Time to make ‘strata titles with vacant possessions’ a reality

• This issue of “vacant possession simultaneously with strata titles” has somehow been delayed these last few years since its inception because of some alleged technical problems.

PETALING JAYA (Dec 31): In 2013, the Parliament passed the Housing Development (Control and Licensing) Act, 1966 (amended 2012) and the Strata Titles Act, 1985 (amended 2013) with a major change to the laws on the issuance of strata titles. The new laws, which came into force on June 1, 2015, tightened the process of the segregation of the master title by the developer.

In addition, it mandated that developers must apply for strata titles within three months of the completion of the superstructure, and the titles should be ready upon vacant possession (VP) of the property.

In previous articles, we have explained how important strata titles are because it gives house buyers full legal ownerships of their properties.

With these amended Acts in place, purchasers can be confident of getting their strata titles. The floodgate of housing developers not applying for strata titles has been closed with this initiative. The changes, led by the new strata regime, will, to a certain extent, address the inadequacies and shortcomings faced by the old strata laws and provide adequate protection to homebuyers. After all, homebuyers are developers’ customers and should be treated with dignity and not be shortchanged.

To ensure that strata titles can be obtained eventually, under Section 6(1) of the Strata Management Act 2013, the Schedule of Parcels (SiFu) must be filed with the Commissioner of Building before developers can sell any parcel or proposed parcel. The new regime of law even requires developers to comply with all the prerequisites before proceeding with any sale of a parcel.

However, this issue of “vacant possession simultaneously with strata titles” (VPST) has somehow been delayed these last few years since its inception because of some alleged technical problems. That has led the National House Buyers Association (HBA) to question the delay. Was it deliberate or otherwise? Was there a shortage of manpower at the land office or the noncommittal action among the professional bodies? Or has someone inaccurately interpreted the application of the laws?

We do not wish to dwell on the technical aspects; or find fault or reasons for the indecisiveness in applying the technical attributes for the accomplishment of VPST. The important thing is that the technical issues have been ironed out and more clarity has been made recently. 

Pemudah’s authoritative and timely announcement

HBA eventually highlighted the issues to the Technical Working Group on Dealing with Construction Permits (TWGDCP) under the auspices of the Special Task Force to Facilitate Business, known by its acronym: Pemudah, (www.pemudah.gov.my) and presented a working paper with the theme: Has VPST been thwarted?  The technical group is made up of professional bodies, stakeholders, trade organisations and related government agencies. Countless meetings and workshops were convened and all expressed their concerns and eventually came to a workable consensus.

HBA is pleased with the authoritative and timely announcement recently by PEMUDAH, which was chaired by the past Minister in the Prime Minister’s Department (Economy) Datuk Seri Mustapa Mohamed and co-chaired by Dato Dr Ir Andy Seo, inter alia:

PEMUDAH meeting on Sept 26 …”has decided that the Government must continue to safeguard house (condominium and apartments) buyers by ensuring the process of vacant possession simultaneously with issuance of strata titles.

The office of the Director of Land & Mines, Wilayah Persekutuan, Kuala Lumpur (PTGWPKL) has been nominated to be the benchmark for this process.

This process (VPST) has been introduced since June 2015. However, many developers have not been able to accomplish issuing strata titles simultaneously with vacant possession.”

Many developers unable to achieve VPST

The [previous] Minister of Housing, in a written response on Aug 3, acknowledged that there had been numerous cases of housing developers not being able to achieve the target of VPST. In fact, he had issued extension of time (EOT), albeit with conditions, to 638 cases, notwithstanding that the laws have been implemented since June 1, 2015.

From the 638 applications from housing developers, 488 were first-time applications whilst the balance of 150 applied for second extensions. The following is an excerpt of the applications:

We understand that throughout Peninsular Malaysia, 19 housing projects (13 in Kuala Lumpur; five in Selangor and one in Johor) have successfully achieved VPST without the need for any EOT.

All Land Offices were directed to benchmark PTGWPKL since they have a simplified version of a flow chart for achieving its success story in VPST.

One-Stop Centre needed

At a recent meeting on Nov 25 chaired by Seo, HBA presented our proposal to enhance the compliance of the VPST process by offering the following recommendations:

• National Housing Department (JPN), under the Ministry of Housing, to establish a One-Stop Centre (OSC) to coordinate and monitor VPST applications similar to OSC 3.0+, and to come under Tan Sri Teo Chiang Kok, co-chair of TWGDCP.

• All Land Offices throughout Peninsular Malaysia and JPN should not work in silos but together, with “JPN to lead and establish OSC with the Land Offices to coordinate and monitor VPST applications towards making VPST a reality”.

• JPN must establish the VPST OSC and convene monthly meetings with the Department of Director-General of Lands & Mines (Jabatan Ketua Pengarah Pejabat Tanah & Galian), Putrajaya, PTGWPKL (bench-marker),  inviting Real Estate & Housing Developers’ Association (Rehda), HBA and other stakeholders to coordinate VPST applications and issues related to granting of EOT (to deliver VP with letter of proof from the respective land offices), whether there is a need for extension of six or 12 months for strata titles issuance.

•  JPN to adopt a “track & trace” of the VPST processes.

Way forward

With the mushrooming of high-rise buildings (vertical strata titles) and gated-and-guarded housings (horizontal strata titles), it is inevitable for our country to move towards the improved comprehensive regime to better govern the fundamental need of modern society – owning a home, forming communities and living in a shared environment.

There have been enough cases of distressful consequences experienced by property owners when their developers have deliberately failed, neglected or refused to apply for and transfer the strata titles to purchasers, even when they have paid in full. There are many cases of errant developers becoming defunct whereupon liquidators are appointed, leading to house buyers having to pay more.

Read also: Liquidators making fortune from homebuyers’ misfortune

Read also: Victims of runaway developers face double woes from exploitative liquidators

The changes will, to a certain extent, address the inadequacies and shortcomings faced by the old strata laws loopholes and provide adequate protection to purchasers without being shortchanged.