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With Local Government Development Minister Nga Kor Ming recently announcing that there are 429 “sick” housing projects, comprising 70,727 units involving 29,147 buyers nationwide as of Jan 31, the National House Buyers Association (HBA) is urging the authorities to prosecute developers that abandon their projects.

Sick housing projects are defined as those that have been delayed by more than 30% of their scheduled progress or whose sales and purchase agreements (SPA) have lapsed.

Nga said the government would issue letters of support to housebuyers to restructure their bank loans if they were affected by sick housing projects.

He said the ministry has come up with several measures to address the issue, such as displaying a list of housing projects with lapsed SPA on the National Housing Department portal.

Other measures include freezing the Housing Development Account (HDA) of sick projects and blacklisting developers and their boards of directors from applying for new advertising permits.

HBA honorary secretary-general Datuk Chang Kim Loong said existing laws were sufficient to teach developers a lesson.

“The housing laws were tweaked and fine-tuned in June 2015 (to provide) more protection and safeguards for housebuyers. The current Housing Development (Control and Licensing) Act 1966 (HDA 1966) was revamped and implemented to plug some of the loopholes, and rectify inadequacies in questionable and grey clauses in the original Act.

“The lack of enforcement is the main reason that developers are getting away with their (inaction). There has been no prosecution (to date) that could (deter) housing developers from abandoning their projects. There is no need to overhaul or revamp the law again and again when no one is acting on them.”

Chang said existing laws criminalise abandonment of projects under Section 18A of HDA 1966 and provide for jail sentences, so housing developers are discouraged from abandoning their projects.

Section 18A states that any licensed housing developer that abandons, or causes to be abandoned, a housing development or any phase of a housing development, that the licensed housing developer is engaged in, carries on, undertakes or causes to be undertaken, shall be guilty of an offence and shall, upon conviction be liable to a fine which shall not be less than RM250,000, but which shall not exceed RM500,000, or to imprisonment for a term not exceeding three years, or both.

“There are sufficient laws to protect housebuyers under Section 12, where the ministry has the power to give directions to safeguard the interests of purchasers. This includes directing a company to assume control and carry on the business of the housing developer upon such terms and conditions as the ministry may determine.

“The ministry can also certify that the licensed housing developer has abandoned the (project). However, developers that abandon their projects have never been prosecuted.

“Public reliance on legislation has often been let down by the lack of enforcement. It is only good on paper and it will continue to remain in our archives unless the existing laws are used to their full capacity.

“The problem of enforcement is not because of a lack of laws. Enforcement action must be organised.

“Do we honestly need new laws to purportedly ‘offer more protection’ for housebuyers when existing ones are adequate?”

Chang said he welcomes the support letters the ministry plans to issue to those who bought units in sick projects. However, he said banks have the discretion on whether they would allow loans to be restructured.

He also said blacklisting a developer was not enough as they would just set up another company and do the same.

Consumers Association of Penang (CAP) president Mohideen Abdul Kader said the government should act against all irresponsible parties that delay the delivery of units or shortchange buyers with shoddy workmanship.

“Errant housing developers should be jailed because their failure to complete their projects satisfactorily may impact hundreds, if not thousands, of housebuyers who would be forced to service their housing loan while it is delayed.

“We are also concerned about how money for a project can be released to a developer when the construction is stalled,” he said.

Mohideen added that freezing the HDA of sick projects and blacklisting developers and their boards of directors from applying for new advertising permits are the right measures to take, and they should also be prevented from operating other businesses as well.

“There is almost no reason for them to allow their project to become sick because the bank will release the funds in stages from the HDA,” he said.

Source: TheSunDaily.my