Traits of a responsible housing developer
KNOCK, knock! Any “good” housing developers out there?
I am reluctant to use the words “good developers” as the words are not in my vocabulary. However, there are responsible ones and more are joining this category.
The qualities of a responsible developer are to be emulated, if you can find them.
The housing industry has come a long way since the advent of large-scale housing development in the late 50s and early 60s. The players in those times were bona fide entrepreneurs. Most probably, conscience ruled and pride in workmanship, timely delivery of quality and affordable houses were their hallmarks.
The present delivery system of “sell-then-build” through progressive payments is fraught with risks for the unsuspecting house buyers. These second generation housing developers, “good” or bad, are used to the lucrative profits from the housing industry. This is so because the post-independence period has been a period of high population and economic growth. Hence, the demand for housing is ever increasing. In a sellers’ market, the buyers are always at a disadvantage. When greed is inversely proportionate to conscience among industry players, the situation can get very bad indeed.
We often hear of developers lamenting about the shortage of workers (legal or illegal, skill or inexperienced), shortage of building materials, complying with new laws or regulations that made it hard for them to complete their projects on time. At the same time, we also hear of projects making multi-million ringgit in profits for the developers and we do not see or hear news of housing developers retiring or quitting the business entirely.
This would mean that the housing development is still a lucrative business. In fact, more rookie developers are joining the arena because the sell-then-build system allows them to make money from people’s money.
It has become a ‘riskless venture’ where profits are guaranteed, and in the worst scenario, the government will mop up the abandoned housing project, befitting the adage: Profit Privatised, Losses Nationalised’
Enough of the bad ones, we at HBA do keep our ears opened for the qualities of responsible developers to be emulated. In the first place, how do buyers judge if their developers have been responsible? The construction industry is a unique field. It is one of a few professions where no formal education is required.
There is no formal award giving ceremony by buyers to tell the world their developers have been ‘good’ and responsible.
There are also some other things the responsible developers do that prove they have a passion for their profession. Here are some of the traits practised by responsible developers.
Attention to environment and existing neighbourhood
Responsible developers do not just depend on their buyers to pass the word around about their reputation. No new project is an island. There are existing neighbouring projects, trees etc. A responsible developer ensures the existing neighbourhood is not disturbed by their new development.
If there are complaints, such as cracks, a landslide and floods that the new construction is causing to the existing neighbours, they are quickly attended to. They also ensure that the existing roads are kept clean regularly from construction activities.
Amenities, facilitiesand infrastructure
Developers who provide adequate amenities and facilities like playgrounds, schools, markets, community halls and even police booths are not only fulfilling the obligations imposed by the local council but also their social responsibilities to society. These developers are commendable as good corporate citizens. It enhances their image too. There are also developers who invest and build infrastructure first prior to selling their houses.
Takes pride in quality and timely rectification
Whether low-cost or high-cost houses, chasing the developer to rectify shocking defects, bad workmanship is a nightmare to buyers who lose out while waiting for repair works.
Responsible developers do their own quality checks before handing over their products. Caring developers do practise the following before handing over their products:
• Adopt quality checks at all stages of construction, test and commissioned utility supplies;
• Clear and clean individual units and construction site of debris;
• Ensuring the Certificate of Compliance and Completion (CCC) is obtained with the handover of units;
• Retain a team of competent workers to do rectification promptly if there are complaints on defects.
• Keeping sufficient stock of products like floor tiles of the same quality and make.
Some developers even extend the mandatory defects liability period of 24 months. We have also heard of developers providing alternative lodgings for their buyers while waiting for defects to be corrected.
Time is the essence of the contract of sale and purchase. Houses should be delivered within the time stipulated in the sale and purchase agreement ie within 24 months for ‘land and building’ and 36 months for ‘building intended for subdivision’. If, for whatever reason, there are delays, compensation should be paid immediately to buyers without second thoughts or finding devious ways to ‘short-change’ the buyers.
Responsible developers keep their buyers informed of delays and tell them of the next expected delivery date. Some buyers even told us of the extras they have received at delivery time, which surely endear them to the developers. These are some of the ‘welcome packs’ that they have received: useful gifts like a key box; warranties from paint companies, auto-gates, pest control, electrical appliances; certificates of treatment for termites / pest control; a certified copy of the CCC issued by the architect and certified copy of the building plans and plans that relate to electrical wiring and water piping so as to facilitate future renovation.
One clause in the sales contract states that the buyer is responsible for late payment interest. It is a common complaint by buyers that their developers would charge interest for late payment even though it is the fault of the end-financier or their lawyers doing the legal documentation. Responsible developers assist in ensuring that the documentations are in order and the buyer is not burdened with any late payment interest.
Joint Management Body (in stratified projects)
Responsible developers assist their buyers to form committees and be prepared for the formation of the management corporation. These developers realise that the projects they have developed will eventually pass to the owners to maintain and manage.
Encouraging community living
Developers who encourage forming of resident/ owners association are a welcome lot. Some even go to the extent of contributing monies for the formulation of buyers representative group for a meaningful channel to voice grievances. Some even provide meeting facilities and allocate a multipurpose room for the elected representative group.
The line of communication should always be open between buyers and their developers:
• Keeping buyers informed of the ongoing projects and their products;
• Developers not to appear having shun away from their responsibility;
• Treating the buyers with respect as buyers can serve as their marketing tool. Show respect and you will gain respect;
• Transparency and accountability on monies collected;
• Providing regular accounting reports and budgets;
• Voicing of any grievances rather than through the media, which will bring adverse effect to the detriment of both parties.
Build first then sell
There is no step that can be more pronounced than for housing developers to adopt the absolute ‘built first then sell’ so that potential buyers can see for themselves the finished product before buying. We believe that in this way, most of the present day ailments afflicting the housing industry can be avoided and the housing industry will be a lot more orderly.
In the interim period, responsible developers have embarked on the Built then Sell (BTS) 10:90 concept where the buyers pays 10% and the balance of 90% to be paid upon completion of the house. They are already big names among developers that find the BTS 10:90 concept workable and feasible and are targeting to achieve the Government aspiration of making BTS 10:90
There are responsible developers whose names are synonymous with quality and trust. They are able to win over buyer’s confidence. Today, they have created their own brand names. No wonder some developers do not advertise, yet all their units are sold out even before the official launch.
By Chang Kim Loong AMN who is the secretary-general of the National House Buyers Association.
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