Pre-emptive measures and safety nets vis-a-vis abandonment?

Chang Kim Loong

Modified 6 Mar 2017, 1:35 am

Ministry: 134 abandoned private housing projects in three years.

A total of 134 abandoned private housing projects were recorded in peninsular (Malaysia) between 2013 and November, 2016, says urban well-being, housing & local government deputy minister in reply to a question in the Dewan Negara (Parliament) on Nov 6, 2016. She said the number included 26 abandoned projects this year.

COMMENT We will elaborate on the stringent rules and safety nets under the Housing Development (Control & Licensing) Act, 1966 (HDA).

The recently implemented (with effect from June 1, 2015) revamped Housing Development Act has plugged some of the loopholes, rectified inadequacies and even some questionable and grey clauses that existed in the original Act. The procedures for control and licensing of housing developers have been made more stringent so that non-bona fide developers would be marginalised.

New law - criminalising abandonment

One pertinent amendment to the HDA was on the issue of criminalising abandonment. This new amendment makes it a crime for housing developers to abandon their housing projects, with jail sentences included.

The new Section 18A states that any licensed housing developer who abandons or causes to be abandoned, a housing development or any phase of a housing development, which the licensed housing developer is engaged in, carries on, undertakes or causes to be undertaken shall be guilty of an offence and shall, on conviction, be liable to a fine which shall not be less than two hundred and fifty thousand ringgit (RM250,000) but which shall not exceed five hundred thousand ringgit (RM500,000) or to imprisonment for a term not exceeding three (3) years or to both.

New law - deposit of three percent on construction cost in the housing development account for a developer’s licence.

Section 6(1)(b) (Conditions or Restrictions for the grant of a Developer’s Licence) was enhanced to make the requisite deposit (refundable) from the current RM200,000 to three percent of the construction costs.

As to whether the new three percent deposit will curb abandonment, our contention is that it will indirectly reduce such incidents. Those developer-aspirants who are financially so weak that they are not able to raise the three percent deposit (it is refundable anyway) should stay out of the industry because the probability of them running into trouble is higher...

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