Malaysia has rather a lot of developers, which is great – after all, we need people to build our shiny new properties to keep up with the demand.
But the innumerable property developers can create quite the challenge, especially when it comes to identifying the bad eggs in what is (generally) a well-respected industry.
Buying property is one of the most significant financial investment in an individual’s life.
That’s true whether you’re an excited homeowner purchasing your first home, or a keen property investor expanding their extensive portfolio.
Whichever side of the industry fence you sit on, you want to know that the money you shell out is going towards an asset that’s worth the value you’ve paid.
So how do you find the right property developer in Malaysia?
In the interest of avoiding properties where the price (and maybe your furniture!) could quite literally fall through the floor, here are some essential steps and cautionary considerations when buying your property.
Caution And Consideration When Purchasing A Property
You wouldn’t rush into a swimming pool without knowing how deep it is, so why would you rush into a huge financial investment without testing the waters?
If you want to avoid sinking into the murky waters of a bad property investment, it’s important to take time and consider the right steps.
This is the most important part of any property purchase, whether that’s a question of price comparisons or the quality of a developer.
Always take time to research and consider the developer in question.
Large developers with reputable track records will have a substantial online presence, clearly showing the work they have completed in previous developments.
You can use this to measure how comfortable you will be using these developers.
They call it a blacklist for a reason – which means you should avoid purchasing properties from anyone on this list.
The chances are you’ll end up paying with more than just some lost Ringgit, but a whole lot of heartache on top!
We get it, the internet is great! One minute you’re watching videos on YouTube and the next you’re reading an awesome article about the property market on PropertyGuru.
But you can go beyond the internet! A true property development should have physical evidence, like, you know, the site of a building being constructed.
Don’t be that mad internet investor who hands over your life savings to some unknown developer without having seen some evidence that a property will actually be built.
Dodgy developers will, unfortunately, be set up as private companies, meaning they’re not obliged to disclose company information to the public.
That might help with your research by finding out just who is behind a development company.
If it turns out the company director has a whole list of failed companies and bad investments behind him, it’s probably better to find out in advance.
Ask if it’s too good to be true
One of the ways that bad developers lure in unsuspecting investors is with an offer that seems too good to be true.
If you’re being offered a two-bedroom condo unit in Mont Kiara for RM300,000, someone either forgot about an extra ‘0’, or isn’t telling you the truth.
Always ask the question if it’s too good to be true, and take time to find out why if you’re worried.
If you’re in doubt about a property purchase, maybe it’s time to speak to the professionals?
They’re going to be in a better place to offer informed insight, rather than a quick search on the Lowyat forums.
What Bad Practices Should You Look Out For?
Just like you can tell a bad egg by that terrible smell, you can get a whiff of dodgy developers in the real estate industry with some clear signs of bad practice.
There are a number of bad practices which are widely shared by poor developers, with four key areas identified on the Ministry of Housing and Local Government’s list.
1) Property developers without licenses
An advertisement by a property developer should include the APDL. This APDL will reveal a validity date that should apply to the project, confirming it has been given permission by the Ministry.
If you have any doubts at all about whether this is valid, take note of the APDL number and contact the Ministry to confirm.
Sure, you might have to wait on hold for some phone calls, but you could discover you’ve saved yourself a magically vanishing RM30,000 down payment to a questionable developer.
There were 108 developers on the blacklist for failing to have a license, and here are just some of them:
- Aghniyak Builders Sdn Bhd
- Mekar Circle Sdn Bhd
- CT Bakti Timor Sdn Bhd
- Ample Development Sdn Bhd
- Andalas Development Sdn Bhd
- Happy Home Development Sdn Bhd
- Harta Mukmin Sdn Bhd
- Ikhtiar Corporation Sdn Bhd
- Uni Legend Estate Sdn Bhd
- Zest Properties Developer Sdn Bhd
2) Property developers with abandoned projects
The reason a project is abandoned can vary, from poor management to downright fraudulent activity.
Some dodgy developers never really intend to finish a project at all, they just take big upfront payments from unsuspecting investors and run off with the money.
Many abandoned projects are just down to inexperience and failure to hedge against changing market conditions. Make sure you’ve got faith in a developer’s ability to truly deliver on a project.
Big name developers often have the experience and financial capital to add that additional level of security to your property purchase, with far less chance of a project being abandoned due to the company going under.
That’s not to say you should ignore smaller developers, but it might raise the risk and inspire you to do even more in-depth due diligence.
Remember to research! The blacklist included 228 property developers responsible for abandoned projects, and here are just some of them:
- AGA Development Sdn Bhd
- Agrocon (M) Sdn Bhd
- Akrab Properties Sdn Bhd
- Barisan Tenaga Designer Sdn Bhd
- Batu Gajah Development Sdn Bhd
- Bench Win Sdn Bhd
- Coral Land Corporation Sdn Bhd
- Cosmopolitan Builders Sdn Bhd
- Duta Value Sdn Bhd
- Circular Intan Sdn Bhd
- Gunawan Hitech Sdn Bhd
- Haji Embong Sdn Bhd
3) Property developers that didn’t honour tribunal claims
An important part of the grievance process to hold poor developers to account is the Tribunal of Homebuyer Claims.
This body was introduced in 2002 to oversee legislation under the Housing Development (Control and Licensing) Act 1966.
This tribunal is a simplified dispute process to allow claims by homebuyers for developers failing to deliver on promised properties or breaches of the Housing Development Act (HDA).
It costs just RM10 to lodge a claim, although claims must be for a value less than RM50,000, and the decision constitutes a legally binding court order.
Although it’s worth noting there is a 12-month period from receiving the CCC or expiry of the defect liability period to lodge a claim.
Unfortunately… this still doesn’t stop some developers from failing to abide by these judgements.
If a property developer is blacklisted for failing to honour tribunal claims, you can get a good kind of indication what kind of developer might be.
There were 300 developers on this part of the blacklist, and here are just some of them:
- Astana Land Sdn Bhd (Formerly known as Kejora Indah Ventures Sdn Bhd)
- Ban Soon Aik Development Sdn Bhd
- Bumi Diamond Development Sdn Bhd
- CY Hitech Development (M) Sdn Bhd
- Diamond Crest Sdn Bhd
- E.N. Development Sdn Bhd
- Fifth Marine Development Sdn Bhd
- Majestic Heights Sdn Bhd
4) Property developers who failed to settle compound payments
Compounds are an additional fee imposed on developers for breaking the law. That means a developer who failed to settle compound payments not only breached a legal duty, but then followed up by failing to pay the penalty for it.
That doesn’t sound like the kind of developer we’d feel happy with, building our dream home! There were 458 developers on the blacklist for failing to settle compound payments, and here are just some of them:
- Azrat & Hashim Sdn Bhd
- Happy Indah Properties Sdn Bhd
- Bukit Tandak Development Sdn Bhd
- Legendview Housing Development Sdn Bhd
- Cybotics Corporation Sdn Bhd
- Dinding Development Sdn Bhd
- Exquisite Corporation Sdn Bhd
- F&Z Communication Sdn Bhd
- Great Wall City Sdn Bhd
- H&A Sdn Bhd
Dodgy developers are a scary prospect, but don’t stress out too much! Malaysia’s construction industry is blessed with a wide range of great developers offering fantastic properties for you to explore. Why not explore this great list of new developments and find the right property for you?