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Friday, February 15, 2008

Significant changes to Housing Act

Last month, we examined some of the significant changes made to the statutory sale and purchase agreement for a housing accommodation comprising land and building. In part two this month, we look at significant changes made to the statutory agreement for a housing accommodation comprising a building or land intended to be subdivided into parcels held under strata titles, brought about by the recently amended 1989 Regulations, which came into operation on Dec 1, 2007.

Agreements for buildings or land intended for subdivision into parcels (Schedule H)
The title to the Schedule H agreement has been changed to “Building or land intended to be subdivided into parcels”. A recent amendment to the Strata Titles Act, 1985, has permitted land with buildings of not more than four storeys to be subdivided into land parcels to be held under strata titles. This new strata scheme will meet the needs of a new housing development concept referred to as Gated Community Schemes.

Parcels free from encumbrances before vacant possession
In the event the land upon which the development is taking place is encumbered to any bank, the amended Schedule H requires the proprietor/developer to deliver to the purchaser or his financier, a copy of the redemption statement and undertaking issued by such bank, in respect of the purchaser’s parcel, immediately after the date of the agreement. Previously, the time period to deliver such redemption statements and undertakings was not specified.

The purchaser’s financier is now required to furnish to the developer an unconditional undertaking to pay the loan sum and in return the developer will undertake to refund the loan sum in the event the transfer of the parcel cannot be registered in favour of the purchaser for any reason that is not attributable to the purchaser.

Right to initiate and maintain actions
The purchaser may now initiate and maintain any action or suit in any court or tribunal provided that his financier is notified of the action or suit within 14 days after the action or suit has been filed.

Defaults by purchasers
A new event of default has been added. If the purchaser fails to pay any sum or sums payable (other than any instalment payable and any interest thereon) for any period in excess of 28 days after the due date, the developer may take steps to annul the sale of the parcel.

Strata title and transfer
The duty and obligation of the proprietor/ developer to execute an instrument of transfer in favour of the purchaser, within 21 days upon issue of the strata title to the parcel has been extended. The executed instrument of transfer shall now be forwarded to the purchaser together with the strata title. This is, of course, subject to full payment of the purchase price and
observance of all terms and conditions by the purchaser.

Position and area of parcel
The purchaser is entitled to an adjustment of the purchase price if the area of the parcel shown in the strata title is less than the area shown in the building plan by more than 2% instead of 3%.

Infrastructure and maintenance
Under the new Building and Common Property (Maintenance and Management) Act, 2007 (Act 663), a Joint Management Body (JMB) is to be established if the management corporation is not in existence at the time of delivery of vacant possession.
The purchaser will contribute to the infrastructure maintenance costs, until they are taken over by the appropriate authority or the JMB and the developer shall provide to the purchaser a list and description of the infrastructure and the expenditure incurred in the maintenance thereof.

Service charges
The purchaser shall pay to the developer service charges for the maintenance and management of the common property and for services provided by the developer until the establishment of the JMB. Thereafter services charges shall be payable to the JMB.

In respect of such service charges, the purchaser will pay four months’ in advance instead of one month’s deposit and three months in advance. All services charges received by the developer shall be paid into a Building Maintenance Account established under Act 663.

The service charge statement prescribed in the Fifth Schedule has been slightly modified. Service charges shall be paid within fourteen days, instead of seven days.

Sinking fund
From the date the purchaser takes possession of his parcel, he is liable to contribute a sum equivalent to 10% of the services charges to a sinking fund established under Schedule H. All funds accumulated in this sinking fund, which is maintained by the developer, are held in trust for all purchasers, and the developer is required to transfer any accumulated funds into a sinking fund established under Act 663.

It is pertinent to note that before the establishment of the JMB, the contribution to the Schedule H sinking fund is a separate and additional payment. Once the JMB is established, the sinking fund established under Act 663 will comprise such portion of the contribution to the Building
Maintenance Fund as may be determined by the JMB and the purchaser is no longer required to make a separate and additional payment to such sinking fund.

Delivery of vacant possession
The purchaser may now occupy the housing accommodation when the certificate of completion and compliance has been issued, water and electricity supply are ready for connection, and the purchaser has paid all monies payable and due. The certificate of fitness for occupation is no longer required.

Wong: The defect liability period has been raised to 24 months

Defect liability period
The defect liability period has been increased from 18 months to 24 months and a purchaser may make a claim before the expiry of 18 months or 24 months after he takes vacant possession. Once a notice of claim by a purchaser has been made, the developer’s solicitors may not release the monies held by him until the developer’s architect has certified that the defects, shrinkage or other faults have been repaired and made good by the developer.

