By Chang Kim Loong
Responsible developers are few and far between, unlike the late fifties and early sixties when the field was played by bona fide entrepreneurs ruled by conscience and pride in their workmanship. Coupled with timely delivery, quality and affordable houses were their hallmarks.
In contrast, the present housing industry operated under the sell-then-build (STB) system through progressive payments, is fraught with risk for the unsuspecting house buyers.
This second generation of housing developers is used to lucrative profits in the housing industry because the post-independence era has been rolling in high population and economic growth, leading to an ever-increasing demand for housing. In a sellers’ market, the buyers are always disadvantaged. When greed is inversely proportionate to conscience among industry players, the situation can get very bad indeed.
We often hear developers lamenting the shortage of workers (legal or illegal, skilled or inexperienced), insufficient supply of building materials and the hassles of complying with new laws or regulations in hindering them from completing their projects in time. At the same time though, we also hear them making profits of multi-million ringgits and none of them are quitting the business entirely.
This means the housing development is still a lucrative business. In fact, more rookie developers are joining the arena because the STB system allows them to make money from other people’s money. It has become a riskless venture where profits are guaranteed. At worst, the government will simply mop up the abandoned housing projects littered. It is befitting the adage: Profit Privatised, Losses Nationalised.
The bad ones aside, the National House Buyers Association (HBA) do take note of responsible developers and urge for the qualities they demonstrate to be emulated.
The construction industry is a very unique field. It is one of a few professions where no formal education is required. There is no formal award giving ceremony by buyers to tell the world their developers have been good and responsible. So how do buyers judge if their developers have been responsible?
Here are some of the traits exercised by responsible developers who have a passion for their profession:
Attention to environment and existing neighbourhood
No new project is an island. They are built among existing neighbouring projects and within an ecological environment. A responsible developer ensures the existing neighbourhood is not disrupted by their new development. If there are complaints such as cracks, landslide or floods stemming from the new construction, they are quickly attended to. They also ensure that existing roads are regularly cleaned 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. Some go the extra mile by investing into the infrastructures first prior to selling their houses.
Pride in quality and timely rectification
Whether it is low-cost or high-cost houses, chasing the developer to rectify blatant defects or bad workmanship is a nightmare to buyers who usually make losses while waiting for the repairs. In contrast, responsible and caring developers carry out their own quality check before handing over their products with the following practices:
- Adopt quality check at all stages of construction as well as test commissioned utility
- 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 promptly if there are complaints on defects
- Keep sufficient stock of products like floor tiles of the same quality and make.
Some developers even extend the mandatory defects liability period to 24 months. We have also heard of developers providing alternative lodgings for their buyers while waiting for defects to be rectified.
Houses should be delivered within the time stipulated in the sale and purchase agreement (SPA), which is within 24 months for “land and building” and 36 months for “building intended for subdivision”. If for whatever reason there were delays, compensation should be paid immediately to buyers without second thoughts or devious ways to short-change the buyers.
Responsible developers keep their buyers informed of delays and tell them of the next expected delivery date. Some buyers even report of the extras they have received at delivery time, which surely endears them to the developers. Some of the “welcome packs” that they have received include useful gifts like key boxes, warranties from paint companies, auto-gates, 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 SPA 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 doing 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 formation of resident/owners associations are a welcome lot. Some even go to the extent of contributing monies for the formulation of buyers’ representative group for a meaningful channel to voice grievances. Others even provide meeting facilities and allocate a multi-purpose room for the elected representative group.
The line of communication should always be open between buyers and their developers for obvious reasons:
- To keep buyers informed of on-going projects and their products
- So that developers do not appear to have shunned away from their responsibility
- To treat buyers with respect as buyers can serve as their marketing tool. (Show respect and you will gain respect.)
- To show transparency and accountability on monies collected
- To provide regular accounting reports and budgets
- To allow any grievances to be voiced, rather than through the media, which will cause adverse detriment to both parties.
Build first then sell
The one step that can significantly improve the industry is for housing developers to adopt the absolute build-then-sell (BTS) system 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 BTS 10:90 concept where buyers pay 10% deposit and the balance of 90% upon completion of the house. Some major developers find the BTS 10:90 concept workable and feasible and hope the government will make it mandatory.
Responsible developers do not have to just depend on their buyers’ word-of-mouth to tout their reputation. Their names would be synonymous with quality and trust, winning over buyer’s confidence. They have created their own brand names. It is no wonder then that even without advertising, all their units are sold-out even before the official launch.
Chang Kim Loong AMN is the Honorary Secretary-General of the National House
Buyers Association (HBA) (www.hba.org.my), a voluntary non-profit, non-governmental organisation