How Property Developers Cheat You

To most, buying a house may be the most expensive purchase you make in your life.

And it is in purchasing a property that many would find out that they have been cheated.

In Malaysia, in purchasing your property, at most times you are only provided two reference documents to base your decision which will cost hundreds of thousand or even millions. These two documents are: (1) floor plan and (2) artist illustrations. The next time you visit a property booth in a mall or go to a property expo, see what they give you, it’s just these two documents.

What most don’t realize is that these items are not binding and that is how and why many get disappointed. When homeowners, after waiting 3 years for their new condo or house, get a poor product and gets upset, the property developer would tell you it’s not binding.

You are upset that your lobby is not equipped with quality furniture per the artist illustration. Developer will tell you artist illustration is not binding.

You are upset that the condo changed name from a expat-friendly English name to a Malay one. Developer will tell you the local authority now requires a name in Malay. Developer will tell you that in your SPA, there is a catch-all clause that says developer is empowered to do anything to deliver the product (and tell you this is industry standard). The developer will not care that a different name in Malay may make the property to be perceived differently in value.

You are upset that the overall quality of the condo is poor – surfaces are not coated with sufficient paint and/or common area not completed. You suspect the developer is rushing the handover to not get hit by LAD (the fine paid to end buyer for not finishing project in time) and tell you – “if you have a problem, raise it with the architect, they gave us the CCC, to us that means it’s good to go”. Better yet, they spin the story by further lying, attempting to confuse customers by saying they have 2 year defect rectification period. Think about it, it’s in the name, defect rectification is to rectify defect, not to give you an incomplete product to begin with.

In truth, the most expensive purchase you’ll ever make is subject to the good will and integrity of the developer.

You may be inclined to tell yourself, let’s buy from a reputable developer, a listed property developer, a developer whose management are in REHDA but these are not sufficient assurances. I have heard to listed companies whose CEOs are in REHDA and their product is appalling. The association is represented by industry players and if the players have established so well the means to cheat the game, how do we protect the buyers?

This is a problem that appears at every price range – from moderately priced homes to luxury ones. When deep pocketed owners of luxury units are short changed, they have the resources to pursue the issue legally but you will be surprised to know that upon consultation with a lawyer, they would be told that almost no action can be taken on the developer. The level of collusion between developer and architect and other players is strong.

What I would like to see is the property development industry in Malaysia to grow to be more consumer friendly. Consumers are making the biggest purchase of their life – it’s only fair that the authorities set expectations higher for property developer. Perhaps periodic updates of the unit progress should be made mandatory (not just the bank telling you the loan has been disbursed). Perhaps a better mechanism for end buyers to contest a cheating developer should be in place.

As of now, the best advice I can give is perhaps for you to buy from a GLC developer (with the government equity in majority). From my experience, GLC developers are more inclined to eat into their profits and spend more to deliver a good product.

Here’s wishing to a more mature property development industry.

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