Thursday, April 11, 2013

Steps to ensure transparency in home sales

The Straits Times  |  APRIL 09, 2013
Stiff penalties for developers who fudge prices or mislead flat buyers on space

Private home buyers will get better protection against unscrupulous developers with new stiffer laws to ensure "what you see is what you get", in terms of actual prices and the appearance of homes.

When reporting prices, developers must now reveal all discounts, including furniture vouchers and stamp duty reimbursements. This ensures transacted prices for new projects are not artificially inflated - a practice that misleads prospective buyers.

Also, showflats can no longer be made to look more spacious than the finished product, such as through the use of higher ceilings or glass panels in place of brick walls.

These were among the amendments to the Housing Developers (Control and Licensing) Act, approved by Parliament yesterday.

In moving the Bill, Senior Minister of State for National Development Lee Yi Shyan said it was necessary to safeguard home buyers' interests and enhance the professionalism of the industry.

"A home is, in most cases, the single largest investment in one's lifetime. It is only right that home buyers are provided with the appropriate tools and legal safeguards to make informed decisions," he added.

The latest move follows regulatory updates by the Government last year requiring developers to provide home buyers with more information, including drawn-to-scale location plans.

The new laws allow for greater punitive and enforcement measures against errant developers.

The Government will be able to inspect a showflat and close it if it does not pass muster. It will also have the flexibility to regulate dubious sales and marketing practices, such as the collection of blank cheques from prospective buyers.

The maximum penalty for flouting the law has been raised. Developers can be fined $100,000 - up from $20,000 - and can now be jailed for up to three years.

The Bill also bars anyone convicted of fraud or dishonesty from becoming a director, manager or secretary in a housing developer for five years.

Members of Parliament who spoke on the Bill yesterday voiced strong support for it and urged the Government to rein in unscrupulous developers.

Many retold stories from residents who had unhappy experiences buying condos - from brochures promising non-existent "lush greenery" and an "unobstructed view" that turned out to be obstructed, to the use of fake buyers queueing to create hype.

Mr Lim Biow Chuan (Mountbatten) asked if the margin of error developers were allowed to have on property area could be reduced from 3 to 1 per cent. Mr Lee said there were currently not many complaints on this, but added it would be considered if there were technological advancements.

Nominated MP Eugene Tan said the $100,000 fine still paled in comparison to the profits developers stood to reap. Mr Lee replied that deterrence was "sufficiently strong", given the other measures - including jail and the suspension of sales until the project is completed, which would constrict revenue flows.

At least one developer applauded the changes yesterday. Said EL Development's managing director Lim Yew Soon: "When the rules on showflats were grey, some developers got very 'creative', and careful and honest developers like us suffered, unfairly, because our showflats looked smaller."

Martin Koh | 86666 944 | R020968Z
Sherry Tang | 9844 4400 | R020241C

Senior Sales Director
DTZ Property Network Pte Ltd (L3007960A)

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