Work in progress: Site workers at an urban property development in Petaling Jaya. — Filepic
PETALING JAYA: The introduction of the “option to purchase” clause in pre-sale agreements for house buyers may be good protection for both buyers and developers as long as it is not used as a tool for speculation.
Real Estate and Housing Developer’s Association (Rehda) president Datuk NK Thong said that although it may be premature to comment on the initiative without knowing the full details, it was a good proposal in principle.
“In other words, if the project sales threshold is reached, buyers must go ahead without the option to withdraw or they could be tempted to sign many options only to go ahead with one.
“This will end up sending a false signal to the market about the real demand for properties,” he said when contacted yesterday.The Local Government Development Ministry earlier announced in the Dewan Rakyat that it was in the midst of fine tuning the Housing and Development (Control and Licensing) Act 1966, aimed to strengthen the administration and management of the housing sector efficiently.
Among the proposed amendments included having clearer definitions of sick projects and looking into adding the “option to purchase” clause in the pre-sale agreement.
The option in the contract would allow developers and house buyers the space to exit the contract without financial implications if the developer failed to proceed with the project due to being unable to hit sales targets within a certain period.
Housing law expert Wong Hua Siong from the Multimedia University’s Law Faculty said the “option to purchase” would give room for both the developer and purchaser to enter and exit the sale and purchase agreement.
“However, should the developer not hit the sales target, it may not be the concern of the purchaser.“The developer might disclaim their liabilities or responsibilities, but from the view of the purchaser, this particular house might be the only house that the purchaser could afford to purchase.
“Thus, the interest of the purchaser needs to be taken into consideration,” he said.
To solve this scenario, Wong suggested that house purchasers be given sufficient notice before the developer wished to exit the SPA to ensure that house buyers have sufficient time to look for another house.
“In the event that there are any new housing projects in the future, the affected potential purchaser should be given some reward or rebate due to the previous project that was terminated in the hope that it could achieve a win-win situation,” said Wong.Consumers Association of Penang (CAP) president Mohideen Abdul Kader said the amendments were good news, adding that CAP had a list of complaints on housing issues.
“Many house buyers continue paying their bank loan on purchase of houses even though the housing project didn’t take place.
“House buyers have the right to receive the money they paid to the developer.
“The banks should not charge interest to house buyers if the developer failed to continue.
“The contract must be very clear and house buyers must be told on every clause in the contract,” he added.
House buyer Annuar Abu Bakar, 33, welcomed the proposal, saying that it would give good protection to house buyers like him.
“I think it will give some space to both sides if they have some grouses on the project,” he said.
