Make Sure Your Developer is Licensed

Plight of kampung land owners
by Chang Kim Loong, Star Property.my

ABOUT two years ago, an English daily highlighted the plight of land owners who had entered into joint ventures with unlicensed developers to build houses on their (home owners’) land.

Most of these deals involved land in the kampung (or villages). When these partnerships turned soured and were subsequently highlighted in the press, the Housing Ministry warned it was going to catch these businessmen, most of whom were small-time developers out to make a quick buck.

However, until today, no action seems to have been taken on these errant developers while the victims continue in their miseries and financial nightmares due to abandoned projects and botched joint ventures.

The Housing Ministry had warned that it was going to catch many businessmen, even small-time ones, as it was going to make it a requirement that all those who wished to develop a housing estate of only five houses should get a developer’s licence.

The Ministry seems rather proud of its wide-ranging powers and had a swooping determination (to weed out these unlicensed developers). It is really unfortunate nothing seems to have come out of that incident.

Swarms of entrepreneurs of the kampung variety, and some city slickers too, had invaded the countryside, and signed on owners of kampung land on the promise of turning them (the land owners) into developers. The wish was to turn idle kampung land into properly-built houses to sell to kampung people, usually by having joint ventures with the land owners.

“Give me your land to develop and I will give you X number of houses, and I shall take Y number of houses for my troubles; no cost to you, no hassles with government servants, no bank loans; no worries at all.” The current deal is 30:70; 30 % for the land proprietor and 70% for the housing developer.

Tricks of the trade

Kampung people as usual were wary; they were not going to buy till the project had got under way, and the proof to them was to give at least a house to the land owner and an enormous upfront deposit as the most convincing evidence of the developer’s sincerity. Perhaps, an upfront RM500,000 would be an ideal bait.

Firstly, said the developer, he needed the money to start building the land owners’ houses so it was not difficult to persuade them to charge their lands for the purpose. The other houses will have to wait including mine, said the developer most sweetly: no risk there you see, the land is still yours.

The developer then left for the city to apply for his licence which required the payment of a deposit to the Housing Ministry, and, of course, there were other payments to be made to various parties in the Government and arrangements had to be made with a construction company; all of which helped to collect the loan money from the land-owner-chargor.

However, the developer has not been heard from for some time now. The land owner/ would-be kampung entrepreneur/chargor went to the Housing Ministry to complain and demanded action to be taken and he was confident this will be done. You see, he knows the wakil rakyat.

Alas, said the legal officer to the kampong man: “So sorry, you had dealt with a person who has no license to be a developer. Under the law, we have no powers to prosecute an unlicensed developer who has abandoned the project.”

“Take action against him (the housing developer) for not having a licence; he has done all that a developer does including (entering into) contracts with intending purchasers and collecting deposits from them. There are at least 10 of them,” said the kampung man.

It is said, “the law is an ass” or that seems how we have made it out to be.

What the Housing Ministry’s legal officer could not bring himself to say is that the legal officers had tied their own hands by adopting a strange, restrictive reading of the law that to qualify as a housing developer, he should have undertaken to build and actually sell, at least, five houses, and to the legal officers it meant producing at least that number of house buyers to testify that they had indeed bought houses from a bogus housing developer!

The sale and purchase agreements and other documentary evidence and the evidence even of the developer’s own staff do not constitute evidence; the developer must plead guilty or there must be at least five buyers coming forward to give evidence; till then there is going to be no legal action against the bogus housing developer.

A request made by the Housing Ministry to the Bar Council for its advice on the professional liability of solicitors who act for unlicensed developers, sent more than a year ago, is still under consideration. At the latest count, there were at least 115 law firms, according to the records of the Housing Ministry, who did not seem to care to find out if their developer-clients were licensed or not.

The irony is it does not seem to matter whether the developer is licensed or not; they all abandon their projects with impunity.

Sadly, most of the lands in the rural areas are Malay Reserve Land which come under greater protection from the state but the banks are now gearing up to foreclose the only wealth the would-be kampung entrepreneur ever had, and had intended to bequeath to his children the way he had inherited it, coming from nenek moyang days.

Cry of the naive victims

Now, where do we go from here when the very people who initiated the housing laws shun their responsibilities? Shouldn’t buyers from unlicensed housing developers have the same protection as those buying from licensed ones? Where are the rescue plans for the naive victims of these Malay Reserve Land? Mind you, there are mostly current and retired civil servants.

Note: It has been two years since the list of the unlicensed housing developers has been unearthed.

Chang Kim Loong is the honorary secretary-general of the National House Buyers Association (www.hba.org.my), a non-profit, non-governmental organisation (NGO) manned by volunteers. He is also a NGO Councillor at the Subang Jaya Municipality Council.