Developers forcing condo owners to renovate

The Consumers' Association of Penang (CAP) has received countless complaints since 2008 via anonymous letters, telephone calls, letters of complaint and even read in our mainstream media, highlighting the tactics used by developers' agents/contractors to force new owners to renovate their units at exorbitant charges. Such complaints are from owners from Sri Saujana, Asia Heights, Serina Bay, Puncak Erskine and other condo units in Bayan Baru, Penang.

These in-house contractors will target new blocks which have just been granted certificate of fitness (OC). The developers are working in cohort with their agents/contractors in forcing these new owners to engage their exorbitant services to carry out renovation before moving in. Prices quoted by these contractors are excessive and are above 50% to 100% more than that quoted by outside contractors.

The developers will demand a non-refundable deposit of RM 1,000–2,000 should the new owners appoint their own contractors to carry out the renovation. All building material such as sand, cement, bricks, etc have to be purchased from these agents/contractors at 70% to 100% above market price. Service charges are also imposed for carrying floor tiles to the relevant units and charges for clearing rubbish and other building debris range from RM 900-1,400.

At the Sri Saujana flats at Gat Lebuh Macallum, Penang all air wells are forcefully closed and charges for laying the concrete and sealing them are imposed on the adjacent unit owners. The developer, PLB-Wonder Bay Bhd has contravened the building by-laws and made these blocks of flats into heat entrapped buildings while the general trend of all construction is veered towards green eco-friendly development and airy, well ventilated units.

Moreover they are collecting parking fees of RM 0.30 per half hour at these blocks of flat right under the nose of the management company.

Upon collecting the keys to their units at Sri Saujana, these new owners were informed by the management company that the developer had appointed a contractor to carry out all the renovation work.

The developer, PLB-Wonder Bay Bhd, had instructed that all renovation work had to be undertaken by that contractor's company and charges for the covering up of the air-well, installing iron grills for the main door and air-well opening be charged to the unit owners.

This tradition of forcing new owners to employ in-house contractors to carry out renovation work is very deeply entrenched in Penang and practically every newly developed block of flats are controlled by agents in that area.

The developers are working in cohort with these agents/contractors by allowing them to set up tables near the entrance of the lifts to monitor the movement of new owners. They will block owner appointed contractors from carrying out their work and force them to purchase all building material from them at exorbitant rates.

The purchase, sale and rental of these units are also controlled by the developers. Owners who do not abide by these unwritten rules have had their properties and cars or motorcycles damaged. As such many new owners, fearing further reprisal, had given in to the demands of these in-house contractors and ended up paying exorbitant charges for shoddy work done.

We urge the Ministry of Housing and Local Government to investigate the rampant abuse of power of these developers in Penang especially in notorious areas. Stringent laws and guidelines should be implemented to ensure that contractors are licensed and have the expertise to undertake such projects.

Should these developers and contractors flout the laws their licences should be withdrawn and they should be blacklisted. Such developers or their directors should not be allowed to form new companies and not be granted developers' licences or permits to build new housing estates and perpetuate this problem.

Guidelines regarding permissible renovation should be given to the individual owners so as not to temper with the main structure of the building and they should be free to choose their own contractors. Developers should also set up a refundable contingency fund to be contributed by developers and new owners, somewhat similar to sinking fund, which should be utilized solely for damages caused by renovation.

We urge the ministry to come up with more stringent enforcement such as prosecution of errant developers and blacklisting their directors so that these developers and their agents/ contractors are not allowed to abuse their power and continue to extort and fleece more money out of new owners.

We hope the ministry will investigate this rampant and deeply entrenched tradition of all high rise property developers, which is endemic in Penang, so as not to perpetuate this problem and cause further hardship to the urban poor.

This group of people is in dire straits and need urgent assistance not only from the Ministry of Housing and Local Government but also from the Ministry of Internal Security and Polis Di Raja Malaysia.

The writer is president, Consumers Association of Penang - MalaysiaKini


June 4, 2010 at 5:45 PMUnknown

the gangster contractor culture....only happens in Penang, for many many years already.

June 4, 2010 at 8:46 PMJin

It would be great if CAP could list down the names of those developers that appoints 'gangster' contractors so that the consumer will avoid them in future.

June 4, 2010 at 11:26 PMWilliamyl

i think before release the OC to them.penang goverment should add in the rules that not allowed ah beng ah seng or over charge the material to owner.than i think the developer will surrender.Anyway i also just bought a new house in sg ara area but the S&P also indicate need to give their contractor to do that.I feel that is already out of law.and this is no low at all add in S&P.PLease ask LIM GUAN ENG do something.sometimes the renovation is double the house prices.anyone we can complaint to????

June 4, 2010 at 11:48 PMHp

Williamyl, may i know which House/Condo you bought in sungai ara? Developer have the right to put this clause in S&P meh?

June 5, 2010 at 9:18 AMK-ER6F


Boulevard Condo also put this terms inside the S&P..... y got this kind of thing ??
really terrible.... government should do something to help citizen since penang property is most expensive in malaysia .... then kena charge by inhouse contractor like that somemore ..

EVEN some of the low cost house also face tis problem =="

June 7, 2010 at 10:35 AMUnknown

Boulevard Condo S&P has this clause ar? which page ya? cos i never read thru ler.... i must be aware it leow lo if there is item been put inside S&P & talk to developer.....

June 7, 2010 at 4:22 PMspinnaker

Very well written piece of article by CAP. It articulates nothing but the blatant truth, regarding the state of lawlessness, surrounding preliminary renovation work for (mostly) high-rise property in Pg.

Companies like IJM used to maintain high stds of workmanship as well as admirable policies to not give in / condone (entirely) to such "gangsterism" malpractices. But take a look at these developers now? Their sales, check & balances are now far more important than customer satisfaction & quality adherence

Like swarms of locusts feeding on the next patch of fresh crop, these gangsters will soon vanish as fast as they appear, plying their lucrative trade on the next OC-upcoming project. What happens then to the supposed "workmanship guarantee" to the often shoddy jobs that were forcefully imposed on the most 'experienced' of home buyers?

This is a truly perpetual nuisance & pest problem that needs serious eradication through direct enforcement of law, and direct plan of attack at its roots. Can anyone simply setup tables/booths/cabins beside a newly OC-ed project, without license? Who issues these licenses? Even hawkers cant simply ply their trade anywhere w'out license. Hawkers are mobile, gangster contractors aren't. So how is it more difficult to deal with such stationary, unlicensed mob?

June 20, 2010 at 1:19 PMUnknown

for your info, the standard s n p is a statutory contract commonly known as schedule h provided under the housing developers act. there are no such clauses in the statutory form and being statutory in nature it cannot be amended.
the offending clause(s) relied upon by the developers are usually found in a separate agreement commonly known as house rules or deed of mutual covenants. and these agreements are contractual in nature. it can be challenged in court.
in my humble opinion instead waiting for everyone to help ourselves, we should be proactive and help ourselves instead. instead of moaning and grumbling which will get us no where, we should go and engage a decent lawyer and sue the developers, show the big boys that consumerism is thriving in our country and we shall not be bullied.
of coursehiring a lawyer requires fees, but then again if we are going to be cowed into paying exxhorbitant prices for materials, i rather pay decent fees to lawyers to fight for my rights. god help those who help themselves.
know your rights n exercise them.
remember always when u pay peanuts u get monkeys, and the maxim is all inclusive of any services provided.

April 6, 2011 at 8:18 PMKS_rev

sufu....i am guessing that your developer is Idxal (Idexl)....they are famous for that :-(