By NST Property/Kathy B. - September 5, 2023
KUALA LUMPUR: A total of 536 'extension of time' (EOT) approvals were issued to property developers from 2014 to mid-2019, according to Datuk Chang Kim Loong, secretary general of the National House Buyers Association (HBA).
EOT is one of the provision clauses in the standard contract form; in the event of unforeseen circumstances, it enables developers more time to complete the project without being fined.
The developer is required to complete and deliver over the house within 24 months (for landed properties) or 36 months (for stratified properties) under the conditions of the Sale and Purchase Agreement (SPA) between a housing developer and the house buyer. If the developer fails to deliver within this time frame, the house buyer must be compensated by paying liquidated damages (LAD) of 10 per cent per year on the purchase price for late delivery.
However, some property developers (who do not reach the deadline) look for opportunities to file for an EOT in order to avoid this additional loss or expense.
When the Housing Controller grants an EOT for a delayed project, it effectively eliminates the compensation or LAD owed.
According to Chang, the floodgate of EOT began in 2014 onwards.
Prior to 2014, granting an EOT was almost unheard of, he told NST Property.
"The figure (536 EOTs) is mind-boggling. How could the relevant authorities have issued the EOTs to developers to save them from having to pay late delivery compensation to the detriment of house buyers?
"Has our country now reached a state of economic crisis where the minister must dish out EOTs to developers who are already in distress and have threatened to abandon their projects?
"If left unchecked, the power may be abused and susceptible to corrupt practices. The buyers will ultimately be at the mercy of housing developers, especially those who walk the corridors of power," Chang said.
Chang said the gross injustice should be checked under the new housing minister's watch.
He said any decision that deprives the house buyers of their rights and entitlements should be exercised transparently, strictly, and with open communication.
"At the very least, the views of the buyers directly affected must be considered prior to the Minister making a decision. The right to be heard is of utmost importance!
"Do they not know that buyers too face hardships and commitments, having to pay rent while continuing to service their bank housing loan?
"They too bear the burden of additional costs and expenses for the delay, as well as having their future plans derailed. One cannot continue to unilaterally hear the views of the housing developer and shun the buyers," he said.
The formation of the HBA to aid homebuyers
Minister got 'tick off,' read the headline of a major newspaper.
It was 1999, and that year marked the humble beginning of the HBA, a voluntary, non-profit organisation.
Housing abandonment was rampant at the time, and dissatisfied buyers had difficulty getting their views heard by the regulating authority, the Ministry of Housing.
"The very people who confronted the Minister of Housing in 1999 are the ones who initiated HBA," according to Chang.
Chang said the HBA protem committee came into existence in October 1999, comprising a group of aggrieved house buyers who had discovered to their disappointment that getting their woes heard was a frustrating process.
"The then-housing industry was in shambles, and businesses were conducted by pro-developers in style and fashion, and there was no single entity explicitly representing the interests of house buyers," he said.
Chang said there were non-government organisations (NGOs), namely the Federation of Malaysian Consumers Association (FOMCA) and the Consumer Association of Penang (CAP), assisting some aggrieved buyers with housing-related issues, among other public interest issues that their respective organisations' pursue.
"For all the new laws and government tribunals set up to rein in our sometimes overzealous property industry, the only effective enforcement agency around, capable of righting wrongs and locking horns with errant bulls, is the HBA."
Chang said the HBA, which only insists troubled house buyers be "nice and humble" and also be "willing to help themselves" before offering assistance, was originally seen as rebel-rousers—thorns at the sides of developers—whingers whose complaints would not be constructive.
"That was then. A mere three years after its inception, the HBA is now seen as a property police squad of sorts, driven by a passion to do what is right," Chang said.
He said that, historically, the HBA has functioned during the tenures of 10 Ministers of Housing and Local Government (now titled Minister of Local Government Development).
Before the HBA, property buyers who were dissatisfied with their developers could only complain to the people who caused their troubles, Chang said.
He said that the HBA, under the slogan "Striving for House Buyers' Rights and Interests," was determined to change the laws and legislation so that those purchasing new homes receive the same level of consumer protection and redress as all other new products of significantly lower cost.
"From the complaints we have received and from the media reports, the damage sustained by house buyers who have trusted their developers to deliver their products efficiently is too numerous," he said.
Chang said HBA aspires to see a level playing field between developers and house buyers and that the rights of house buyers are not shortchanged.
He said that the HBA will continue to provide constructive criticism on the core needs for ensuring that new homes are built and delivered on time and correctly, and that consumers purchasing them can have realistic trust that they are purchasing well with a commensurate degree of after-sales support.
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