PURCHASING a home is a huge cost in absolute terms, even for affordable housing, yet buyers have little say about their rights.

With the Local Government Development Ministry granting of extension of time (EOT) to developers, the delivery of strata titles upon vacant possession should improve governance.

Recent landmark court decisions on homebuyers’ rights are also a positive sign of good governance.

Improving governance on EOT granted

EOT is granted to a developer to extend the fixed completion date of properties.

Once the EOT is granted, the developer can extend the date for handing over the keys to the buyer.

In this case, the developer can also avoid liquidated ascertained damages (LAD) claimed by the homebuyers due to its inability to complete the project within the stipulated time frame.

However, the main issue with the extension is that it will lead to financial burden on the buyer as they continue to pay progressive interest payments.

The imbalance of power is a concern for buyers who fear that the controller of housing or the local government development minister has too much power and makes decisions without considering the factors affecting the buyers.

Two court cases in recent years, namely Ang Ming Lee and Bludream City, provide important guidance on EOT, but must be interpreted in the context of the case.

In addition, the minister’s written reply in parliament last November 5 stated that EOT will be granted in situations where:

1. Construction time restrictions imposed by the local council or the proximity to schools that do not allow the developer to extend the construction hours

2. The need to construct other infrastructure such as an integrated water supply system before development can commence

3. Building height in excess of 30 storeys

4. The development includes the construction of a podium or basement

5. The condition of the site requires additional ground work to ensure its suitability for high-rise development

6. Multi-phased development requiring all infrastructure to be in place before the housing phases begin

7. Environmental factors

The local government development minister and the housing controller must always remember to make a balanced decision taking all factors into consideration, even though the EOT is unilaterally granted by the ministry to the developer and the power is conferred by the relevant laws and regulations.

Delivery of strata title

Delivery of strata title upon vacant possession is encouraged to prevent developers from failing to process the application for strata title.

This can avoid the legal costs of suing developers and the delivery of the strata title as soon as possible further protects the rights of the homebuyer as the owner of the parcel.

Although the case is very rare nowadays, it will arise in a situation where fewer units are sold in the project.

Another scenario that could occur is that the developer goes into liquidation. This will result in a liquidator taking over the project.

The cost to the buyer is unregulated and will be a burden. Hence, it is commendable that the government has capped the fees (RM500) of liquidators appointed by the Insolvency Department.

A recent court ruling (the Remeggious Krishnan case) also stated that homebuyers can claim from the Home Buyer Claims Tribunal (Tribunal Tuntutan Pembeli Rumah) for different issues for the same property from the developer – capped at RM50,000 each.

Another court ruling (the case of Bandar Eco-Setia Sdn Bhd) indicated that the developer must ensure that home owners have access to water and electricity upon vacant possession, otherwise the owners can claim LAD.

The power imbalance between buyers and developers is further reduced by eliminating any possibility of exploitation of buyers. – August 28, 2023.

* Nick Tan Beng Teong graduated with Bachelor of Economics at University of Malaya. A member of Agora Society, Tan believes in policy reforms in order to build a better nation.

* This is the opinion of the writer or publication and does not necessarily represent the views of The Malaysian Insight. Article may be edited for brevity and clarity.