The purchaser may assign all his rights and interest in his parcel to a third party without the consent of the proprietor or the developer, provided he has fully paid the purchase price and complied with all terms and conditions of the agreement, or if before full payment, the developer and the purchaser’s financier have exchanged undertakings mentioned earlier.
Additional Plans
Two additional plans are required to be attached: the layout plan and the common facilities plan.

Transitional provisions
In the case of the Schedule G discussed last month and the Schedule H discussed in this part, the amended 1989 Regulations do not affect the validity of any contract for the sale and purchase of a housing accommodation entered into after April 12, 2007, but before Dec1, 2007, and such
contract shall continue to have full force and effect even if inconsistent with or contrary to any provisions of the amended Schedule G or H. Further, if on Dec 1, 2007, a contract of sale has been signed in any phase of a housing development, the developer may continue to use the previous Schedule G or H agreements until all the housing accommodation in the said phase of housing development have been sold.

The writer is the deputy chairman of the Conveyancing Practice Committee, Bar Council, Malaysia

Note: This column is brought to you by the Malaysian Bar Council for your information only. It does not constitute legal advice. You should therefore seek professional legal advice for your specific needs. Neither the Malaysian Bar nor the Sun Media Corporation Sdn Bhd shall be liable to any reader who suffers losses as a result of relying on this column.

Article by theSun (by Andrew Wong)

Green light for KL Grand Hyatt

LONG OVERDUE: An artist's impression of Grand Hyatt KL - website picture.

The Brunei Investment Agency, one of the world's largest sovereign wealth funds with assets of US$30 billion (RM97.2 billion), has finally been given the green light to develop the Grand Hyatt hotel on Jalan Pinang, Kuala Lumpur.

Business Times was informed that the proposal, which was submitted in 2005, was approved in late November 2007, after several amendments to its original proposal had been made.

Brunei Investment Agency official Suharafadzil Yusof when contacted said the project had been approved.

However, he declined to say when work will start or when the project will be ready. Apart from a 40-storey five-star hotel, the building will also house service apartments and offices.

The hotel alone may cost about RM360 million, industry executives estimated, if it sticks to a plan to have 450 rooms.

There was also no response to Business Times' query from Hyatt International's office in Singapore.

Industry experts say that if construction begins immediately, it could take anything between 30 and 36 months to be ready.

This means that the hotel may be operational in 2010.

In a press release put out in 2007, it was reported that international destination-design firm Wimberly Allison Tong & Goo (WATG) served as the design architect, together with local firm GDP Architects.

WATG did not reply to e-mail queries.

The 2007 release said that the hotel lobby is located at the top of the building and guests at the lobby will have an impressive 360-degree view of downtown KL.

The project is slated to open to the public in December 2010, the statement said.

Earlier plans to open a Grand Hyatt Duta came to an end as the project was never completed.

The Hyatt Group in 1994 gave the contract to develop the RM570 million Grand Hyatt Duta to Kuala Lumpur Landmark Sdn Bhd, a subsidiary of Olympia Industries Bhd.

Mycom Bhd, the holding company of Olympia, then teamed up with Kuala Lumpur Landmark to develop a 52-storey building to house its headquarters and the hotel.

However, construction was halted in July 1998, when the group encountered financial difficulties during the 1997/1998 economic downturn.

The Grand Hyatt Duta was to have been completed in 1997. Until today, the hotel at the corner of Jalan Sultan Ismail and Jalan Ampang remains partly completed. The Hyatt Group is no longer associated with the project.

The Hyatt Group also operates the Hyatt Regency Kinabalu, Hyatt Regency Johor Baru and Hyatt Regency Kuantan Resort.

By New Straits Times - (Business Times) (by Vasantha Ganesan)

Tanco revives Port Dickson project

Three phases of stalled Palm Springs Resort to be launched this year

KUALA LUMPUR: Resorts operator and property developer Tanco Holdings Bhd will, for the first time in 10 years, be launching this year three phases of a previously stalled major project, Palm Springs Resort, in Port Dickson.

The company had been launching several small phases of its Bandar Country Homes development in Rawang in the past few years, but these had been slow, business development director Andrew Tan told StarBiz.

For Palm Springs Resort which comprises 15 phases, Tanco aims to launch Duta Grande comprising 800 units of 410 to 830 sq ft resort suites with a gross development value (GDV) of about RM260mil ; SPA Village with 70 chalets ranging from 1,200 to 1,400 sq ft worth RM70mil in GDV; and Palm Springs Boulevard consisting of 24 shop lots with built-up areas of 1,200 sq ft with a GDV of RM15mil.

