Raising Housing Tribunal’s claim limit to RM250,000 could undermine house buyers’ rights

• As the current KPKT Minister Nga Kor Ming considers the draft of the proposals, amendments and additions to the HDA and HDR, and Scheduled Sale and Purchase Agreements and Directions handed down by the two preceding ministers, we hope he has been competently and adequately briefed.

The Tribunal for Homebuyer Claims, aka Housing Tribunal (Tribunal), has been intended as a fast, cheap and simple avenue for aggrieved house buyers to seek redress. Since its establishment in 2002, numerous buyers have successfully obtained compensations ranging from late delivery of vacant possessions to defective workmanship.

However, some quarters have felt that the Tribunal’s monetary jurisdiction should be increased to RM250,000 from the current limit of RM50,000. On the surface, this proposal seems to be in the interest of house buyers.

However, the National House Buyers’ Association (HBA) would like to caution, such a proposal may actually backfire.

Don’t misplace your confidence that with a filing fee of RM10, you can expeditiously recover your claim for liquidated ascertained damages of RM250,000 from your housing developer through the Tribunal. In reality, it is not as simple as you think.

Proposed amendments to HDA and HDR 

As early as Aug 18, 2020, under the then administration and the Ministry of Housing and Local Government (KPKT) headed by Datuk Zuraida Kamaruddin, HBA was involved in a series of focus group discussion sessions that gathered stakeholders’ feedback to amendments to the Housing Development (Control & Licensing) Act, 1966 (HDA) and Regulations (Act 118) (HDR).   

Subsequently, HBA continued to offer input and feedback on Jan 28, 2021 and July 26, 2022 in the follow-up consultations under Datuk Seri Reezal Merican Naina Merican, the immediate past housing minister. The last such meeting was held on June 26, 2023 at the Housing Planning Division, chaired by Puan Rosidawati Abd Rashid.

As the current KPKT Minister Nga Kor Ming considers the draft of the proposals, amendments and additions to the HDA and HDR, and Scheduled Sale and Purchase Agreements and Directions handed down by the two preceding ministers, we hope he has been competently and adequately briefed.

One of the proposals which we find ludicrous was the increase of the monetary jurisdictional power of the Housing Tribunal from the current RM50,000 to a fivefold increase to RM250,000. This is a big sum and we hope Nga understands its wide ramifications and implications to the housing industry, especially the house buyers.

Below is an excerpt of the current Section 16M of the HDA: 

PART VI Section 16M: Jurisdiction of Tribunal

 Subject to Section … the Tribunal shall have the jurisdiction to determine a claim lodged under Section … where the total amount for which an award of the Tribunal is sought does not exceed fifty thousand ringgit (RM50,000).

Ill-advised proposal

KPKT seems to be under the impression that it is doing aggrieved house buyers a great favour by increasing the monetary jurisdiction of the Tribunal to RM250,000, and it expects house buyers to respond positively.

However, upon HBA’s probing, KPKT could not accord a logical explanation except to state that, inter-alia:

• It was Zuraida’s proposal.
• The monetary increase will correspond with the jurisdictional increase in the Consumer Tribunal from RM25,000 to RM50,000.
• The increase is in line with the current monetary jurisdiction of the Strata Management Tribunal (SMT) at RM250,000.

HBA’s objection and rationale

HBA cannot fathom the motives of such a move, which seems more regressive than progressive. There are potential drawbacks and repercussions to consider when KPKT ministers make such a proposal.

HBA is of the view the existing limit of RM50,000 should be retained based on the following rationales:

1. Tribunal decisions are subject to judicial review (JR). Since the amount proposed is to be increased to RM250,000, there is more reason for housing developers to file for JR rather than comply with the award. Thus, the award will be rendered redundant.

2. Since lawyers are not permitted in the Tribunal, it is prejudicial to the weaker party, that is, house buyers, to proceed with large claims. Lay-buyers will not be properly advised of their legal rights and entitlements.

3. The trend today is for developers to employ in-house lawyers/law degree holders to represent them at the Tribunal and argue with case laws, authorities and expert witnesses, etc. Their “expert witnesses” could be their architects, engineers, land surveyors, building inspectors, lawyers, water leakage experts and a host of others under their payrolls. Each of them may have a pecuniary interest in the project in that he/she were involved in it. It will be a case of David versus Goliath. Can aggrieved buyers defend themselves effectively?

4. It defeats the very purpose of having the Tribunal in the first place if lawyers are allowed at the Tribunal. Affected house buyers – the victims – might as well file their cases in the courts of law from the onset.

5. Obviously, large claims will open the floodgates to JR by the developers’ battalion of “free” lawyers whilst the house buyers have to swallow the legal fees and expenses all by themselves. If they file their cases in their own names, the JR process will obviously be against them in their personal capacities.

6. Who is in control of the game? It’s obviously the developers, if the monetary claims increase to RM250,000.

7. The increase sounds impressive but is in fact misleading. It gives false hope to house buyers. KPKT is in fact doing a disservice and grave injustice to the uninformed and innocent house buyers by making such a false impression.

8. The higher the stake, the higher the possibility that the developer will go even to the apex court. The sum would justify their efforts to delay the cases until they are conveniently wound up by their creditors. Their liquidations effectively enables them to evade making due compensations to claims by house buyers.

Strata management tribunal deals with big-ticket items

If the minister aspires to increase the jurisdiction of the Tribunal to RM250,000 in line with the SMT, then the minister has been ill-advised for the following reasons:

1. SMT is not restricted to housing per se. It includes commercial development like mixed developments, strata shops, shopping malls, office complexes, strata factories, etc.

2. Their claims include common properties/facilities and common funds of all owners/proprietors.

3. Their claims also include big-ticket items such as sinkage in the common roof, cracks in the facade, defects and repair costs to the swimming pool, faulty passenger lifts and escalators, defective sauna and steam facilities, motor room, cooling tower, plumbing issues and a host of other complex and high-cost items.

4. The claimants in SMT cases, apart from an individual, are management bodies like joint management bodies, management corporations (MC) and sub-MCs; property developers, proprietors (including original proprietors), managing agents and a host of other stakeholders. 

Increase should not exceed magistrates’ court’s jurisdiction

If the Minister feels that the quantum of RM50,000 in the Tribunal should be increased, perhaps, any increase should not exceed the monetary jurisdiction of the magistrates’ court, which is RM100,000.  

After all, the award of the Tribunal, in the event of non-compliance under Section 16AD, is registered at the magistrates’ court for execution processes and prosecution purposes

Datuk Chang Kim Loong is the Hon Secretary-general of the National House Buyers Association (HBA). 
HBA can be contacted at: 
Email: [email protected]
Website: www.hba.org.my 
Tel: +6012 334 5676

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