An area where many consumers are short-changed
10/12/07 NST-PROP By G. Umakanthan

Judging by the number of complaints still pouring in, it'll take a while before developers in general can earn the confidence of the housebuying public.

Of 18,345 complaints handled by the National Consumer Complaints Centre (NCCC) during the whole of last year, the biggest number (1,578 in all)  was against housing developers.

Established by the Education and Research Association for Consumers Malaysia (ERA Consumer) and the Selangor and Wilayah Persekutuan Consumer Association with the support of the Ministry of Domestic Trade and Consumer Affairs, NCCC in its just released Annual Report 2006 also recorded 1,325 complaints against property management companies (MCs).

"Housing is an area where many consumers have been short-changed. The number of developers has mushroomed over the years and the lack of monitoring and enforcement by the Ministry of Housing and Local Government had resulted in many consumers suffering losses at the hands of these unscrupulous developers," the report said.

It noted that one of the biggest consumer grouses against developers is the collecting of a booking fee from people interested in buying property when a new development is launched, to enable the buyers to "lock in" their purchase.

"There are many instances where prospective buyers would later change their minds and want to cancel their intention to purchase the property. Most of the time, the developers would refuse to refund the booking fee paid," it said.

The report pointed out that Regulation 11 (2) of the Housing Developers (Control and Licensing) Regulations 1989 clearly states that no housing developer "shall collect any payment by whatever name called except as prescribed by the contract of sale".

This contract of sale is the Sale and Purchase Agreement (SPA),  which means that unless the SPA is signed, it is illegal for any developer to collect any fee from a prospective buyer.

Another common complaint received by NCCC is the late delivery of units. Despite the developer required by law to pay liquidated damages to the purchaser for late delivery of the house, the second biggest complaint to NCCC against developers is their refusal to pay the compensation.

The other major complaints against developers are on abandoned housing projects, shoddy workmanship and misleading advertisements.

The housing law is clear about the punishment for such breaches, but NCCC reported with regret that no developer has to date faced prosecution for publishing misleading advertisements.

In light of these complaints, it recommended that the Housing Ministry upgrades its enforcement capability and demonstrates to the people that it is capable of dealing with unethical developers.

It also wanted the minister to "use the sweeping powers at his disposal" under Section 11 of the Housing Development Act 2001 to protect house buyers.

To overcome the problems consumers face from the housing industry, it added, "it is time that the government seriously enforces a compulsory build-then-sell (10:90 variant) concept".

As for complaints against MCs, the main grouse is on the poor performance of the companies' of and unsatisfactory service.

While MCs would complain about residents not paying their monthly dues on time, NCCC noted that often led to arm-twisting, including disconnection of water supply to residents' units, in order to recover the dues.

Other complaints against MCs involve the withholding of the accounts from residents, poor security services and delays in the issue of strata titles to the buyers.

Said NCCC: "The Strata Titles Act 1985 has enough provisions to overcome the problems... what is lacking is enforcement. The authorities should strictly enforce this legislation and prosecute errant property management companies."