| Category of errant developers | Responsible Divisions of the National Housing Department | Reference |
| Developer without license | Revival of abandoned projects Division | Click here |
| Developer involved in abandoned housing projects | Revival of abandoned projects Division | Click here |
| Errant developer on Tribunal for Home Buyers Claims (TTPR) | Enforcement Division | Click here |
| The developer that fails to pay compound | Enforcement Division | Click here |
| Projects exceeding the Sale and Purchase Agreement tenure | Monitoring of Private Housing Division | Click here |
How do you check the background of property developers in Malaysia prior to buying newly launched properties? In this article, we share the important steps and relevant website links for you to conduct due diligence effectively.
A delayed or abandoned housing project is an absolute nightmare for any home buyer. No consumer will want to deal with a delayed property, which they will have to start servicing the home loan once the housing loan agreement kicks in (regardless of whether the property is ready or not).
In 2022, KPKT reported that the number of ‘sick’ residential property developments in Malaysia has risen by 59% over the previous 2 years – A sick housing development is defined as “sick” when its construction progress is delayed by more than 30%. How do you ensure you do not end up in the same boat as these unfortunate purchasers? Due diligence and conducting a background check on the housing developer is necessary. Let’s find out what you need to do before making any commitments to a property purchase.
Why do you need to check the status of a property developer
Before we go further, let’s share why you need to review the status of your housing developer. Some of the reasons include:
- Avoiding developers with a poor track record or who is blacklisted by KPKT
- Facilitate complaints if there are any problems.
- Reduce the risk of delayed and abandoned housing projects.
How to perform a background check on property developers
1. Find information in CCM about a property development company
Any company doing business in Malaysia must register at the Companies Commission of Malaysia (CCM). You can do a search on the ccm-einfo website. Before doing that, sign up for an account and make payment for the required documents.
You can also refer to these guidelines to help you use the portal.
It certainly won’t be assuring if your property developer does not have a track record and is not registered! Search for information on your developer’s profile, project history, achievements, financial status and more.
The following is a sample of a company search:
Make sure that the company is not just registered but is actually in the property development business.
2. Search the internet for info on the property development company
Search the internet and social media for information about the property development company that you want to purchase a home from.
For example, you can search internet forums such as the Lowyat forum (Property Talk thread), as well as any Facebook Groups formed by other buyers/existing homeowners in a certain property project or residential area. You can get plenty of information from the real-life experience and knowledge sharing of existing home buyers.
Make sure to also check out the following:
- Does the property developer have social media or websites for buyers to contact or ask questions?
- Are there existing complaints/news articles on the bad reputations of a certain property developer?
Although the following methods are not entirely foolproof in identifying problematic housing developers, you can at least obtain an overview of their previous track record.
➡️ First-time homebuyers who are purchasing a subsale property should check the latest subsale property price data in Malaysia to help them make an informed buying decision. With iProperty Transactions Section, you can search for transaction data of a certain property type in an area or neighbourhood of your choice – for FREE!
3. Check on problematic housing developers at the National Housing Department’s official portal
For further assurance of a housing developer’s performance and track record, you can visit the KPKT website to check on the company’s background. You can drop KPT an email to ask about the property developer’s projects and check whether it has any track record related to abandoned projects.
Alternatively, KPKT also regularly updates the list of problematic housing developers on its website. KPKT provides several categories of errant developers:
➡️You can also find out here if the property developer has a bad track record or is blacklisted by the Ministry of Housing (KPKT).
4. Does the housing developer have a license?
As mentioned, every developer is required to have a housing developer license under the Housing Development (Control and Licensing) Act. However, there are developers without licenses that work on projects by the National Housing Department.
How to check if a property developer is licensed or not
- Every property ad and brochure requires a license number and permit, also known as Advertising Permit and Developer’s License (APDL). The developer is required to display this license number on all advertisements and the project board.
- You can check the OSC3 system+ of local authorities for data and license numbers of the housing developer.
What if you choose a housing project without a license by mistake?
If you have mistakenly chosen an unlicensed housing developer, the following are some of the adverse effects:
- The rights and interests of home buyers are not protected under Act 118 of the Housing Development Act (HDA)
- The buyer will be liable for the loan debts if an unlicensed housing project is delayed and cannot be completed.
- Any Sale and Purchase Agreement (SPA) is likely not compliant with recognised government laws. Buyer’s rights may be ignored and the agreement may also be biased in favour of the developer.
What should I do if my property developer does not have a license?
