A critical analysis on the Housing Development (Control & Licensing) (Amendment) Act 2012 and its possible effects on house buyers of abandoned housing projects.
According to the Ministry of Urban Wellbeing, Housing and Local Government, there are 155 abandoned housing projects which involved 28,637 houses and affecting 28,255 buyers as at March 2015.
The Housing Development (Control & Licensing) Act 1966 ("HDA") has always been used by the Government to monitor housing projects and provide the necessary guidelines. The latest amendment to the HDA is the Housing Development (Control and Licensing) (Amendment) Act 2012 [Act A1415] ("the Amendment"). This latest amendment to the HDA in my view offers greater protection to house buyers who are trapped in a situation where housing projects are abandoned.
The amendments to the HDA will be discussed in the following paragraphs:
DEPOSIT IN APPLYING LICENCE
According to Section 6 of the HDA, it is a condition for an applicant, e.g. a licensed housing developer, to place a deposit of not less than RM200,000.00 in order to apply for a housing development licence.
Section 6 of the HDA has been amended by section 3 of the Amendment to alter the sum of deposit for obtaining a housing development licence from the current RM200,000.00 to 3% of the estimated cost of construction. The proposed amendment is to ensure that only licensed housing developers with sufficient financial capability in proportion to the construction cost of their development are allowed to undertake any housing development.
The meaning of "estimated cost of construction" under the Amendment is the cost of constructing a housing development and includes financial costs, overhead costs and all other expenses necessary for the completion of the housing development but excludes land cost.
It is hoped and envisaged that the Amendment will also help the Government financially in reviving the project in case the licensed housing developer abandons the project.
TERMINATION OF SALE & PURCHASE AGREEMENT
The amended section 8A of the HDA provides for statutory termination of sale and purchase agreements if the buyer finds that there is no development on a housing project within six months from the date the sale and purchase agreement was signed.
This amended provision provides for the right of a purchaser to terminate the sale and purchase agreement if the licensed housing developer refuses to carry out or delays or suspends or ceases work for...