By Datuk Chang Kim Loong
TIME and again every Housing Minister desires to tweet and talk about tuning the housing laws, in the pretext of “more protection” and safeguards for house buyers as if it is customary to do so.
This time around, the current minister, Datuk Zuraida Kamaruddin talked of having a ‘fund’ purportedly to revive abandoned housing projects. If such a ‘rehabilitation fund’ is set up, wouldn’t house prices be increased proportionately since developers will always factor the “increase” to the house prices? Would the setting of the proposed “rehabilitation fund” allow developers to be reckless in launching new projects?
Housing Development (Control & Licensing) Act, 1966 (amended 2015)
The current Housing Development (Control & Licensing) Act, 1966 (HDA) was revamped on June 1, 2015 to plug some of its loopholes, rectified inadequacies and even some questionable and grey clauses that existed in the original Act.
The procedures for control and licensing of housing developers have been made more stringent so that non bona fide developers would be marginalised.
Let me elaborate the stringent rules and safety nets that are currently in place under HDA.
Criminalising abandonment
The pertinent amendments to the HDA were on the issue of criminalising project abandonment. This new amendment makes it a crime for housing developers to abandon their projects, with jail sentences attached.
The new Section 18A states: that any licensed housing developer who abandons or causes to be abandoned a housing development or any phase of a housing development which the licensed housing developer is engaged in, carries on, undertakes or causes to be undertaken shall be guilty of an offence and shall, on conviction, be liable to a fine which shall not be less than two hundred and fifty thousand ringgit (RM250,000) but which shall not exceed five hundred thousand ringgit (RM500,000) or to imprisonment for a term not exceeding three (3) years or to both.
Now here comes the million-ringgit question. How many wayward housing developers have been prosecuted under this new Section, with so many abandoned housing projects?
We have not heard any at all reported in the news media. Have you?
Deposit of 3% on construction cost in the developer’s account
Section 6(1)(b) (Conditions or Restrictions for the grant of a Developer’s License) was enhanced to make the requisite deposit (refundable) from the then RM200,000 to 3% of the construction costs,
As to whether the 3% deposit will curb abandonment, our contention is that it will indirectly reduce such incidences. Those developer-aspirants who are financially so weak that they are not able to raise the 3% deposit (it is refundable anyway) should stay out of the industry because the probability of them running into trouble is higher.
The increase in the finance cost in order to fork out the 3% deposit is negligible when measured against the potential gross development value.
Furthermore, any additional cost (interests) is only incurred during the construction phase because upon project completion, the 3% is fully refunded by the Controller of Housing.
However, the effectiveness of the revamped Act remains to be seen. It would only reflect its effectiveness after a period of time. However, we reiterate that much would depend on the degree of enforcement to be carried out.
Here is another million-ringgit question. More than five years has passed since its’ implementation. Why are there still new abandoned housing projects littering our skyline?
Where is the “protection” from the defunct developers? Do they not know that abandoned housing projects is the biggest nightmare that house buyers face?
Ornamental pieces
Our fundamental belief is that even the best of legislation to counter a particular situation would just remain as “ornamental piece” unless strict enforcement is carried out against offenders, without fear or favour, so as to instill respect and fear on the rule of law.
The Housing Ministry is the guardian of the housing legislation that was passed by the Parliament. Yet, how do you account for the surmounting problematic housing projects?
It is not that the ministry does not have the laws; it is the sheer lack and lax in enforcement. – July 20, 2021
Datuk Chang Kim Loong is the honorary secretary general of the National House Buyers Association (HBA), a non-political, not-for-profit organisation manned by volunteers.
The views expressed are solely of the author and do not necessarily reflect those of Focus Malaysia.
Photo credit : NST
