HBA, will you be my big brother?

New Straits Times 25/02/2006

Click to read HBA's response

GIVEN their choice, it appears that house buyers want the National House Buyers Association (HBA), a Non-Governmental Organisation, to slip into bigger shoes and play an institutional role in monitoring housing developments throughout the country in order to safeguard their interests.

Instigated by a letter to PropertyTimes published last week (Letter to the Editor, Feb 18 issue), a survey was conducted among prospective buyers to glean their feedback on whether it would be a good idea for the HBA to be empowered in order to protect them from errant developers. And the finding was a resounding thumbs up, with 70 per cent of the respondents saying they hope the body can take on a "big brother" role.

The general consensus for this view is because they feel the HBA has a track record of defending house buyer's rights and therefore can be trusted to act without fear or favour.

In the letter that sparked the poll, author V.Thomas proposed that the HBA be "institutionalised and empowered" to act on buyers behalf, with the support of the Government, developers, local authorities and banks.

He suggested that this could be achieved if buyers pay HBA a sum of RM200 or one per cent of their house price (whichever is higher). In return, the association would safeguard their interests by employing a panel of lawyers, engineers and architects to monitor housing projects.

"The main reason for the exploitation of house buyers until now has been the lack of a strong protective set-up for them," Thomas wrote.

The majority speak out

Concurring with Thomas' sentiments was A. Lima, 35, of Subang Jaya, Selangor, who said, "It's a good idea because something needs to be done about the current situation in the property market".

"There needs to be more protection for consumers ... it is timely to give the responsibility to an independent body such as the HBA."

P. Ananda, 29, from Jalan Klang Lama in Kuala Lumpur said: "Because they have the best interest of buyers at heart, I think the people in the HBA are probably most suited for the job.

"From the many newspaper reports I've read about their activities, I believe they have done a good job in championing the causes of aggrieved purchasers. And so, I honestly can't think of a better organisation to act on our behalf."

Arieff Wahid, 28, of Taman Tun Dr Ismail also in KL too endorses the idea, but said the reason for his support is because "the Government is not doing its job (of enforcing the laws for development) in the first place".

"By right, it should be the Government's duty," he reasons, "but with all the abandoned projects the country is faced with, it is clear that it has not been doing its part. So the public must find someone to look out for them ... why not the HBA?"

The minority's view

Ironically, it is for this same reason that Darshan Singh, a member of Federation Of Malaysian Consumer Associations, disagrees with the move to institutionalise the HBA.

While he concurs that the housing industry is in need of "serious monitoring", Darshan pointed out that this should lie with the Government and the "buck" should not be passed to someone else.

"All the guideless for proper enforcement are already spelt out clearly in the Housing Development Act, so I don't see why the burden should be vested with another party," he said.

"Honestly, if the public is now calling on another body to do (the Government's) job, it is quite a slap in the authorities' face."

He suggested that if any Non- Governmental agency has to get involved in the process, it should be the banks as they currently "seem to have very little concern about consumer protection".

"They are instrumental to the industry and it is about time they took it upon themselves to play a more proactive role," Darshan said. "They should be the ones monitoring, assessing and vetting documents on behalf of their client-borrowers.

"In the process, this would lead to the provision of better service." W.C. Yow, 45, a property investor and owner of several properties, pointed out that not all developers can be branded irresponsible, saying that he for one has had "the good fortune of dealing with a string of responsible companies".

"But I am aware of the fact that errant outfits exist, and these are the ones that have caused mistrust among buyers," he said.

"However, to institutionalise the HBA and give it `watchdog' status appears to me like a duplicity of roles and therefore it does not get my vote.

"Why should buyers incur additional cost for something that should be provided by the Government?" Yow asked of Thomas' proposal to pay HBA a fee of RM200 or one per cent of the house price.

"If the Government cannot enforce the law, it would be a more viable solution for insurance companies to work with developers and create something that can be called a house buyer protection policy."

Elaborating, he said such a tool would allow buyers to be compensated against non-completion of a project, late delivery, or even for any defects incurred in their units.

"It is on insurance company's job to assume risk, so this suggestion could be right up their street," he said, adding that the premium for the policy, to be issued individually to buyers, should be borne by developers until their projects have been completed with Certificates of Fitness.

"Thereafter, buyers can have the option of continuing to pay for the policy to protect them against defects after the (obligatory) 18-month defect liability period is over."

Professional opinions

Khatijah Abdullah, president of the Malaysian Institute of Estate Agents, also said it should be the duty of the Ministry of Housing and Local Government to enforce the rules safeguarding house buyers.

"It's an issue of jurisdiction," she said. "If the Ministry can properly vet the development applications submitted, there would be no need for other parties to come in and make the whole process more complicated than it already is ... it's a whole lot of unnecessary double work."

She added that if anyone should set up a "watchdog" for the industry,it should be the Government.

"As a member of an association, I know it will be difficult for the HBA to take on such a daunting task. Associations are largely made up of volunteers - people who come and go, and it would be almost impossible for them to administer it."

Sarkunan Subramaniam, executive director of property consultancy Knight Frank Ooi & Zaharin Sdn Bhd, reinforced Khatijah's comments, adding that he thinks the HBA would lose a certain amount of credibility if the move took place.

"Right now, it is seen as the voice of the house buying public and is independent from the Government," he said.

"By institutionalising it, the public may view it as yet another Government agency ... which would then raise doubts about whether or not the HBA has consumers' best interests in mind."

Datuk Mani Usilappan, former director-general of the Ministry of Finance's Valuation and Property Services Department, said the proposal "sounds like an incredibly brilliant suggestion ... but only if it can be implemented".

While the task is rightfully that of the Ministry of Housing and Local Government, Mani pointed out that the Ministry is a Federal Government body and thus, does not have branches or officers in all States.

"The HBA can be a suitable body to assume the role since it looks after the interests of consumers and since it can set up branches in every State," he said.

However, Mani asked, "Under whose authority or auspices would it operate? How would it get the authority to act - to inspect projects and demand to see books?"

"If the HBA does not have legislative authority, its actions would be easily challenged in court," he said.

"It can only act if it is given the powers of an inspectorate ... this means more regulation and I think the country has quite enough rules."

Click to read HBA's response