I will not use the word ‘good’ developers as the word is not in my vocabulary. However, there are responsible ones in the midst and more are joining that category.
Qualities of a responsible developer
The housing industry has come a long way since the advent of largescale housing development in the late fifties and early sixties. Industry players in those times were bona fide entrepreneurs. Most probably, conscience ruled and pride in workmanship, timely delivery of quality and affordable houses were their hallmarks.
The present delivery system of `sell-then-build’ through progressive payments by quite a few developers is fraught with risk for unsuspecting house buyers.
These second generation of housing developers, ‘good’ or bad, are used to the lucrative environment in the housing industry. This is because the post-independence period in Malaysia saw a boom in population and economic growth. Hence, the demand for housing increased rapidly. In a sellers’ market, the buyers are always disadvantaged. When greed is inversely proportionated to conscience among industry players, the situation can get very bad indeed.
We often hear of developers lamenting the fact that the shortage of workers (legal or illegal, skill or inexperienced), shortage of building materials, complying with new laws or regulations make it tough for them to complete their projects on time. At the same time, we also hear of projects raking in millions of Ringgit in profits and we never seem to hear news of housing developers retiring or quitting the business entirely. This is proof enough that the housing development is still a lucrative business.
In fact, more rookie developers are joining the arena because the ‘sellthen-build’ system allows them to make money from peoples’ monies. It has become a ‘riskless venture’ where profits are guaranteed and at the worst scenario, the government will mop up any project that gets abandoned. It is befitting the adage: Profit Privatised, Losses Nationalised’.
Enough on these few bad apples, we at HBA do keep a look-out for the qualities of responsible developers, which should be emulated by all. So, how do buyers judge if a developer is responsible or not? The construction industry is very unique industry – it is one of the few professions where no formal education is required.
There are a few habits practised by responsible developers that prove they have a passion for their profession. Here are some of the traits practised by responsible developers:
Attention to environment and existing neighbourhood
Responsible developers do not just depend on their buyers to pass around the word of their good reputation. No new project is an island – there are existing components all rouns such as neighbouring projects, trees, etc. A responsible developer will ensure that the existing neighbourhood is not disturbed by their new development.
If there are complaints eg cracks, landslide, floods that the new construction is causing to the existing neighbours, these are quickly attended to. They also ensure that the existing roads are kept clean and not littered or damaged from construction activities.
Amenities, facilities and infrastructure
Developers who provide adequate amenities and facilities like playgrounds, schools, markets, community halls and even police booths are not only fulfilling the obligations imposed by the local council but also their social responsibilities to society. These developers are commendable as good corporate citizens. It enhances their image too. There are also developers who invest and build infrastructures first prior to selling their residential properties.
Takes pride in quality and timely rectification
Whether low cost or high-end homes, chasing the developer to rectify defects or bad workmanship is a nightmare for buyers who lose out while waiting for repair works. Responsible developers do their own quality checks before handing over their products. Caring developers will practice the following before handing over their products.
• Adopt quality checks at all stages of construction, test and commissioned utility supplies;
• Clear and clean individual units and construction site from construction debris;
• Ensure the Certificate of Compliance and Completion (CCC) is timely with the handover;
• Retain a team of competent workers to do rectification works promptly if there are complaints on defects;
• Keeping sufficient stock of products such as floor tiles of the same quality and make.
Some developers even extend the mandatory defects liability period of 24 months. We have also heard of developers providing alternative lodgings for their buyers while waiting for defects to be corrected.
Timely delivery – ‘No’ to EOTs
Time is the essence of the contract of sale and purchase. Houses should be delivered within the stipulated time stated in the sale and purchase agreement, i.e within 24 months for ‘land and building’ and 36 months for ‘building intended for subdivision’. If for whatever reason, there are delays, compensation should be paid immediately to buyers without a second thought or finding devious ways to ‘short change’ the buyers.
Recently, we have unearthed some 304 EOTs (Extension of Time) that the Housing Minister and his Controller of Housing have issued to the detriment of house buyers purportedly invoking their powers under Regulation 11(3) of the Housing Development Regulations, 1989. The issue of EOT was challenged in the Court of Law and the Courts have on 27 February 2017 ruled that the issuing of EOTs is ultra vires their powers. This case is now a subject of an appeal by the Attorney-General Chambers.
Responsible developers keep their buyers informed of delays and tell them of the next expected delivery date. Some buyers even told us of the extras they have received at point of delivery, which surely endears them to their developers. These are some of the ‘welcome packs’ that they have received: useful gifts like key box; warranties from paint companies, auto-gates, pest control, electrical appliances; certificates of treatment for termites / pest control; a certified copy of the CCC issued by the architect and certified copy of the building plans and plans that relates to electrical wiring and water piping so as to facilitate the buyers future renovation.
One clause in the sales contract states that the buyer is responsible for late payment interest. It is a common complaint by buyers that their developers would charge interest for late payment even though it is the fault of the end-financier or their lawyers handling the legal documentation. Responsible developers assist in ensuring that the documentations are in order and the buyer is not burdened with any late payment interest.
Joint Management Body (in stratified projects)
Responsible developers assist their buyers to form committees and be prepared for the formation of the management corporation. These developers realise that the projects they have developed will eventually be passed to the owners to maintain and manage.
Encouraging community living
Developers who encourage the forming of resident/owner association are a welcome lot. Some even go to the extent of contributing monies for the formulation of a buyers representative group for a meaningful channel to voice grievances. Some even provide meeting facilities and allocate a multipurpose room for the elected representative group.
The line of communication should always be open between buyers and their developers, for the obvious reasons:
• Keeping buyers informed of the ongoing projects and their products;
• Developers not to appear having shun away from their responsibility;
• Treating the buyers with respect as buyers can serve as their marketing tool – Show respect and you will gain respect;
• Transparency and accountability on monies collected;
• Providing regular accounting reports and budgets;
• Voicing of any grievances rather than through the media, which will bring adverse effect to the detriment of both parties.
Build first then sell
There is no step that can be more pronounced than for housing developers to adopt the absolute ‘built first then sell’ so that potential buyers can see for themselves the finished product before buying. We believe that in this way, most of the present day ailments afflicting the housing industry can be avoided and the housing industry will be a lot more orderly.
In the interim period, responsible developers have embarked on the Built then Sell (BTS) 10:90 concept where the buyers pay 10% and the balance of 90% is to be paid upon completion of the house. They are already big developers that find the BTS 10:90 concept workable and feasible.
There are responsible developers whose names are synonymous with quality and trust. They are able to win over buyer’s confidence. Today, they have created their own brand names. Thus it is wonder why even if these developers do not advertise, all their units will be sold-out even before the official launch.
This article is courtesey of Chang Kim Loong, Secretary General of National House Buyers Association ( HBA).