Bumiputera lots: Why should innocent house buyers pay for state agencies’ negligence?

• LPHS and the Selangor Land and Mines Office (PTGS) are supposed to monitor the sale under the bumiputera quotas (median 40% imposition in Selangor) with a bumi discount of 7% of the sale and purchase agreement price vis-a-vis residential per se irrespective landed or stratified.

The recent report on “Homeowners unknowingly sold bumiputera lots, slapped with RM13m penalty fees” is not a newly discovered issue.

In fact, it was already highlighted last year during the Selangor State Assembly that convened in March. Subang Jaya Assemblyman Michelle Ng Mei Sze had asked for updates on the “Prevention system against sale of bumi inter-alia lots” (Sistem pencegahan penjualan lot bumi).

In reply, the various recommendations from the National House Buyers Association (HBA) were indeed acknowledged as “baik” (good). However, the respondent had the audacity to remark: “... up to today, the HBA has yet to present detailed proposals to LPHS (Selangor Housing and Property Board), before further action could be taken”.

Why should LPHS wait for HBA (a non-profit and voluntary organisation manned purely by volunteers) to offer it “detailed proposals”? The state agency is adequately equipped with its own in-house lawyers and legal experts to do the necessary legal research papers substantiated with case laws for the authorities to initiates action.

As soon as HBA obtained an excerpt of the State Assembly Hansard transcript, we had promptly conveyed the message that HBA would not be doing LPHS’ homework for it and that LPHS must proactively work towards curbing such wrongful acts by property developers.

It has been more than one and a half years since then. Are we still waiting? Shouldn’t it have conducted its own research to examine the viability of HBA’s proposals and make the necessary policy changes by now?

Background on Bumiputera Housing Policy

Every responsible government should ensure its citizens have a roof over their heads. In recognising this, the Malaysian government has put in place a number of policies to assist the rakyat in acquiring homes, one of which is the Bumiputera Housing Policy.

This policy was introduced as part of the New Economic Policy in 1970 to reduce the income disparity between the bumiputeras and non-bumiputeras. In a nutshell, the policy requires property developers to reserve a certain percentage of their units for sale exclusively to bumiputeras at a discount.

As land matters are under the purview of the respective state governments, the Bumiputera Housing Policy varies from state to state, ranging from 30% to 50% for bumiputera quotas and 7% to 10% for bumiputera discounts.

The bumiputera quota has been credited by many quarters, including HBA, for enabling less well-off bumiputeras to acquire properties, especially in the urban and suburban areas, and to avoid polarisation of neighbourhoods.

(On a separate note, perhaps the government should reconsider the relevance of such a blanket policy after more than 50 years of its introduction. As it is, affluent bumiputeras are also eligible for the discounts even when buying multiple high-end millions-ringgit properties. Shouldn’t the policy be updated to the current social demography?)

Responsibility of Selangor Housing and Property Board (LPHS)

LPHS and the Selangor Land and Mines Office (PTGS) are supposed to monitor the sale under the bumiputera quotas (median 40% imposition in Selangor) with a bumi discount of 7% of the sale and purchase agreement price vis-a-vis residential per se irrespective landed or stratified. The quotas may be released through a stringent “bumiputra release mechanism” that housing developers must abide by before the units may be sold to non-bumis.

However, there are several cases where housing developers “conveniently” oversell these bumi lots to non-bumis without going through the processes formulated for the periodical release of unsold bumi units. Somehow, the gatekeepers, that is, LPHS, have been caught napping and a large percentage of bumi quota units were sold undetected. The housing developers even had the audacity to confirm in writing to the affected buyers and their financiers/banks that the units they purchased were “not bumiputera” units.

(Read: False declaration a serious offence)

To rub salt into the wound (of the buyers), some of these housing developers have been wound up and declared insolvent. Those strata titles (with restriction-in-interest) issued by the land office require “written consent to transfer and charge”, but the PTGS refuses to issue the consent/s because the titles were under the bumiputera quotas, leaving the buyers in a limbo.

