Do we honestly need new laws to purportedly “offer more protection” for house buyers when the existing ones are adequate?

Do we lack laws or the will to enforce them? 

Would amending the Housing Development (Control &Licensing) Act, 1966 (Act 118) and their related Regulations honestly solve the problem of abandoned housing project?

There is nothing wrong with the current laws. The million dollar question is – how many delinquent housing developers have been punished and prosecuted in the Courts of Law with so many abandoned housing projects littered in Malaysia?

Why has Section 18A of the Housing laws on criminalising abandonment not been invoked?

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 marginalized.

Let me elaborate the fore-warnings under Section 18A that are currently in place under HDA especially on issues related to “project abandonment”.

Criminalizing housing abandonment

The pertinent amendments to the HDA were on the issue of criminalising housing project abandonment. This new amendment (not that new, since more than six years have passed) 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 RM250,000 but which shall not exceed RM500,000 or to imprisonment for a term not exceeding three years or to both”.

Now here comes the million-ringgit question. How many delinquent housing developers have been punished or even prosecuted under this Section 18A of HDA, with so many abandoned housing projects? Since its enactment in 2015, there have not been any news (not a single case) of developers being prosecuted under this new Section, although cases of abandonment abound. Enforcement is still the key on whether the law is effective in protecting property buyers. It surely cannot be that the Ministry of Housing is shy of publicity.

We have not heard any enforcements at all reported in the news media. Have you?

Ornamental pieces

Our fundamental belief is that even the best of legislations made to counter a particular situation would just remain as an ornamental piece unless strict enforcement is carried out against offenders, without fear or favour, so as to instill into them the respect and fearful feeling that the law commands.

The Housing Ministry is the guardian of the housing legislation that was passed by Parliament. Yet, how do we account for the surmounting problematic housing projects? It is not that the Ministry do not have the laws; it is the sheer lack and lax in enforcement.

One abandoned housing project far too many

One of the greatest injustices is to end up being a victim of an abandoned housing project. It is a traumatic experience having to endure a situation where you place your entire savings to own a home, only to discover the house never gets completed and, worse, you still have to service the bank loan. 

A total of 198 abandoned private housing projects were recorded in Peninsular Malaysia. Some date all the way back to 1997 – some 24 years ago! – whilst the new ones are declared by the Housing Minister as “abandoned”, are recent. You may want to visit the Ministry of Housing & Local Government website at www.kpkt.gov.my for the “Senarai Pemaju Projek PerumahanSwasta terbengkalai sehingga 31 Ogos, 2021”. These statistics do not even include projects by the government or their agencies that have been abandoned.

It should be pointed out that these statistics did not even include those “not declared” by the Minister. The undeclared projects are still left idle under the categories of “projek sakit” (sick projects) and “projek lewat” (delayed projects) that are nearly three times the figures of abandoned ones.

Stories of developers falling “problematic” and becoming incapable of continuing with their housing projects are not something new.

The havoc wreaked upon victims of failed house housing projects is a widespread national issue. Look at the number of abandonment of housing projects and the number of buyers affected and left in the lurch to fend for themselves. This is not only unfair; it is downright unacceptable and disgusting. How do we expect those who are directly facing such a situation to stomach it whilst those developers go scot-free? And yet we pride ourselves as a caring society with a caring government. Always blaming the “lack” of laws and not themselves.

Risk of abandoned projects amid Covid-19

The prolonged Covid-19 pandemic has forestalled the property industry and continues to beset stakeholders with massive problems that could run up to billions of ringgit.

The number of abandoned projects is expected to rise due to the economic slowdown and cash-strapped property developers. The possibility of a spike in distressed projects post-pandemic cannot be discounted. Not only developers will experience cash hiccups; buyers too will be effected especially the M40 and B40 household groups, which have become more vulnerable with many facing job losses and salary cuts. At the same time, new graduates are finding it tough to secure full-time jobs.

The public relying on the legislation is often let down by the enforcers. It is only good on paper and it will continue to remain in our archives unless the existing laws are used to their full capacity.

The problem of abandoned housing projects is not because of the lack of laws. Do we honestly need new laws to purportedly ‘offer more protection’ for house buyers when the existing ones are adequate? Or is the Government blaming the ‘insufficient tools’ vis-à-vis housing laws?

Let’s face it: there is no solution to abandonment. We just have to prevent it from happening. Could pre-emptive measures be adopted and enforcement organized to avoid future abandonments? Your guess is as good as mine!

As the saying goes, prevention is better than cure, because it is too late to close the stable doors after the horses have bolted.

Note to first-time buyers:

  • Buying a home is a very serious investment that must you must get right on the first try. Do not be impulsive. Patience and taking the time to plan are key.

  • Buy completed property – what you see is what you get.

  • Don’t buy a pie in the sky. 

HBA%2021

NATIONAL HOUSE BUYERS ASSOCIATION [HBA]

 

 No. 31, Level 3, Jalan Barat, Off Jalan Imbi, 55100, Kuala Lumpur

Tel: 03-2142 2225 | 012- 334 5676 | Fax: 03-22601803

Email: [email protected] | Web Site: www.hba.org.my

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