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Developers can be jailed now. Buyers beware though.

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Yes, after the amendment to the National Housing Development (Control and Licensing) Act 1996, developers may now be jailed as well as hefty fines. It’s meant to tell every developers in Malaysia today that should you want to build homes, you should be serious.Under this new amendment, any developers found guilty of abandoning their projects may be jailed for three years and fined up to RM500,000. Another point is that the house buyers may also terminate the sale and purchase agreements with developers if they see no progress in the project for six months of more. Refund of deposit, once asked needs to be settled within 30 days. Of course, these days, the number of developers who abandons project has been reduced tremendously. Even the ‘unprofessional’ ones would still complete their project, just that the quality they promised is missing.

When we look at this amendment, I think this is a fair deterrent. For those who are definitely not ready to be a developer, they really should not. The reason being, most of the first time home buyers, when they buy their first home meant that they are using up majority of whatever savings they have built over many years of their working life. One project may affect 100 buyers easily and these 100 buyers may affect 200 other family members who either have no place to stay or may have to lend the affected buyers more money in order to buy another property.

I remember vividly when my wife and I bought our first property, an apartment of RM123K. We paid a 15% deposit, did a very simple renovation of RM20K, bought cheapest possible electrical goods and the bill came to about RM50,000 in total. My wife and I had just finished everything we have saved. We did not even have money to go for honeymoon and had to use credit cards to pay for it which took us many months to pay back. Now, imagine if the developer ran away or fails to complete the project! I have a friend whose house, until today is still abandoned, the developer has disappeared long time ago.

There’s a reason why they call it home sweet home. Don’t let errant developers destroy it. For this particular new amendment, it is welcomed. More of these to come please. Protect first time home buyers but remember, punish the speculators.

written on 27th May 2014

Next suggested article:  What is considered reasonable property price?

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