News and Views

PEMUDAH: Strata titles issued simultaneously with vacant possession to be a reality

January 12, 2023
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MALAYSIA
Amendments to the Housing and Strata Titles legislation

In 2013, Parliament passed the Housing Development (Control and Licensing) Act, 1966 (amended 2012) and the Strata Titles Act, 1985 (amended 2013), which made major changes to the laws on the issuance of strata titles. The new laws, which came into force on 1.6.2015, are stricter on the process of the segregation of the master title by the developer. In addition, it mandated that developers must apply for strata titles within 3 months of the completion of the superstructure and it should be ready upon vacant possession of the property.

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 a developer’s 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 (‘SiFus’) 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.

This issue of ‘vacant possession simultaneously with strata titles’ (VPST) have been somehow delayed these last few years since its’ inception because of some ‘alleged technical problems’. That lead the National House Buyers Association (HBA) to question why the concept of VPST was delayed. Was it deliberately or otherwise? Was there a shortage of manpower at the land office or the non-committal action between the professional bodies? Or was it because someone inaccurately interpreted the application of the laws?

We do not wish to dwell into the technical aspects; neither engage in fault findings in this article nor the reasons for the indecisiveness in applying technical attributes for the accomplishment of VPST. The crux of the matter is that the technical issues have been ironed out and more clarity achieved.

Has VPST been thwarted? If so, how to tweaked it?

HBA eventually highlighted the issues to TWGDCP (abbreviation for ‘Technical Working Group on Dealing with Construction Permits’) 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 organizations and related government agencies. Countless meetings and workshops were convened, all parties expressed their concerns and eventually came to a workable consensus.

PEMUDAH authoritative and timely announcement

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

PEMUDAH meeting on 26.9.2022 …”has decided that the Government must continue to safeguard house buyers (condominium and apartments) 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, they are many developers who have not been able to accomplish issuing vacant possession simultaneously with strata titles.”

Minister’s written response in Parliament

The Minister of Housing in a written response on 3.8.2022 acknowledged that there has been numerous cases of housing developers not been able to achieve the target of VPST whereupon he had issued extension of time (EOT), albeit with conditions, to 638 cases notwithstanding that the laws were implemented since 1.6.2015.

From the 638 applications from housing developers there were 488 first time (1st) application whilst the balance of 150 applied for 2nd extension. The following is an excerpt of the applications:

We understand that throughout Peninsular Malaysia 19 housing projects (13 in Kuala Lumpur; 5 in Selangor and 1 project 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 flow chart for achieving their success story in VPST.

Way forward with ‘OSC VPST’

At the recent meeting on 25.11.2022 chaired by Dato Dr Ir Andy Seo, HBA presented our proposal to enhance the compliance of the VPST process by offering the following recommendations:

• National Housing Department aka Jabatan Perumahan Negara (JPN) under the Ministry of Housing to establish 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 aka Pejabat Tanah & Galian (PTG) and JPN should not work in silos and should work together with the theme “JPN to lead and establish OSC with the Land Offices to coordinate and monitor VPST applications and towards making VPST a reality”:

• HBA suggest that JPN must establish the OSC VPST and convene monthly meeting with Department of Director-General of Lands & Mines aka Jabatan Ketua Pengarah Pejabat Tanah & Galian, Putrajaya (JKPTG), PTGWPKL (benchmark) inviting Real Estate & Housing Developers Association (REHDA), HBA and other Stakeholders to coordinate VPST application and issues related to granting of EOT (to deliver VP with proofs of letter from the respective land offices), whether there is a need for extension of 6 or 12 months for strata titles issuance;

• JPN to adopt a ‘track & trace’ of the VPST processes.

Conclusion

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

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.

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 the latter have paid in full. There are also many cases of errant developers becoming defunct whereupon Liquidators were appointed.

This article is written by Datuk Chang Kim Loong, Honorary Sec-Gen of the National House Buyers Association (HBA), which is a voluntary non-government and not-for-profit organisation manned wholly by volunteers.

Disclaimer: Any opinions expressed are entirely the author’s own and do not necessarily reflect the views of PropertyGuru and its entities.