Prospective house buyers should hold off their purchases for now due to certainty on when their properties would be completed, the National House Buyers Association (HBA) advised today.
This is until the urban wellbeing, housing, and local government minister unequivocally assures that he and his subordinates would not grant any further extensions of time (EOT) to developers, said HBA secretary-general Chang Kim Loong.
In addition, he said house buyers should demand for developers to issue an irrevocable undertaking that they would not seek EOTs from the ministry.
His statement follows an April 3 parliamentary reply by the minister, Noh Omar, that a total of 304 EOTs had been granted by the minister and the controller of housing since 2014.
“So now there appears to be no certainty in completion dates any more, because the minister seems to be invoking his power.
“Because of that, perhaps intelligent house buyers should hold off on their purchase, meaning that we don’t buy first until certain things happen,” Chang told Malaysiakini after a press conference on the issue in Kuala Lumpur today, together with affected house buyers.
“Otherwise, where is my surety as a buyer? I can’t plan my time. Assuming a first-time house buyer who wants to get married – they thought their house should be ready in 36 months, but subsequently it got delayed by one year.
“Never mind, after one year I can get compensation. But instead, the minister gives an EOT and I get nothing.
“Having paid for rental (for accommodation while the house is being built) and having paid to service interest, I will not be getting any liquidated ascertained damages (LAD) at all in lieu of being delayed,” he added.
Earlier at the press conference, Chang said the HBA had long sought for the figures on the EOTs, and was shocked when it was ultimately revealed in the Dewan Rakyat.
He said assuming that each project had an average 350 units, and each buyer have a family of four, it means that as many 106,400 buyers had been denied compensation in the form of LAD at the stroke of a pen, affecting a total of 425,600 people.
To make matters worse, the house buyers were never consulted on the EOTs, even though the only parties of a sale and purchase agreement (SPA) is the home buyer and the developer – not the government.
In some cases, the house buyers are not even aware of the EOT until they had been handed the keys to their new house, together with a notice of the EOT and the realisation that they would not be able to pursue damages.
Under the standard terms of an SPA, the LAD for the late delivery of houses is 10 percent of purchase price per annum.
Chang said the practice of granting EOTs to housing developers started when the ministry was headed Abdul Rahman Dahlan, and is now continued under Noh.
While Noh had told the parliament that EOTs are granted to prevent housing projects from becoming abandoned and hence protects buyers’ interests, Chang dismissed such claims.
“The figures are so mind-boggling. How could he have issued the EOTs to developers to save developers at the detriment of the house buyers?
“It’s just like Santa Claus giving out money – not his money but the buyers’ money. To the benefit of whom? To the benefit of the developer who collects the money,” he said.
He pointed out that buyers are not entitled to claim LAD until they have been handed vacant possession of their property, meaning that the issue of abandonment does not arise.
He claimed that the fault lies with the lack of enforcement and supervision by the ministry, which is empowered by several provisions under the Housing Development (Control and Licensing) Act 1966 to take preventive actions against project development.
The minister can even take over a housing project under Section 11 of the law, he said, if a developer acts to the detriment of house buyers.
“But did he use Section 11 or not? I would like the press to ask the minister: Has he ever used Section 11 of the law?
“I want to let you know that I have not seen any of these ministers use this section to protect house buyers. If you use Section 11 to protect house buyers, the issue of EOT will never arise,” he said.
Chang also rubbished Noh’s claim that developers should be granted EOTs if there had been floods, landslides, or a stop-work order by the local council.
He said such problems are self-inflicted. It usually indicates that the developer had not constructed proper drainage at the project site, or had incurred the wrath of local residents by working past the hours permitted by the local council and resulted in a noise complaint.
On a related issue, HBA vice-president Goh Seng Toh lauded Real Estate and Housing Developers Association’s (Rehda) statement in February that delays are the developer’s responsibility and buyers should not be penalised for it.
However, he said Rehda should do more to discourage its members from seeking EOTs.
The Rehda statement was in response to a Kuala Lumpur High Court decision, which found that the then minister Abdul Rahman had acted beyond his powers by approving an EOT for a condominium project by BHL Construction Sdn Bhd.
Abdul Rahman, who is now the minister in charge of the Economic Planning Unit, had said the Ministry of Urban Wellbeing, Housing, and Local Government would appeal the decision.
HBA legal adviser Andy Wong, who is representing the affected buyers, said the case is expected to go to the Court of Appeal this year, and parties are waiting for the court’s written judgment on the case.