LETTERS: I refer to a report that stated the Housing Development (Control and Licensing) Act 1966 (Act 118) will be amended to help buyers of abandoned housing projects.
It quoted the housing and local government minister as saying that the amendment was being drawn up to address issues concerning abandoned housing projects and to allow stricter action to be taken against developers.
In addition, a fund will be set up, where housing developers are required to allocate a certain amount before they can develop a housing project. The fund will be used if the developers abandoned the project.
Before the amendments are done, the Housing and Local Government Ministry should conduct a detailed study on the issue of abandoned housing projects so that relevant provisions can be inserted for the best interest of homebuyers and developers.
Developers are facing challenging times due to the Covid-19 pandemic. If the imposition is severe, small- and medium-scale developers will fade away, driving the price of properties higher.
Besides developers who cannot manage their funds accordingly, projects are usually abandoned during a financial crisis. However, in this case, there are other factors as well, such as financial institutions and unjustified delays by certain agencies.
The law governing housing development is complex, with its various regulations and obligations, plus different policies between the federal, state and local governments. With regards to the proposed fund, it remains unclear on the utilisation, as well as the percentage of developers' contribution.
If the fund is meant to revive abandoned housing projects, the amount to be deposited may affect a company's cash flow and may lead to a housing project being abandoned, or it will be used to reimburse homebuyers, which may not be proportionate to the loan taken.
It is imperative that the proposed provisions are workable. For example, the Housing Development (Housing Development Account) (Amendment) Regulations 2015 gave the controller the power to use the funds in the Housing Development Account (HDA) to comply with an award made by the Tribunal for Homebuyers' Claim.
The opinions on this differ, whether the controller can actually remove the money for this purpose. And if it can be withdrawn, at what stage can the money be removed to comply with the award as the case may end up in the Federal Court?
It could also put homebuyers in danger as they would have spent the money when the award is overturned by the court. The amendment seems impractical and to date, no money has been removed from the HDA for this purpose.
In terms of stricter actions, would there be action against developers for failing to contribute to the proposed fund or is it only those who abandoned the project as a whole? Can the tribunal's jurisdiction be extended to include abandoned projects?
We may have many laws, but the lack of enforcement would defeat the purpose of those laws. Taking the non-compliance of the Strata Management Tribunal awards as an example, although it involves a simple and straightforward procedure, there is a lack of enforcement by the Housing and Local Government Ministry or the Commissioner of Buildings.
Similarly, in terms of developers' failure to contribute to the Common Property Defects Account, has enforcement been carried out on errant developers?
Without focus and serious enforcement, the proposed fund and restrictions on developers may suffer the same fate as the Tribunal awards and other offences under Act 118.
ARIFF SHAH R.K.
Penang
The views expressed in this article are the author's own and do not necessarily reflect those of the New Straits Times