In the end, the state agency demands the non-bumis, who had unwarily purchased the bumi units, to somehow bear the “bumiputera discount of 7% as well as an additional 5% ‘standard’ penalty imposition”, hence making it a total of a whopping 12% x purchase price (PP).

Imagine: a PP of RM800,000 x 12% = RM96,000!

It means that these innocent buyers will now have to pay an additional sum of tens of thousands just to procure and register their names on the titles (their ownership papers), while the developers have pocketed the full sums for the properties. 

Incompetence of gatekeepers

In fact, HBA has already had several discussions with representatives of LPHS and chaired by the previous EXCO in charge of housing, the latest of which was on Feb 2, which confirmed the following:

1. The affected buyers must apply for exemption through the private liquidators for waivers. Such applications must be approved by the State Executive Council (Majlis Mesyuarat Kerajaan Negeri).
2. The private liquidator, appointed by the High Court and now acting for the defunct developer, is imposing an “administrative fee” of 0.5% just for the application, on behalf of the defunct developers, for the said exemption on top of their alleged “administrative fee” of 1% X PP. In the case of buyers of the same development project, even the land proprietor (another legal entity) has been placed under liquidation and another set of liquidators have been appointed and hence another fee of 1% plus their lawyers’ vetting fees of RM450 are payable. Summary of the monies payable are:

i) Liquidator’s fee for application for “bumi exemption” - 0.5%

ii) Liquidator’s “administrative fee”- 1.0%

iii) Land proprietor’s liquidator’s fee - 1.0%

TOTAL                            2.5%

Imagine, PP of RM800,000.00 x 2.5% = *RM20,000

(*This figure does not even include each liquidator’s lawyer vetting fees)

3. LPHS stated that it had no “safety net” and precautionary measures to ensure compliance of the bumiputera quotas by housing developers and land proprietors.
4. LPHS stated there was no written Surat Akujanji (Letter of Undertaking) signed by the board of directors of the developer/land proprietor companies.
5. LPHS stated that there was no Surat Akuan (Statutory Declaration) signed and affirmed jointly and severally by the directors of the defunct companies.
6. LPHS seemed to surmise it has no legal recourse against the delinquent developers and land proprietors.

Buyers made scapegoats

There was an instance where a buyer was “compelled” to pay the 12% of the original purchase price, in lieu of the developer’s failure to procure the “written consent to transfer and charge”. The aggrieved owner later discovered she had been hoodwinked to make the “requisite” payments as there was and is no such required payment to be made by purchasers. The payment is the obligation of the developers/land proprietors and not the house buyers!

How can the innocent and unwary house buyers be “victimised” by the state agencies? Why are the buyers made the scapegoats? Is it because they are easy targets?

LPHS should instead prosecute the defaulting housing developers and the land proprietors even to the extent of lodging a police report for their criminal act, and pursue investigation.

Seeking redress under law on nonfeasance

Nonfeasance is a legal concept that refers to the wilful failure to execute or perform an act or duty required by one’s position, office or law, whereby such neglect results in harm or damage to a person or property.

Nonfeasance in public office is a type of misconduct by public officials where they fail to perform a duty that they are legally required to do, which is a serious offence that can result in civil or criminal liability, depending on the circumstances. In civil proceedings, the affected party may seek damages for the harm or damage caused by the nonfeasance. In criminal proceedings, the accused may face imprisonment or fines, depending on the severity of the offence.

Nonfeasance can occur in a variety of situations, such as when a public official fails to provide necessary services, fails to act on complaints, or fails to take action to prevent harm or damage to the public or to individuals.

Perhaps, the aggrieved owners could take a walk to the court of law to seek justice and redress against the incompetent gatekeepers.

For the record, the recent highlighted case is not an isolated case; there are plenty of others in the same dilemma.

This article is written by National House Buyers Association (HBA) honorary secretary-general Datuk Chang Kim Loong. HBA is a voluntary non-government and not-for-profit organisation manned wholly by volunteers.

HBA can be contacted at: 
Email: [email protected]
Website: www.hba.org.my 
Tel: +6012 334 5676

The views expressed are the writer’s and do not necessarily reflect EdgeProp’s.

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