COMPLETE MALAYSIAN HOME BUYERS’ GUIDE 2008

COMPLETE MALAYSIAN HOME BUYERS’ GUIDE 2008

Important Considerations for Buyers of Malaysian “Homes”:

1. Check Whether The “Home” Is Sited On Residential or Commercial Land:

Is it sited on residential or commercial land? The former – known as “housing accommodation” - enjoys specific protections and safeguards under the Housing Development (Control & Licensing) Act (HDA) & Housing Development Regulations (HDR); Whereas the latter (e.g. serviced apartments, condotel, resort apartments and the likes) do not – instead, they are governed by, among others, the Contracts Act and other Malaysian law.

Is it on a freehold or a leasehold land? If leasehold, how many years left?

Is it on Malay Reserve land which non-Malay cannot buy?

2. Check On The Developer:

A Malaysian home which is a “housing accommodation” under the HDA & HDR can only be legally developed and offered for sale by a developer with:
· A valid housing development licence;
· A valid advertisement licence for the housing development;
· A valid sales permit.

Obviously, you should also check on the developer’s track record in terms of:
· completion ability;
· delivery of quality;
· past customers’ experience.

3. Check: A “Landed Home” or “Strata Home”?

A “housing accommodation” under the HDA can be a “landed home” (such as bungalows, semi-detached houses and terrace houses) or a “strata home” (such as condominiums, flats, apartments and townhouses).

HDR Reg. 11(1) imposes different standard Sale & Purchase Agreements and different periods of completion for a “landed home” as opposed to a “strata home”:
· For “landed homes” - the legally expected date of completion is 24 months from the date of signing of the Sales and Purchase Agreement (SPA) as per Schedule G of HDR 1989; whereas,

· For “strata homes” - the expected date of completion is 36 months from the date of signing of the SPA (as per Schedule H of HDR 1989).

HDR Reg. 11(4) further states that the Purchaser’s solicitor is “entitled to a complete set of the contract of sale including…free of charge subject to the undertaking…to return…in the event…not executed by the purchaser within fourteen (14) days from the date of receipt…”

The rights of buyers must be understood as contained in the Sales and Purchase Agreement as in either schedules G or H of the Housing Development (Control and Licensing) Regulation 1989, whichever is applicable – please refer above

4. Get A Copy of The Brochure

Brochures for a housing development are usually given free by the developers. HDR Regulation 6(1) stipulates that certain information must be included in any advertisement – including the brochure. Do look out for the following information:
1. The Housing Development’s Licence number and the expiry date;
2. The Advertisement and Sales permit numbers and the expiry dates;
3. Name and address of:
· The licensed housing developer;
· The authorized agents (if any);
· The holders of power of attorney (if any);
· The project management company (if any);
4. Land details: tenure – freehold or leasehold expiring when? Land mortgaged to bank?
5. Development Description:
· Location;
· Building material specification;
· Size of the property;
· services/amenities.
6. Name of Housing Project (if any);
7. Expected Date of Completion;
8. Price of each type of home;
9. Number of units for each type;
10. Reference number of the approved building plan and the name of the local approving authority

5. First Payment 10% - No Payment Allowed Before Signing SPA.

The first payment of 10 per cent must be made upon signing of the Sales and Purchase Agreement. Please ensure the date of signing of the SPA and the date of first payment are the same.

Be informed that under HDR Regulation 11(2): the housing developer is not allowed to collect any form of payment by whatever name called (whether as booking fee, earnest money, earnest deposit or what not) without a Sales and Purchase Agreement being signed.

HDR Reg 11(4) further states that the Purchaser’s solicitor is “entitled to a complete set of the contract of sale including…free of charge subject to the undertaking…to return…in the event…not executed by the purchaser within fourteen (14) days from date of receipt…”

6. Architect Certification

Any demand by the developer for instalment payment must be supported by a certificate duly signed by an architect or a certified engineer.

