HOUSE prices may increase if warranties for structure and fixtures by manufacturers, contractors and suppliers to the developer are extended to house buyers.
Real Estate and Housing Developers’ Association Malaysia (Rehda) president Datuk NK Tong (pic) said vendors may consider increasing prices if they have to deal with individual buyers instead of just the developer.
“Alternatively they may choose to reduce the warranty period to the same duration as the defect liability period (DLP).
“This would remove a developer’s ability to determine how confident a supplier is about their product,” he said.
Tong was commenting on StarMetro’s report titled “Extend Warranties for Defects to Homeowners” on March 3, in which the National House Buyers Association (HBA) proposed to add a new clause to the sale and purchase agreement (SPA) so buyers could inherit warranty protection against house defects.
Tong said a two-year DLP was enough, as construction defects would show up within that period.
“The DLP can be viewed as a trade-off between consumer protection and keeping homes affordable, similar to extended warranties for appliances.
“The cost to homeowners will increase as a result of extended warranties.
“The DLP was previously for 12 months, but it has been increased to 24 months.
“Contractors are responsible to address defects reported by homeowners within the two-year period, which will begin from the delivery of vacant possession.”
The DLP covers defects or irregularities such as leakage, cracks on walls or tiles, water damage as well as faulty installations of fixtures, doors, and windows.
Tong said Rehda was cognisant of homeowners exercising their rights to utilise the DLP, so developers or contractors could fix the defects and ensure their homes are liveable and meet the advertised standards.
However, for defects that appear after the 24-month period, they are typically due to wear-and-tear and needed regular maintenance.
“If defects that appear within the period are not effectively resolved, a responsible developer should still honour the DLP and resolve the matter,” said Tong.
“Additionally, if it can be proven that the defects were there from day one, these are considered latent defects and the developer may still be responsible for honouring the DLP even after its expiry.
“An independent professional consultant, such as an architect or engineer, is usually called in to determine who is responsible for addressing such defects if there is a suspicion that these are latent defects, even after the DLP’s expiry.”
In cases of leakage, Tong said climate change and extreme weather patterns could exacerbate the issue.
Developers would continue to focus on building better quality houses, despite the present economic and labour challenges, he said.
“Many foreign workers left the country during the Covid-19 pandemic, taking away valuable skills acquired after years of training,” said Tong.
“With a new batch of foreign workers, contractors are faced with the task of rebuilding these skills through long-term training,” he said.
HBA honorary secretary-general Datuk Chang Kim Loong suggested for the DLP to be increased to 36 months.
“The government should consider ensuring that the principal listed companies underwrite the performance of its subsidiaries.
“It is the norm for property developers to set up subsidiary companies when embarking on each property development for administrative purposes and to limit legal liabilities,” said Chang.
