We all know that you should always conduct your due diligence before purchasing your first home or an investment property. Here’s how you can do a quick check on a developer’s background before committing any further.
Let’s state the obvious, shall we? Property investment involves a lot of money and for some of us, it’s a once-in-a-lifetime opportunity. Which is why it is important to not get overly excited when you are promised the moon and the stars by a property developer. Be prudent as the property you have your eye on might be one from a blacklisted property developer.
If you’re in the midst of surveying for your dream house and want to avoid being cheated by an unscrupulous developer, read on. Already bought a property from a blacklisted developer? We also have a solution for you.
Which property developers should you avoid?
Before committing to a big-ticket purchase, check if the developer has faced any problems in their projects or are currently in hot water with the authorities. The National Housing Department (JPN) regularly compiles a list of blacklisted property developers in Malaysia and has released an updated list of blacklisted property developers recently.
These developers are divided into four offence categories as per below:
1. Property developers without licenses
A property developer is mandated by the Housing Developers Act (Control and Licensing) 1966 Act, which requires them to apply for a license and permit before commencing a project development and selling it to the public. Failing to do so is an offence under the Act. Usually, the developer will display the license and permit number on their pamphlet, brochure or at their sales gallery.
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Here is an excerpt from the list, which has been updated as of 30 June 2020:
- Aghinyak Builders Sdn Bhd
- Bulatan Mekar Sdn Bhd
- CT Bakti Timor Sdn Bhd
- Expand Factor Sdn Bhd
- Ikatan Darma Sdn Bhd
- Ivoria Development Berhad
Click here for the full list.
2. Property developers with abandoned projects
There are many reasons for a project to be abandoned. It could be because of inexperienced developers, poor marketing and sales strategies, financial problems, challenging economic conditions, disputes between shareholders, mismanagement of the company and business affairs, or even lack of enforcement and monitoring by the authorities.
As of November 2017, the government had registered 253 abandoned private housing projects in Peninsular Malaysia, with the highest number from Selangor.
As of 31 May 2020, there is still an astounding 189 developers on the abandoned projects list. Some of them include:
- AGA Development Sdn Bhd
- Akrab Properties Sdn Bhd
- Sri Hartamas Corporation Sdn Bhd
- Duta Nilai Sdn Bhd
- Majestic Heights Sdn Bhd
- Idealmont Development Sdn Bhd
- Villa Genting Properties Sdn Bhd
Click here for the full list.
3. Property developers that did not honour the Tribunal for Homebuyer Claims (TTPR) Award
For those who are unaware, the Tribunal for Homebuyer Claims provides homebuyers with an easier, cheaper and faster means of dispute resolution for home-related issues with housing developers such as property defects claims and late delivery of vacant possession. The TTPR is under the purview of the Ministry of Housing and Local Government (KPKT) and any final decision of the Tribunal is called an Award, where the developer is then supposed to act on or compensate the aggrieved homebuyer(s) accordingly.
As of 17 July 2020, almost 300 developers have failed to adhere to the TTPR, including:
- Abra Development Sdn Bhd
- Ban Soon Aik Development Sdn Bhd
- Diamond Crest Sdn Bhd
- Hartaplus Realty Sdn Bhd
- Lestari Puchong Sdn Bhd
- Sky Venture Management Sdn Bhd
- Wangsa Idaman Sdn Bhd
Click here for the full list.
4. Property developers who failed to settle compound payments
Developers who break the law will be charged with an additional fee, known as compounds. Just to break it down for you, property developers will be compounded between RM5,000 to RM50,000 based on the offences made. These are divided into three main clusters as below:
i. Compounding of the offence of the licensed housing developer under sections 7 and 18 (c) of Act 118
ii. Compounding of Advertising and Sales Permits in compliance with regulation 5 (Housing Development (Control and Licensing) Regulations 1989
iii. Compounding of the management and maintenance offences of the Housing Development Account (HDA) under the Housing Development Regulations (1A), 5 (6), 6 Housing Development Account) 1991.
As of 17 July 2020, there were 489 developers who are guilty of not settling their compound payments, some of them are:
- Ajumas Engineering Sdn Bhd
- Crystal Amber Sdn Bhd
- Fajar Melati Sdn Bhd
- Idaman Ekspres Sdn Bhd
- Macvilla Sdn Bhd
- SOE Brothers Sdn Bhd
- Top Impression Sdn Bhd
Click here for the full list.
MORE: Top 10 property developers in Malaysia
I’ve bought a property from a blacklisted developer. What should I do?
To answer this question, we called KPKT and the feedback wasn’t as helpful as we’d hoped. The representative said that they weren’t able to do anything, so we would need to talk to a lawyer and file a civil suit.
We couldn’t just stop there! So we engaged a real estate lawyer, Khairul Anuar Sharudin of Khairul, Suhaila & Hazlina, to get a more thorough answer. Apparently there is another way to approach this matter – You can cancel your sales and purchase agreement (SPA)!
1. For licensed developers:
Based on the amended Housing Development Act (Control and Licensing) 1996 Act 118, homebuyers can revoke their SPA if the housing project that they bought shows no progress within six months since they signed the contract. To make this happen, you need to acquire approvals from the Ministry and request written consent from the banks.
Other things you should know is that the financier should not unreasonably withhold permission to terminate the agreement. Once the process is settled, the licensed housing developer should refund your money within 30 days (interest-free).
2. For unlicensed developers:
According to the former Housing and Local Government Deputy Minister, Halimah Mohamed Sadique in a media report, you can bring your complaints to the Housing Claims Tribunal, including problems you face with the unlicensed developers, under the same Act.
Moral of the story: Check first before you buy!
While there are many factors to consider when deciding when or where to purchase a house, the safest way is to start with an easy background check. As you can see, there are hundreds of blacklisted property developers.
It doesn’t matter if you encounter them at the mall or a property expo – double-check their credibility with KPKT and look up their CTOS profile. As cliche as it may sound – prevention is better than cure.
That aside, if you’re looking for a home loan, head to our home loan eligibility calculator to determine which property price range fits your financial profile.
Good luck!