7. Interest on Late Payment

A buyer (or whose end financier) who fails to pay the developer the progressive payment/installment within 21 working days from the date of the written notice of payment from the developer can, under the standard SPA, be charged an interest of 10 per cent per annum on the installment in arrear.

8. Termination of the Sales and Purchase Agreement

Any such failure to make the progressive payment or interest charged on late payment for a period of more than 28 days can give the developer the right to terminate the Sales and Purchase Agreement. The developer must serve the notice in writing by AR registered post of its intention to terminate the SPA.

9. Infrastructural Maintenance Fee

Buyers must pay the cost of maintaining the infrastructure from the date of vacant possession till the date the responsibility is taken over by the local authority or management corporation (in the case of a subdivided building).

Infrastructure is defined as:
a) For land and building - Road, driveway, drains, sewerage, pipelines and sewerage tank for the housing development;
b)For subdivided building - Road, driveway, drains, sewerage, pipelines and sewerage tank for the building.

10. Maintenance and Management Fee

From the date of vacant possession the buyer shall be responsible for paying for services such as:-

11. For land and building

i.) Refuse removal, upkeep of drains and grass-cutting on the road reserves;

ii.) The buyer is responsible for such payment until such responsibility is taken over by the proper authority;

iii.) The buyer must pay a six months’ deposit upon being handed vacant possession for the services to be rendered. After six months, if the services are still not taken over by the relevant authority, any subsequent payment shall be payable on a monthly advance.

12. For subdivided building

i.) Payment is for the cost of maintaining and managing the common area and payment starts when vacant possession is handed over.

ii.) The buyer shall pay one (1) month’s deposit and three (3) months’ advance in respect of the maintenance service charges and any payment thereafter shall be payable on a monthly advance.

iii.) Maintenance fee must be paid to the developer from the date of vacant possession up until the formation of a management corporation under the Strata Title Act 1985.

iv.) Once the management corporation is formed under the Strata Title Act 1985, maintenance services will be handled by the management corporation and the buyer must pay the maintenance fee to the management corporation and not to the developer.

(Reminder: Maintenance fee must be paid as long as the buyer owns a parcel in the said maintained building.)

13. Sinking fund

For subdivided building onlyThe buyer shall upon the date he takes vacant possession of the said parcel contribute to the sinking fund an amount equivalent to 10 per cent of the service charges. The buyer shall pay one (1) month’s deposit and three (3) months’ advance in respect of the service charges to the sinking fund and any payment thereafter shall be payable on a monthly advance.

14. Payment of Quit Rent, Rate Assessment, etc

From the date of vacant possession or date of assignment, whichever is earlier, the buyer is responsible for the quit rent, assessment, rate payment and other charges relating to the property bought.

15. Vacant Possession

Vacant possession on the building complete with water and electricity connection must be handed over within 24 calendar months from the date of signing of the SPA for landed property and 36 calendar months for subdivided building.Regulation and Rights of House Buyers during the Handing over of Vacant Possession.

Ensure the property is free from any encumbrances before accepting notice of vacant possession.If the developer leases the land or the property, the developer must settle the balance payment before handing over vacant possession.

Conditions that must be followed by housing developers:-
1.) Certificate from the developer’s architect stating thata.) the building is completedb.) water and electricity are ready for connection
2.) The developer has applied for:
a.) the issue of the Certificate of Fitness for Occupation (CFO) through Form E *
b.) the local authority has issued a notice stating that Form E has been checked and accepted by the relevant authority.
(* Form E is an application from the developer’s architect to the relevant authority for the issue of the CFO.)

The buyer is entitled to enter into occupation of the property only upon issue of the CFO by the relevant authority and renovation may be carried out only upon issue of the CFO and approval of the plan by the relevant authority. While inspecting the building, any defect is recorded and handed over to the developer to be rectified. Make sure you obtain a copy of the report. The buyer is entitled to claim for late delivery from the developer.