The company, which came out of PN17 classification on Jan 17 after debt restructuring and the emergence of a new lead banker in Lehman Brothers Commercial Corp Ltd, also plans for more launches at its Rawang development.

Andrew said the Rawang development was mature, with about 10,000 homes and 45,000 residents.

The company plans to launch in Rawang phase 2 of its Greenwood Park district consisting of 155 terrace houses of about 1,700 sq ft priced from RM240,000. The total GDV for this phase is RM70mil.

It will also launch Ivory Heights, comprising 52 bungalows with built-up areas of 3,200 sq ft, with prices starting from RM600,000.

In the company’s debt restructuring, Lehman provided a two-year loan facility of about RM239.6mil in November last year to repay Tanco’s existing debt obligations, to mainly local banks.

Tanco director Datuk Lynne Tan said with only one lender now, the company would be able “to work on our assets” and re-launch its projects as well as the timeshare sales that it had been so successful with in the past.

Tanco was also looking to build up its landbank, she added.

Lynne said the focus in the near term would be on Palm Springs Resort, with another 400 acres of undeveloped prime seafront land with condominiums, a hotel, a waterpark and marina in the works.

Tanco would be banking on selling most of these projects en bloc to foreign investors, Andrew said.

He said as many international portfolio funds were mandated to invest in the Klang Valley or in resorts, given that property prices in the Golden Triangle had doubled in the past 12 months, the country’s resorts could attract such funds.

By The Star (by Loong Tse Min)

UEM Land’s profit catalyst

Nusajaya to help it post record sales and profit by 2012

: UEM Land Sdn Bhd expects record sales and profit by 2012 when development of its Bandar Nusajaya in the Iskandar Development Region (IDR) picks up momentum.

Managing director Wan Abdullah Wan Ibrahim said the development of Nusajaya should reach its “tipping” point by 2011 as new activities and projects were being launched.

Targeted for completion in 30 years, Nusajaya is expected to incur a total gross development cost of RM55bil.

UEM Land is currently working on 11,000 acres in Nusajaya.

The sale of 4,500 acres to Khazanah in 2006–2007 for RM1.9bil has reduced the company's gearing to 0.48 time from 17.38 times before.

Upon completion, Nusajaya will have 100,000 homes and a population of 500,000. Besides the residential component, the other growth catalysts for Nusajaya include a theme international resort, education city (EduCity), medical city (MediCity), waterfront development, Johor's new administrative centre and the Southern and Industrial Logistics Centre, an industrial estate development.

Analysts said the expected consolidation of UEM Land's parent, UEM World Bhd, would raise the profile and financial capability of UEM Land to actively promote its Nusajaya development.

UEM World is expected to announce today a major corporate exercise that could involve the streamlining of the group's business structure.

“The proposed consolidation of UEM World will make it a more focused group in the property business. It will be able to leverage and take advantage of its huge land ownership in the IDR,” an analyst at a local brokerage said.

Wan Abdullah said the company needed to establish considerable level of activities and critical mass to ensure Nusajaya's success in a shorter time.

“Going by its normal pace, the development will take about 180 years but we are fast tracking it by working with strategic partners who are competent in their areas of expertise,” he told StarBiz recently.

So far, the development of Nusajaya is progressing steadily with 11,000 homes completed by various developers and delivered to buyers.

The value of the units sold by UEM Land last year rose to RM485mil compared with RM80mil in 2006.

The sales value does not include other contributors to revenue, such as sale of land during the de-gearing exercise, revenue from construction of the new administrative centre and other strategic land sale to joint-venture partners.

By April, Johor's administration will be moving to Nusajaya. To date, 95% of the Mentri Besar's office and the state legislative assembly office have been completed.

UEM Land is negotiating to build the Federal administrative complex, which will be under the build, lease and transfer model.

According to Wan Abdullah, many developers are vying to participate in the development of Nusajaya and that the company would be selective and only team up with those that could add value to the development.

“The partners must have the right technical expertise, financial strength and marketing network to add value and contribute positively to the development of the sprawling township,'' he said.

UEM Land has tied up with a few partners, including Gamuda Bhd to undertake the development of Horizon Hills and with Limitless LLC, a unit of Dubai World, to build 900 waterfront homes in Puteri Harbour.

The 1,200-acre Horizon Hills resort development is a 50:50 joint venture between UEM Land and Gamuda.

Since the first product was launched in March last year, sales have to date reached RM350mil.

In December, the company signed a 40:60 joint venture with Limitless.

“We are looking at working with more competent partners to offer more quality property products as we are targeting the regional market,” Wan Abdullah said.

By The Star (by Angie Ng)