Friday, October 5, 2007

Better Protection for House Buyers

Better Protection for House Buyers
By: Yeoh su Hui

Prior to Dec 1, 2002, the definition of “housing developer” under the Housing Development (Control and Licensing) Act, 1966 (Act 118) did not include the words “firm or society (by whatever name described)”.

Further Section 2(1) provided that the Act did not apply to any society registered or incorporated under any written law relating to cooperative societies and any body or agency established and incorporated by statute and under the control of the Federal Government or the Government of any State.

As a result, housing developers who are societies, cooperatives and state and statutory corporations, such as Perbadanan Kemajuan Negeri Selangor (“PKNS”), Perbadanan Kemajuan Negeri Melaka (“PKNM”), Penang Development Corporation (“PDC”), Koperasi Tunas Muda (“KTM”)(collectively called “the exempted developers”) did not have to comply with the provisions of Act 118, notwithstanding that these non-licensed developers were undertaking huge housing projects.

These exempted developers were not required to apply for a housing developer’s license or an advertisement and sales permit when undertaking a housing development project. The contract of sale for the sale and purchase of the housing accommodation entered into between the purchasers and these exempted developers did not have to comply with the form prescribed in Schedule G or Schedule H of the Housing Development (Control and Licensing) Regulations 1989 (“the Regulations”).

Housing developers who required to be licensed under Act 118 will have to complete a particular stage of construction of the housing accommodation before they can claim any monies or progress payments. Further, the defect liability period prescribed under the Regulations is 18 months after date the purchaser takes vacant possession of the housing accommodation. A licensed housing developer is required to complete and deliver vacant possession of the housing accommodation within 24 months (landed properties), or 36 months (apartments or condominiums), as the case may be.

These exempted developers need not follow the schedule of payments prescribed under the Regulations. Some of them were collecting progress payments upon commencement of construction of a particular stage of work of the property instead of upon completion of the same. Instead of the 18 months’ defect liability period, some of these exempted developers gave their purchasers only a 12 months’ defect liability period.

Further, when these exempted developers do not complete the housing accommodation within the 24 months or 36 months prescribed by the Regulation, they do not contravene any statutory provisions as they are not governed by Act 118. Purchasers who bought housing accommodation form these exempted developers did not have benefit of the statutory protection granted under Act 118 and the Regulations. Any relief or remedy sought by the purchasers against these exempted developers will have to be based on the terms and conditions of the actual contract sale.

Many purchasers felt short-changed as the law did not provide any protection for them in the event they were to purchase housing accommodation which are developed by these exempted developers.

Situation After Dec 1, 2002

The Housing and Local Government Ministry and various non-governmental organizations, such as the Consumer Association of Penang (“CAP”) were very concerned that exempted developers were not governed by Act 118.

On Dec 1, 2002, Act 118 was amended by deleting Section 2. The definition of “housing developer” was also amended to read as “any person, body of persons, company, firm or society (by whatever name described), who engages in or carries on or undertakes or causes to be undertaken a housing development.”

This meant that after Dec 1, 2002, the exempted developers described above come within the purview of Act 118 and the Regulations. Any society, co-operative or state or statutory corporation who undertakes a housing development will now have to apply for the requisite developer’s license and the requisite advertisement and sales permit, prior to the launching of the units of housing accommodation for sale to the public.

The contract of sale entered into between the society, cooperative or state or statutory corporation and the purchasers are required to be in the form prescribed in Schedule G or Schedule H of the Regulations.

Amendment to Act 118 in 2007

There have been concerns expressed by certain purchase as to whether transaction with these societies, co-operatives, state or statutory corporations are governed by the recent amendments to Act 118 which came into force on 12th April 2007.

A new Section 22D of Act 118, stipulates that the consent of the housing developer is not required for an absolute assignment of the proprietary right or interest in a housing accommodation, provided that a proper notice of the assignment has been given to the housing developer in accordance with the provisions contained in Section 22D.

Section 22D applies to any housing accommodation where separate or strata title for the housing accommodation has not been issued by the appropriate authority and it is clear that this new Section 22D will apply to any such transactions with these societies, co-operatives, state or statutory corporations.


With the inclusion of societies, co-operatives, state or statutory corporations in the definition of “housing developer”, there is now better protection for purchasers who purchase properties developed by these developers, and purchasers no longer have to worry about the terms and conditions contained in the contract of sale as it would have to be in the form prescribed in Schedule G or Schedule H of the Regulations.

The writer is a member of the Conveyancing Practice Committee, Bar Council, Malaysia

Note: This column is brought to you by the Malaysian Bar Council for your information only. It does not constitute legal advice. You should therefore seek professional legal advice for your specific needs. Neither the Malaysian Bar nor Sun Media Corporation Sdn Bhd shall be liable to any reader who suffer losses as a result of relying on this column.

Source: TheSun, Friday, October 5, 2007
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1 comment:

mansid said...

As a Bumiputera, I agreed with proposal made by Datuk Seri Ong, Minister of Housing and Local Government that the ministry is considering to scrap discounts for bumiputeras who buy property valued at RM500,000 and above (source: The Star, Tuesday, 25 Nov 2008).

As a Malay, my view is Malays who can afford buy properties which value are above RM500,000 are considered rich. Why we should give more incentives to make them rich and rich?