Just like a bad egg that smells, dodgy developers can be detected through their bad practices.
The Housing and Local Government Ministry has blacklisted such developers on its website.
The list includes those which have no advertising permit and developer’s licence (APDL), those responsible for abandoned projects as well as those which failed to honour tribunal claims and settle compound payments.
Real Estate and Housing Developers’ Association president Datuk Soam Heng Choon has said Rehda will cancel the membership of any company which has been blacklisted by the government.
There are four key areas when it comes to bad practices.
1) Developers without APDL
An advertisement by a developer should include the APDL. It shows the project name, validity period, land tenure, expected completion date, minimum and maximum price, and building plan number. This way, the government can keep track of what is being launched in the market.
However, a developer can build show units without the APDL and accept bookings via cheque but they have to hold on to the cheque until the APDL is issued.
If you want to sue the developer for some reason, the APDL is the code to use.
2) Developers with abandoned projects
Projects are abandoned for various reasons, from poor management to financial issues to fraud. The developers are usually unlicensed or small players which have no track record or stable financial background.
There are cases of a company turning into a developer just to collect downpayment from buyers for a project they never intend to finish. The idea is to collect as much money as possible and disappear.
This is the reason why market experts tell you to always buy from reputable and trusted developers.
The ministry is drafting a new policy on abandoned housing projects to fine-tune the standard operating procedures to address the problem.
3) Developers who defied the Tribunal for Homebuyer Claims
The Tribunal for Homebuyer Claims was introduced in 2002 to oversee legislation under the Housing Development (Control and Licensing) Act 1966. This tribunal is a simplified dispute process to allow homebuyers to claim from developers who fail to deliver a project or breach the Housing Development Act.
It provides home buyers an easier, cheaper and faster means of dispute resolution. It costs just RM10 to lodge a claim, and the claims must be for less than RM50,000. The decision constitutes a legally binding court order.
4) Developers who fail to settle compound payments
Compounds are imposed on developers for breaking the law. The compound can range from RM5,000 to RM50,000 depending on the offence.