16. Damages

If the developer fails to deliver vacant possession of the building as stipulated by the SPA, it must pay damages calculated on a daily rest, 10 per cent per annum of the purchase price.

17. Defect liability period

The defect liability period is 18 months after the date of vacant possession. Creation of Management Corporation for Subdivided BuildingA management corporation will be created once the strata title of each individual parcel is issued to the owners. Other functions of the management corporation include insuring and maintaining the building.

18. Enquiries and complaints

You may contact:

Monitoring and Enforcement Division
Ministry of Housing and Local Government
Level 3, Block B North, Pusat Bandar Damansara
50782 KUALA LUMPUR
Tel : 03-2094 7033Fax: 03- 2092 5049

This is a division under the Ministry of Housing and Local Government and it is responsible for the implementation and enforcement of the provisions of the Housing Developers (Control and Licensing) Act (Act 118).

Forward your complaints to the above division. Or e-mail its enforcement officers at enforcement@kpkt.gov.my, giving your full name, IC no, developer’s name, name of housing project, etc. and the gist of your complaint.

Douglas.

(Acknowledgments & Disclaimer:
The above summary is adapted mainly from information publicly available at the Official website of the Malaysian Ministry Of Housing & Local Goivernment. While every effort and care is taken to ensure accuracy, reliance on it wholly or partly is solely at the discretion and risks of the readers. The writer does not, cannot and will not give warranty of any kind whatsoever for the above summary which is given free and in good faith.)

Talk On Test Of Professional Competence for Malaysian Probationary Estate Agents (PEAs) - 30 Aug. 2008

To:
Principals, REAs, PEAs & Negotiators (of Malaysian Real Estate Agencies),

The 23 Aug 2008 "Talk On TPC" is now closed for registration.

Nevertheless, another "Talk On Test of Professional Competence" will be held on 30 Aug. 2008 (Sat) to take advantage of the long Merdeka weekend for the benefits of outstation participants based on feedback by some callers. This talk is to support and compliment similar TPC talks held elsewhere by others and to give PEAs more choices.

TPC Registration Form (Click this link) is downloadable at "My Links" of this blog. Details of the TPC Talk are as follows:

Topics covered:

How to prepare for:
1) Yearly Work Diary?
2) Record of Experience?
3) Practical Task 1?
4) Practical Task 2?
5) Professional Interview?

Date : 30th August 2008 (Saturday)

Time : 9:30am – 3:30pm (Lunch 12:30pm – 1:30pm)

Venue : Training Room
GT REALTY
22-B (2nd Floor), Jalan 19/36
46300 Petaling Jaya, Selangor.
(In front of SJK (C) Puay Chai Primary School, SS2, PJ)

Speaker : Mr. Douglas GT Tan - holds a B.Sc. (Bldg) degree from NUS, S'pore; passed his TPC in 1 sitting; practiced real estate agency more than 15 years since 1992; closed high-end & low-end properties; lectured part-time at HELP in 2003 & 2004 on "Real Estate Agency Practice", "Real Estate Agency Law" & "Principles & Practice of Marketing"; conducted 2 TPC talks in 2003. Secure your seats early to avoid disappointment!

Fee : RM250/person (RM220/person if register before Aug. 27 or group registration)
(fee includes notes, mints & bottled water plus lunch)

Payment : 1. Credit cash into Maybank Bhd A/c No.: 112763-020567 of TAN GEE TICK, or
2. Mail crossed cheque payable to TAN GEE TICK (to add outstation charges)

To Register: Please call Ms. Ester (017-6018 062) / Mr. Douglas (012-288 6993)

(Important Note: Participant shall not cancel paid registration but approved substitution is allowed; in the event of cancellation/rejection by organizer, full interest-free refund shall be given to the participant or his/her sponsor.)

Regards,
for Douglas.

