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Malaysia has made impressive strides in providing affordable housing in support of successful efforts of poverty eradication.

From 1990 to 2009, about 808,000 units of low-cost affordable housing were provided to support Malaysians in need.

The demand for houses be it low- cost, medium-cost or high-cost, has not decreased. But it is another story on the supply of it.

There are some rogue developers have sketchy financial resources and taking advantage of loopholes in the law to “hit and run” – deceiving house buyers and does not complete the project.

House buyers are made to progressively pay the developers when they are building the houses. In other words, developers are using their customers’ funds for their capital requirements.

Thus, if their business were to fail or run into cash flow problems, the houses cannot be completed and the house buyers are left in a lurch.

It is a nightmare for the buyers as they have to start payment for their housing loans although they have yet to stay in their new house.

Even if the housing project is long abandoned, the monthly payments have to be honoured. If they default on payment, the unfortunate house-buyers would be fined or sued.

This is the very reason as to why the government has channel vast amount money to revive abandoned housing projects that are causing untold hardship to those who are unfortunate enough to be involved.

The Government will continue toprovide assistance towards the rehabilitationof abandoned housing projects.

Referring to the Ministry of Housing and Local Government, “Abandoned Projects” are defined as projects that meet the following criteria:

  • The project is not completed within or later than the delivery date stated in Sale & Purchase Agreement and no significant activity is noticed at the construction site for six (6) continuous months, or
  • ‘Petisyen Penggulungan’ has been registered in the High Court under Section 218 of the Companies Act 1966, or
  • Company is under the Receiver and Manager, or
  • Developers are not able to acknowledge in writing to the ‘Pengawal Perumahan’, and
  • Confirmed as abandoned project by the Ministry of Housing and Local Government under Section 11 (1) (c) of Act 118

The Government has launched ‘The Housing Revival Initiative’ in September 2009 in which the Ministry of Housing and Local Government (MHLG)  function as mediator to resolve whatever issues that may arise with regards to the project being revived.

A green lane has been set up for the corporate organisation involved, so as to assist it in all its future dealings with the MHLG.

The MHLG has also established mechanisms for the monitoring and enforcement of housing projects delayed, ailing and abandoned.

Developers are required to submit progress report two times per year or at a frequency to be determined by the Controller of Housing in accordance with section 7(f) of Act 118, increased visits to the project sites and premises for projects that have been identified as problematic projects.

Developers must also submit audited annual financial report to ensure that accounts of the developer and the Housing Development Account (HDA) are correctly and properly maintained besides meeting with default developers to identify problems and solutions.

MHLG taking action to strengthen the effectiveness of existing enforcement and monitoring mechanisms such as improving the reporting of 7(f) under Act 118 with additional information by providing financial details of the HDA transactions.

In addition, the frequency of reporting the progress of the projects would be increased from two times to four times a year.

The developer also required to provide an additional report, which is related to the work schedule of the project and the projected cash flow.

Some initiatives undertaken include visiting project sites within two months after the license is issued to housing developers for early monitoring, taking action against professionals such as lawyers, auditors, architects, engineers and others who have committed offences under Act 118 and displaying statistics and the status of abandoned housing project on MHLG’s website periodically for the buyer’s information and awareness.

The Government also amend the existing housing development act in 2011 to further regulate the property industry and protect the home buyer’s interest.

The revised Act is to lessen the cases of developers leaving their projects and running off with the home buyer’s deposits.

The authorities would impose an element of criminality to apprehend fly-by-night developers and hold delinquent developers accountable.

Developers would be expected to submit a report, verified by Bank Negara’s Central Credit Reference Information System (CCRIS).

CCRIS details the companies’ financial capacity, while the amended Act also look into tracing these developers to ensure they do not set up shop elsewhere after a failed project.

Legal action against errant developers will be taken and if found guilty, they will be fined RM250,000 to RM500,000 or a maximum of three years in jail, or both.

Furthermore, the deposit required to secure a developer’s licence will be raised from the present RM200,000.

In addition to the government’s initiative to lessen abandoned housing projects, the authorities were promoting the build-then-sell (BTS) scheme to developers.

By 2015, all developers should be on a BTS basis, and abandoned housing projects will be a thing of the past by then.

MHLG statistic revealed that as up to 15 November 2011, a total of 22 Abandoned Housing Projects that being placed in the Restoration Plan involving 11, 445 houses of 8, 544 buyers.

4, 931 houses of 3,082 buyers from 32 projects have been removed from MHLG Abandoned List as on 15 November 2011.

62 Projects involving 25,987 houses of 16,953 buyers are in revival process by the Actual Developer / Rescuer / SPNB as on 15 November 2011.

-SNASH-

(this article published in 1BINA.my)