Penalty for late delivery of homes will cripple housing industry, warns lawyer
PETALING JAYA: The housing industry, especially in major cities, could come to a standstill if there is no flexibility in allowing extension of time for developers to complete their projects, a lawyer said.
Johan Mohan Abdullah said high-rise condominiums could not be completed within 36 months and developers risk paying damages to buyers for late delivery.
Mohan suggested that the Housing Development (Control and Licensing) Regulations 1989 be amended to allow the housing and local government minister to provide developers a more pliable time-frame to complete the housing schemes.
Under the government regulated sale and purchase agreement (SPA), housing projects on landed properties must be completed within 24 months while high-rise structures, like condominiums, are given 36 months.
Mohan suggested the government allow condos which are 15 stories and below to be completed within 36 months, 16 to 30 stories at least 48 months while those that are 31 to 50 stories in 60 months.
“Developers want to complete their projects on time but the work could be held up due to worker problems, construction material shortages or due to prolonged bad weather,” he told FMT.
Mohan said this in response to Tuesday’s Federal Court ruling which held that the controller of housing has no power to give developers extensions of time to complete their projects.
Chief Justice Tengku Maimun Tuan Mat, who delivered the judgment, said any extensions or modifying the terms and conditions in the SPA would deny buyers the right to claim for liquidated damages.
“These modifications and the granting of extensions of time to the developer do not appear to protect the purchasers, which militates the intention of Parliament,” she said in allowing the appeal of 104 buyers.
The bench also ruled that Section 24 of the Housing Development (Control and Licensing) Act 1966 did not give any authority for the minister to delegate his powers to the controller to modify the SPA.
In the case before the Federal Court, the purchasers had entered into an SPA on May 3, 2012 and the developer, BHL Construction Sdn Bhd, was to deliver vacant possession of their condominium units in Kuchai Lama within 36 months.
Due to complaints by nearby residents about the extended working hours, stop-work orders issued by the local authorities and investigations conducted on the piling contractor, the project was delayed.
Following an appeal, the minister gave a 12-month extension to BHL Construction and this led to a legal battle that resulted in the High Court ruling in favour of the purchasers in 2017.
The Federal Court upheld the High Court’s decision.
Mohan said the court’s strict interpretation of the law and regulations appeared to indicate that developers should build homes first and then look for buyers to avoid violating the SPA.
“Under such circumstances, only the big players, who are cash-rich, could survive,” he said.
Meanwhile, Property and Real Estate Lawyers’ Association president Pritam Singh said pending any amendments to the housing legislation, the minister could use Section 2 of the Housing Development (Control and Licensing) Act to give exemption to developers so that the housing industry would not be in limbo.
“The SPA is a construction contract and there must be provision for extension of time,” he said.
Pritam also hoped the government would consult all stakeholders, including developers, before steps were taken to review any law to regulate the housing industry. - FMT
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