For Sale: Residential Properties Across Malaysia (as at 20 Aug. 2008)

Hi Folks,

If you are looking to buy residential properties in any parts of Malaysia - from Perlis in the north to Johor in the south (of Peninsular Malaysia) or from Sabah to Sarawak (in East Malaysia) - Just click this link on Residential Properties For Sale In Malaysia: Yes, more than 1,000 housing accommodation, in different states across Malaysia, with pertinent information (location, property type, size and reserved price) nicely tabulated in 92 A4 pages for your convenient viewing. Click the link now to look for your desired residential properties!

Once you have interest - whether to buy or to view any one of them: Just email me at tanhalim1@gmail.com stating the 1) Property Ref. No. & Page No.; 2) Location (e.g. Selangor, Petaling Jaya); 3) Property Type (e.g. Terrace House) and 4) Its Reserved Price; and, of course, 5) Your Full Name & Contact Details.

Upon making the necessary arrangements with the Vendors on "best effort" basis, we will follow-up with you thereafter.

Cheers,
Douglas GT Tan (H/p: 012-288 6993)

GT REALTY, 22-B Jalan 19/36, 46300 Petaling Jaya, Selangor D.E., Malaysia.
Tel: 03-7958 8821 / Fax: 03-7958 7821

P/s: Lists of other types of properties (commercial, industrial & land) for sale across Malaysia will be out very soon - look out for them in my subsequent posts!

Home Buyers Guide (Part 5)

Hi Folks,

First Payment (10%) - No Payment Allowed Before Signing SPA.

Do you know:

• That the first payment of 10 per cent shall only be made by you upon signing of the Sales and Purchase Agreement? That the date of signing of the SPA and the date of first payment should therefore be the same?
• That under HDR Regulation 11(2): A housing developer is not allowed to collect any form of payment by whatever name called (whether as booking fee, earnest money, earnest deposit or what not) without a Sales and Purchase Agreement being signed?
• That HDR Reg 11(4) further states that the Purchaser’s solicitor is “entitled to a complete set of the contract of sale including…free of charge subject to the undertaking…to return…in the event…not executed by the purchaser within fourteen (14) days from date of receipt…”?

That is why from the very beginning, it is very important to make sure whether the 'residence' you are buying is on residential land or commercial land. If the former, then above stipulations apply. As for 'residence' on commercial land such as service apartments, the terms of the Sale & Purchase Agreement need not be those that are prescribed in Schedule H or G of the HDR 1989.

In fact, I can show an actual S&P for a 'serviced apartment' near Mont Kiara which terms are significantly different from those of the standard S&P under the HDR - more of these in my subsequent posts.

Douglas.

Talk On Test of Professional Competence For Malaysian Probationary Real Estate Agents (PEAs) - 23 Aug. 2008 (Sat)

To:
ALL Malaysian REAs, PEAs & Negotiators,

Kindly let your friends and colleagues who are PEAs (Probationary Estate Agents or Negotiators who have just passed their written examinations in "Diploma In Real Estate Agency") know that there will be a talk on "Test of Professional Competence (TPC)" on 23 August 2008 (Sat). This talk is meant to support similar talks held elsewhere and to give PEAs more choices.

Details are as follows:

Topics covered - How to prepare for:

1. Yearly Work Diary?
2. Record of Experience?
3. PracticalTask 1?
4. Practical Task 2?
5. Professional Interview?

Date : 23rd August 2008 (Saturday);

Time : 9:30am – 3:30pm (Lunch 12:30pm – 1:30pm);

Venue : Training Room , GT REALTY, 22-B (2nd Floor), Jalan 19/3646300 Petaling Jaya, Selangor. (In front of SJK (C) Puay Chai Primary School,SS2, PJ)

Speaker :

Mr. Douglas GT Tan (holds a B.Sc. (Bldg) degree from NUS,S'pore; passed his TPC in 1 sitting; practiced real estate agency more than 15 years since 1992; closed high-end & low-end properties; lectured part-time at HELP in 2003 & 2004 on "Real Estate Agency Practice", "Real Estate Agency Law" & "Principles & Practice of Marketing"; conducted 2 TPC talks in 2003. Secure your seats early!)