The following is what you need to do if your property developer does not have a license:
Step 1: Obtain confirmation letter of problematic projects
With this letter, you can:
- Discuss with financial institutions on reducing interest rates and restructuring housing loans.
- Apply for EPF withdrawal.
Check the relevant abandoned housing project through https://ehome.kpkt.gov.my/website before submitting your application. If your project is listed under KPKT’s list of abandoned housing projects, the application for the confirmation letter of problematic projects can be emailed to [email protected] or faxed to 03-8891 4228.
You can send your letter to:
Abandoned Housing Project Division,
Ministry of Housing and Local Government,
Aras 33, Blok 51, Persiaran Perdana,
Presint 4, 62100, Putrajaya.
NOTE: To facilitate your application, include a copy of the applicant’s identity card and a copy of the Sale and Purchase Agreement.
If the project is not listed under KPKT’s abandoned housing projects, check with JPN’s Private Project Monitoring Division.
Step 2: Deal with LPPSA (for civil servants only)
LPPSA borrowers have the advantage of applying one of the following options:
- Cancel LPPSA loans and apply for full loans similar to a first-time housing loan.
- Exemption from the housing loan interest rates pending revival of the project or for five years (whichever is earlier).
The form for cancellation of financing for abandoned projects can be found here. If you have further questions on this process, you can contact LPPSA.
Discover properties for saleTOP ARTICLES JUST FOR YOU:
➡️ How to negotiate for the best housing loan interest rates
➡️ Top 10 most searched areas by homebuyers in Malaysia in 2022
5. Are housing ads displayed by the developer complying with applicable laws?
All housing ads are subject to KPKT guidelines and approval of the Advertising and Sales Permit which requires developers to comply with Rule 6 of the Housing Development (Control and Licensing) Regulations 1989.
Any local advertisement is supervised by the Local Authority (PBT) under the KPKT’s Department of Local Government under the Local Government Act 1976. According to KPKT’s guidelines, all ads will be subject to these guidelines including online advertising.
For any inquiries or complaints regarding licensing or false and misleading advertising, you may lodge a complaint to the following:
Department of Local Government
Ministry of Housing and Local Government
Aras 29, No. 51
Persiaran Perdana, Presint 4
Pusat Pentadbiran Kerajaan Persekutuan
62100 Wilayah Persekutuan Putrajaya
Tel: 03-8891 3000
Fax: 03-8891 3090
Email: [email protected]
Website: jkt.kpkt.gov.my
Department of National Housing
Ministry of Housing and Local Government
Aras 30-38, No. 51
Persiaran Perdana, Presint 4
Pusat Pentadbiran Kerajaan Persekutuan
62100 Wilayah Persekutuan Putrajaya
Tel: 03-8891 5000
Fax: 03-8891 4088
Email: [email protected]
Website: ehome.kpkt.gov.my
Corporate Communications Unit
Ministry of Housing and Local Government
Aras 2, No. 51
Persiaran Perdana, Presint 4
Pusat Pentadbiran Kerajaan Persekutuan
62100 Wilayah Persekutuan Putrajaya
Tel: 03-8891 3175
Website: www.kpkt.gov.my
6. Survey areas in completed housing projects
Previously, we shared how to get feedback from previous buyers through social media and internet searches. You can also survey areas with completed residential projects. Try to get detailed feedback from existing home buyers/occupants and their experience with the build quality.
You can ask about possible problems that may arise after living in a purchased home. Also, ask about the developer’s response to complaints about home repairs within the DLP or warranty period.
Does the developer respond well to buyers’ complaints, or does it delay the process? These are important factors in assessing the credibility and commitment of the developer to providing the best for its buyers.
7. Get a property agent’s opinion
You can also get a property agent’s opinion about reliable and reputable developers in the area where you want to buy property. Most property agents have good knowledge of market prices, the build quality of homes as well as the background of housing developers.
Still uncertain about which property developer to choose? We share a list of 10 leading property developers in Malaysia.
We hope this guide will help in checking your property developer and enable you to make more informed decisions on home purchases. Good luck!
Disclaimer: The information is provided for general information only. iProperty.com Malaysia Sdn Bhd makes no representations or warranties in relation to the information, including but not limited to any representation or warranty as to the fitness for any particular purpose of the information to the fullest extent permitted by law. While every effort has been made to ensure that the information provided in this article is accurate, reliable, and complete as of the time of writing, the information provided in this article should not be relied upon to make any financial, investment, real estate or legal decisions. Additionally, the information should not substitute advice from a trained professional who can take into account your personal facts and circumstances, and we accept no liability if you use the information to form decisions.