Quek Ngee Meng

Managing Partner

A: Suite 9-8, Level 9 (Lobby B),

Wisma UOA II, 21, Jalan Pinang,

50450 Kuala Lumpur

W: www.hhq.com.my

Halim Hong & Quek organized a half-day seminar entitled “New Strata Laws: One Year On” at Pullman KLCC, Kuala Lumpur on 20 July 2016. The objective of the seminar was to review the progress in implementation of the new strata and housing development legislations, which took effect from June last year. These amendments are now contained in the Housing Development (Control & Licensing) Act 1966 (Act 118), the Strata Titles (Amendment) Act 2013 (Act A1450) and the Strata Management Act 2013 (Act 757) and their related regulations.

The speakers were two senior government offcials directly involved in the implementation of these laws: Mr Jayaselan Navaratnam, the Deputy Director General of the National Housing Department of the Ministry of Urban Wellbeing, Housing and Local Government and Surveyor Chan Keat Lim, the Director of Survey in the Cadastral Legislation Section of the Department of Survey and Mapping Malaysia, Ministry of Natural Resources and Environment Malaysia. The managing partner of the frm Mr. Quek Ngee Meng moderated the Q&A session.

New Laws and Their Impact

The amended legislations brought about significant changes to the strata and housing law in terms of hastening the issuance of strata titles, enhancing the position of purchasers and imposing stricter requirements on developers.

To achieve the delivery of strata title on vacant possession, the new law has imposed strict requirements on developers to submit their proposed strata plan within three months of the building reaching the super structure stage (i.e. completion of building works up to completion of walls necessary for measurement of parcels, accessory parcels and common property) so that there will be adequate time for the issuance of strata title upon delivery of vacant possession.

The changes to the housing and strata management laws have strengthened the position of purchasers and facilitated them as property owners signifcantly. Developers for both commercial and housing strata development are required to demarcate the boundary of parcel, accessory parcel and common property as well as the future development of the strata scheme in the form of Schedule of Parcels before the sale of any property. They shall fle the Schedule of Parcels with the Commissioner of Buildings (“COB”) before they are allowed to sell and a copy of the Schedule of Parcels shall be conspicuously exhibited in their offce.

Purchasers of housing development now also have the unilateral right to terminate the Sales and Purchase Agreement (“SPA”) at any time if the Controller of Housing has certifed that the developer has refused, delayed, suspended or ceased work for a continuous period of six months or more after execution of the SPA. The new laws have also made available a more comprehensive set of statutory by-laws to facilitate strata home-owners to manage the common property as a community.

The new laws have also provided for the setting up of a Strata Management Tribunal with wide-ranging jurisdiction on strata management matters to provide an avenue for dissatisfed parties to forward their claims. A heavier burden has been imposed on developers in the new laws to ensure greater responsibility and transparency. All developers for residential accommodation development are required to deposit an amount equivalent to 3% of the estimated cost of construction. They are also required, after vacant possession, to deposit cash or bank guarantee with the COB an amount not less than 0.5% of the estimated cost of construction towards meeting any claims that can be made on common property defect by the relevant party.

Issues faced in the Strata Development

During the seminar, Mr Jayaselan highlighted the issues arising from the statutory right to terminate the SPA granted only to the purchaser but not to the developer in the new laws. This has put developers in diffculty as they do not have any recourse when they are faced with circumstances beyond their control to proceed.

Another issue highlighted by Mr Jayaselan was the power vested with the Controller to grant extension of time (“EOT”) to developers who fail to complete their projects within the prescribed period owing to “special circumstances” has to be weighed against the rights of purchasers as any EOT granted means a delay in delivering vacant possession. As there are many purchasers who voiced their dissatisfaction over this EOT which effectively deprive their right to claim late delivery damages from the developer, the Controller has now imposed a condition that if there is an agreement signed, then the developer will have to obtain consent from the purchaser for this EOT to be granted.

Surveyor Chan, on the other hand, gave an update on the status of applications for Schedule of Parcels and certifcate of proposed strata plan. As of end May 2016, the Department of Survey and Mapping Malaysia has received applications for 230,747 parcels from 1,396 schemes, predominantly from four main territories: Kuala Lumpur (32%), Selangor (26%), Johor (16.9%) and Penang (15.6%). Surveyor Chan also updated seminar participants the recent amendments approved by Parliament in its last sitting in the May 2016 session on amendments to the Strata Titles Act, the Land Acquisition Act and the National Land Code.

These amendments, amongst others, enabled the implementation of quit rent of parcel or provisional block, deleting the statutory time frame for the developer and purchaser to sign the instrument of transfer of the parcel and clarifying the implementation of the acquisition of the subdivided building.