Fee : RM250/person (RM220/person if before Aug. 16 or group registration - fee includes notes, mints & bottled water plus a surprise)

Payment :

• Credit cash/cheque into Maybank Bhd A/c No.: 112763-020567 of TAN GEE TICK, or
• Mail crossed cheque payable to TAN GEE TICK to reach by 20 Aug 08 (add outstation charges)

Enquiry : Ms. Ester (017-6018 062) / Mr. Douglas (012-288 6993)

(Important Note: Participant shall not cancel paid registration butapproved substitution is allowed; in the event of cancellation/rejectionby organizer, full interest-free refund shall be given to theparticipant or his/her sponsor.)

Register early to secure seats!

Regards,

for Douglas.

(TPC Registration Form is downloadable at "My Links" of this blog - at the left)

Malaysian Home Buyers Guide (Part 4)

Hi Folks,

When you are buying a "home" or residence in a housing development built on residential land and therefore governed by the HDA & HDR, it is important that you get the Brochure not just because it usually given free by the developers but more because the law (the HDA & HDR) stipulates that certain information must be included in the brochure.

Do look out for the following information:
1. The Housing Development’s Licence number and the expiry date;
2. The Advertisement and Sales permit numbers and the expiry dates;
3. Name and address of:
· The licensed housing developer;
· The authorized agents (if any);
· The holders of power of attorney (if any);
· The project management company (if any);
4. Land details: tenure – freehold or leasehold expiring when? Land mortgaged to bank?
5. Development Description:
· Location;
· Building material specification;
· Size of the property;
· services/amenities.
6. Name of Housing Project (if any);
7. Expected Date of Completion;
8. Price of each type of home;
9. Number of units for each type;Reference number of the approved building plan and the name of the local approving authority.

When you don't see any of the above information, check whether the so-called "home" you have in mind is built on commercial land in which case you cannot rely on HDA & HDR for safeguards and protections (e.g. claiming LD for delay in delivery of vacant possession by the developer before the Housing Tribunal) - your recourse would have to be based, among others, on what you have signed with the developer in the context of Malaysian law (e.g. filing a civil suit under the Contracts Act based on a contractual clause in S&P that allows claim for LD for the delay in delivering vacant possession - this civil suit would not be subject to the limitation on the quantum of LD being claimed since it is not a claim before the Housing Tribunal and the service of a lawyer may be engaged unlike an LD claim before the Housing Tribunal).

I will cover a few more points in my next few posts. Thereafter, I will provide a summary of all the points for the benefits of those preparing for the diploma of real estate agency examinations and the Malaysian Home Buyers at large. (Of course, reliance on my notes are at your sole discretion and risks. I undertake no warranty of any kind whatsoever for the the view honestly expressed in good faith to the best of my knowledge and for public interests.)

Have a great weekend,

Douglas.

Malaysian Home Buyers Guide (Part 3)

4. Check on The Home: Is It A “Landed Home” or “Strata Home”?

This check is important because the Malaysian housing development law (the HDA & HDR) imposes different periods for completion and standard Sales & Purchase Agreements:

• For “landed homes” (such as bungalows, semi-detached houses and terrace houses) the legally expected date of completion is 24 months from the date of signing of the Sales and Purchase Agreement (SPA) as per Schedule G of HDR 1989; whereas,
• For “strata homes” (or sub-divided homes, if you like, such as condominiums, flats, apartments and townhouses) the expected date of completion is 36 months from the date of signing of the SPA (as per Schedule H of HDR 1989).
  

Your rights as a buyer of Malaysian home or housing accommodation must be understood as contained in the Sales and Purchase Agreement as per either schedules G or H of the Housing Development (Control and Licensing) Regulation 1989, whichever is applicable.

Douglas.