News Summary :
According to the National Housing Department, from 2001 to 2015, there were 28 cases of abandoned projects in Peninsular Malaysia while another 20 are being revived.
Example of Abandoned Project:
1.Selayang Springs Condominium abandoned project in April 2014.
Recently been lifted from being classified as an abandoned project to be placed under the list of projects being revived.
KL Northgate Sdn Bhd will take over the project from the previous developer – Barisan Tenaga Perancang (M) Sdn Bhd.
2. 454-unit landed residential project in Taman Lestari Permai, Sepang, which was supposed to be completed in 2005, was left deserted and was only listed as an abandoned project in July 2015.
3. The Boss Service Suites a high-rise residential hotel suites development in Klang, Selangor which was launched in 2010 and declared abandoned mid-2015.
What the law says:-
According to the Urban Wellbeing, Housing and Local Government Ministry, a housing project in Peninsular Malaysia is deemed abandoned if:
1. There is no significant construction activity at the site for six consecutive months.
2. The developer is under the control of the Official Receiver.
3. The developer admits in writing to the Housing Controller that it is unable to complete the project
Although there are laws to protect home buyers, there are also loopholes in the law. Some problematic developers could stop construction for five months and resume construction for a month, and repeat that again to avoid being classified as an abandoned project.
A project is considered ready to be revived when :-
1.At least 50% of its buyers agree to it, or when the total purchase value by purchasers who agree to have the property revived amounts to at least 75% of the project’s GDV.
2.White knights (new developer) willing to revive the project.
-The white knight could request buyers to cough up more money to complete the project. This is usually when disagreements among buyers occur
-In Budget 2016, the government has proposed to provide stamp duty exemption to white knight developers.
3.Owners and creditors agree to the revival scheme
A project could be stalled due to various reasons such as :-
1. Offering the wrong product for a particular location
2. Litigations by contractors
3. Land and squatter issues
4. Market conditions
5. Legal problems
6. Dispute among shareholders.
When your dream home becomes a nightmare
Full Article : http://www.theedgeproperty.com.my/content/when-your-dream-home-becomes-nightmare