Housing ministry’s extension of time on projects “irrational”


PETALING JAYA: The National House Buyers Association (HBA) has taken Abdul Rahman Dahlan to task for giving a developer more time to complete a project during his previous tenure as urban wellbeing, housing and local government minister, saying it served to place purchasers at a disadvantage.

HBA honorary secretary-general Chang Kim Loong told FMT Rahman’s reasoning for granting of Extension of Time (EOT) was “irrational”, stressing that it denied the rights of house buyers to pursue compensation in the form of liquidated and ascertained damages (LAD).

“The effect of an EOT is that the developers do not have to pay compensation or LAD to the house buyers after the project is completed and vacant possession delivered,” he said today. “Clearly, the only reason for granting an EOT is to save money for the developers.”

He explained that buyers cannot refer to LAD unless purchased homes are completed and vacant possession delivered as stated in Schedule H of the Sale and Purchase Agreement.

In a landmark decision the High Court ruled on Monday against developer BHL Construction Sdn Bhd over a 12-month extension that led to house buyers not being able to claim compensation.

Rahman, who held the position from 2013 to 2016, has since said his former ministry will be filing an appeal.

He said the granting of an EOT is well within the minister’s powers and that such extensions were given only after stringent checks and if a developer faces delays due to circumstances beyond its control.

Chang said at the very least the views of affected buyers must be considered prior to the minister making a decision.

“Do they (the ministry) not know that buyers too face hardship and commitments like having to pay rent while continuing to service their bank loan? They too bear the burden of additional costs and expenses for the delay.”

He said as businessmen, developers must be able to accept risks and not seek the government’s “protection” to ensure they do not lose money.

The government must not try to save developers financially at the expense of innocent consumers, and by issuing an EOT the minister is effectively allowing developers to save on money that should be paid to house buyers, he added.

“Has our country now reached a state of economic crisis that the minister must dish out EOTs to developers who are already in distress and threaten to abandon their projects?”

“Does it mean the minister will grant extension to every high-end project that ask for extension?”

Chang also said it should be left to buyers to negotiate with developers to reach a fair compromise, instead of the minister making such decisions unilaterally.

“After all, the buyers are the covenanting parties to the contract whereas the minister is not a party to the contract.”

Chang noted that even the Real Estate and Housing Developers Association (Rehda) has come out in support of the High Court decision

He questioned if the number of abandoned projects have been reduced by the issuance of EOTs that has transpired in the last three years.

“We have not heard of EOTs been issued under housing ministers before this,” he said.