“EOT: HDA is to protect house buyers’, not errant developers” (Part 2)

SUBSEQUENT to the Ang Ming Lee case, there are attempts to invoke the minister’s power under Section 2(2) of the HDA to exempt developers from adopting the Scheduled Agreements and indirectly granting (extension of time) EOT to housing developers.

Section 2(2) of the HDA reads as follows:-

The minister may by order published in the Gazette exempt any housing developer or housing accommodation from any or all of the provisions of this Act and such exemption may be granted for such duration as may be specified in the order, and may be made subject to such limitations, restrictions or conditions as the Housing and Local Government Minister may specify in the order.

With due respect, it is questionable whether the Minister can invoke Section 2(2) to grant EOT. Granting EOT is contrary to the decision of the Federal Court in Ang Ming Lee case.

The exercise of the power of Minister under Section 2(2) to extend the completion date is detrimental to the interest of house buyers and is against the intention of the Parliament in enacting HDA. The attempt to circumvent the decision of the Federal Court must be censured and is unthinkable as it runs contrary to the legal provisions and the spirit of the HDA.

The abuse of Section 2(2) of the HDA to enable developers to adopt the Scheduled Agreements in a selective manner is a regressive step. Invariably, any EOT of a housing development means that the house buyers will have to fork out additional money to service their loan facility interests and consequently increase the housing costs.

Their plans to speedily have a shelter will be derailed. Doesn’t the minister know the longer the house buyers are made to wait, the longer the holding cost is and the higher the risk exposure?

Essentially, Section 2 of the HDA is drafted to allow the Minister the power to “exempt” the developer from complying with the legal obligations of the HDA in select circumstances which affect the rights and interests of house buyers, not to assist the housing developers.

If Section 2 of the HDA were a valid provision to be utilised to circumvent the Federal Court decision in the Ang Ming Lee case, then developers could further use the same argument to avoid their obligations to pay the house buyers the LAD for any delays.

As we have mentioned above, the Federal Court decision in the Ang Ming Lee case has a universal application. The Federal Court finds that actions which deny house buyers their rights to LAD are invalid, null and void ad initio.

It does not matter which provision of the HDA the minister uses to circumvent the Federal Court ruling. The Minister cannot deny the house buyers the LAD, especially when no right to be heard was given to the affected house buyers.

What “exemptions” are allowed in Section 2(2)?

It is true Section 2(2) has been enacted to allow certain exemptions. One example is in paying the requisite deposit of 3% of the gross construction cost (GCC) to the Ministry, whereby the old rate of RM200,000 for a developer’s license is applied instead. The Minister, in the Parliament, argued that the exemptions were to help Government linked companies and small developers embark on affordable housing.

The Ministry, in fact, exempted 122 developers from having to pay the requisite deposits between 2016 and November 2019. The Deputy Minister told Dewan Rakyat in December 2019 that the exemptions were given as an incentive to developers to build affordable units priced below RM350,000 because their profit margins were low.

A total of 184 exemptions were granted under the housing initiative programmes such as PR1MA, Malaysia Civil Servants Housing Programme (PPAM), Rumah SelangorKu and RUMAWIP (now known as Residensi Wilayah Keluarga Malaysia).

HBA has rebuked such exemptions because neither the affordability of the units nor developers’ profitability should be the yardstick. The deposit of 3% of the GCC is to ensure developers for subsidised housing schemes complete the work on time and without forsaking quality. After all, the deposit is refundable. However, this topic is for another article.

Ultimately, Section 2(2) cannot be exercised to change the subsidiary legislation ie. the Scheduled Agreements.

The power to grant exemptions under Section 2(2) or Section 11, 12, 24(e) or whatever section of the HDA ought to be exercised in prudence and objectivity (in accordance to the purposes of this Section) and certainly not to vary from the prescribed contracts by offering longer durations to complete developments or to modify the Schedule of Payment, or in some instances, to shield the developers from paying late delivery compensation.

Perhaps the house buyers, who are gravely “affected by the unilateral EOT, need to make another trip to the court to seek legal redress. – July 24, 2022


The article is jointly written Datuk Chang Kim Loong, the honorary secretary-general of the National House Buyers Association (HBA) and their legal adviser, Koh Kean Kang.

The views expressed are solely of the author and do not necessarily reflect those of Focus Malaysia.

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