJ) revealed they have not received any instruction.

According to a source in MPSJ, the council is aware of the Cabinet decision to freeze serviced apartment approval, which was made about a month ago, "but we are not sure if the directive is for the whole country or only for selected towns and cities".

The freeze is likely to affect seven projects that have yet to be approved by DBKL as at Nov 22.

Meanwhile, an industry source revealed that the Housing and Local Government Ministry is planning to table amendments to the Housing Development Act in Parliament by the first quarter of next year.

According to her, the amendments are to bring serviced apartments and bungalow lots under the jurisdiction of the Act.

In June last year, Housing and Local Government Minister Datuk Seri Ong Ka Ting announced that the Government would consider legislation to protect buyers of serviced apartments.

"I have brought the issue to the Cabinet and when it is approved (and amendments to the law made), the ministry will be able to monitor the development of these apartments," he had said.