LETTER | The malady affecting housing industry and buyers

LETTER | I’m referring to a quote by an online news portal that stated, “nearly 430 sick housing projects as of Jan 31 - with 29,147 buyers comprises of 70,727 housing units (as of Dec 31, 2022)”.

In addition to that, as of June 30, 2020, the 417 sick projects involved 84,498 housing units and 38,070 buyers. In Feb 2020, statistics by the National Housing Department (JPN) show that there were only 107 projects.

This data did not include abandoned projects where the purchasers have lost everything and are stuck with bank loans.

As of July 2022, the Housing and Local Government Ministry statistics show there are 102 projects nationwide involving 19,077 units of houses and 10,655 purchasers.

These numbers are expected to increase pending the reclassification of many sick projects as abandoned by the ministry.

In total, the current problematic projects number 531 - involving 89,804 units of houses and 39,802 purchasers. This represents a frozen liquidity of about RM18 billion that affects all stakeholders in the projects.

Isn’t it clear that the numbers are rising and the previous governments have failed to implement any decent strategy to arrest the problems?

It implies that the existing regulatory framework has serious flaws as unqualified (from a capabilities and capacity perspective) developers are given a license to build and subsequently create problems in the market.

Legally and morally, the government can be considered liable for the problematic projects because they issued licences to allow companies to collect money in advance and deliver their product much later.

They also insist that all parties use a lopsided contract that is not equitable and biased against the purchasers.

The National House Buyers Association has called for quarterly audits on housing projects that are about to fall sick using teams that comprise accountants, engineers and architects.

However, Victims Malaysia (VM) has doubts about the value of such audits towards solving issues of problematic projects.

They are unlikely to bring out new information that can be translated into action by the government.

Authorities failed affected buyers

The audit function should be an integral part of any corporation undertaking any business and this should be the board and shareholders' responsibility to ensure that their business is thriving.

Isn’t it obvious enough that the root causes of almost all problematic projects are the developer's inability to manage its finances and project management optimally? The affected developers know the issues and they know the solutions.

As long as the regulators continue to issue Housing Development Licenses (APDL) based on existing processes and criteria, weak developers will take the opportunity and more problematic projects will surface.

JPN and the ministry’s failure in the past and present to take action against such developers despite having the necessary legal provisions in the Act will only encourage the developers to do wayward housing business.

Having been involved with issues of abandoned housing in Malaysia since 2008, VM has a significant depth of knowledge on what we believe needs to be done and has proposed many solutions.

Sadly, the past government has shown a consistent lack of political will to protect the house buyers' interests. Every minister who comes on board uses the issues of problematic housing as political fodder.

VM would like to reiterate that, major changes proposed in the Housing Development (Control and Licensing) Act (Act 118) and associated regulations, including better sales and purchase agreement (SPA) terms must be done immediately.

The Real Estate and Housing Developers' Association Malaysia’s (REHDA) influence in the whole regulatory ecosystem is strong but they have never proposed any solutions to prevent problematic housing.

Sadly, it is a not-for-profit organisation like VM that has been pushing and raising the issues since 2008.

Will the present government offer a glimmer of hope? We can only pray and hope that the government will take up our many suggestions.

Our request for a meeting is part of the process. We do pro-bono work for the best interest of the public.

MOHAMED RAFICK KHAN ABDUL RAHMAN is the chairperson of VICTIMS Malaysia.

The views expressed here are those of the author/contributor and do not necessarily represent the views of Malaysiakini.