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For many people, the purchase of a home is the most important financial
decision of their lives. Therefore, it makes sense to approach the decision
carefully. The purchase of a home is unlike any other consumer product as it
covers a lot of ground - including legal, financial, technical and emotional
considerations. To not educate yourself and learn from the mistakes of others
only sets you up to be at best, disappointed and at worst, being 'house poor'.
Caveat emptor! Let the buyer beware - The idea that buyers take responsibility
for the condition of the items they purchase and should examine them before
purchase. How true is this for the property buyers? It works well for buyers of
completed units but
not if you are buying from plans, when the construction has not even commenced.
There is nothing as yet for you to inspect or assess. At least with knowledge
you can enter into the world of homeownership with more confidence.
The process of building and selling a new house or apartment unit
involves coordination among a large number of parties: land owners and
developers; contractors; trades people; government regulators;
designers; architects; consultants; planners; building material
suppliers; lawyers; bankers and house buyers.
First time house buyers normally have little knowledge of what
aspects to look for when they are ready to acquire a home. Thus the
onus is on a prospective house buyer to be well educated on their
rights and to seek help from all sources available before they make
their first payment.
In reality, there is no 'one stop centre' for a study of a
developer's record. It is common practice for big corporations to start
a new private limited company for every project, as such, you might not
be able to check track records unless you have the names of all the
subsidiary companies formed. There are also instances where the
development project is a one time venture that the company/individual
undertakes. You will have to do some investigative work to get the
information you want. It is a good idea to be clear about which situation applies to
you. The following table describes the different types of homes and
whether you can expect the developer to be licensed under the Housing
Development (Control & Licensing) Act 1966 (Amended 2002).
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Type of Purchase |
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Developer Information |
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| Purchase
of "house & land" & "subdivided units" from developers who are
State Agencies, Cooperatives before 1st December 2002 |
Not required to be licensed |
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| Purchase
of "house & land" & "subdivided units" from developers who are
State Agencies, Cooperatives after 1st December 2002 |
Check with Ministry of Housing's website (http://web.kpkt.gov.my/idaman) to ensure that the particular project is licensed |
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| Purchase of "house & land" & "subdivided units" from housing developers |
Check with Ministry of Housing's website to ensure that the particular project is licensed |
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| Purchase of "house & land" & "subdivided units" from developers who build less than 4 units |
Not required to be licensed (Do additional follow-up- described below) |
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| Purchase of commercial units e.g. Service apartments, land for bungalow building, office lots, factories from developers |
Not required to be licensed (Additional checking required - described below) |
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Additional follow-up: Whether the Developer is from whom you are
considering buying a property is licensed or not, it is a good idea to
take steps to evaluate their credentials. Here, we list some of the sources where a potential house buyer can do their additional checking.
- from the National House Buyers Association.
There are well over 2000 pages of information, a forum board,
publications, FAQ as well as links to much more information. Numerous
guides are available on specific subjects.
- if the parent company is listed - you can check with Bursa Malaysia
(formerly known as Kuala Lumpur Stock Exchange)'s website for the
background and for all the subsidiaries of the company. Read also all
announcements for litigation news and public reports.
- if the company is licensed by the Ministry of Housing and Local Government,
you may check for information based on housing developers, licence and
permit numbers, projects, list of the addresses of consultants,
architects of projects, statistics, etc. However the information is
only restricted to the subsidiary company/Vendor and there is limited
information on past performances and in some cases, the information has
not been updated. Do write to the Ministry if the information that you
seek has not been updated or make an attempt to visit the Monitoring
& Enforcement Division of the Ministry.
- check the archives of some online news provider that provide this service.
- you can ask the developer for the names of the projects they
have claimed to have developed - so that you can go look for yourself
and maybe contact some of the past buyers for feedback. Most developers
would not hesitate to provide these references of their past projects
and those with website would have proudly provide the list of all their
subsidiaries and past projects in their websites.
- check also from websites that provide court decisions eg, http://www.kehakiman.gov.my or http://www.ipsofactoj.com. These sites provide a picking of cases of companies involved in law suits.
- do keep yourself up-to-date on news on housing related laws,
etc, by reading and keeping articles of relevance in your own file. The
'I don't know that' expression is so often heard by our volunteers from
aggrieved house buyers. That makes us realise that house buyers often
do not acquire enough knowledge in their own interest at the very
beginning of their quest on homeownership.
However, these are just the initial checking steps. There are pros
& cons of buying new from a developer. The pitfalls of buying
'off-plan' is just too numerous to mention here. As such, choosing a
developer who understands the anxieties of a new house buyer, treats
every individual buyer with respect and assist to minimise problems is
the kind of developer that you would want to deal with.
Help from HBA
To help house buyers ask the right questions before purchasing a
unit, HBA has published a book titled "House Buyers Guide Book". It is
designed to provide valuable information that house buyers are expected
to know before they jump to the conclusion to proceed with the purchase
of houses. It is also to educate them to be aware of their rights as
purchasers so as to be constantly on guard and to avoid the likelihood
of possible and future pitfalls via-a-vis the housing developers in
their quest to purchase a property "Off the Plans" i.e. incomplete
units not readily available but under progressive construction.
Theses books are for sale at RM5.00 each in three languages either by mail order through our website or from HBA's Secretariat.
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