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Tight control on developers expected to curb irregularities
Tight control and monitoring of property developers is needed to minimize the number of business irregularities in the sector, which often sees customers fall victim to bad practices
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ight control and monitoring of property developers is needed to minimize the number of business irregularities in the sector, which often sees customers fall victim to bad practices.
The government needs to supervise the developers' compliance to the existing laws on housing and residence development.
According to data from the Indonesian Consumers Foundation (YLKI), the number of complaints relating to housing increased significantly in recent years. It recorded 74 cases in 2012, 121 in 2013, 157 in 2014 and 160 in 2015.
YLKI complaints and law division head Sularsi said the cases, which were mostly reported by consumers, were about troubled development processes, including the inability to finish construction on time and illegal building permits.
'The authority is needed to monitor such problems and give legal certainty to customers. Otherwise, such problems will keep happening,' Sularsi said recently, adding the Public Works and Public Housing Ministry is in charge of the supervision.
A top official at the ministry acknowledged the ministry has the authority to supervise developers' practices, but added that the its monitoring capacity is limited so it needs consumers to also be proactive in reporting any irregularities.
The ministry's housing provision director general, Syarif Burhanudin, said the stipulations in the 2011 law on housing and residences have a clear message but in practice the developers take a different approach.
For example, Article 42 stipulates that developers cannot market property until they have finished 20 percent of construction.
'It's true that it means developers are forbidden to market property if the construction hasn't begun. However, in practice, many of them market it anyway, even if they haven't started anything. As long as the customers and the developers acknowledge the conditions and agree to the terms and conditions stipulated under the sales and purchase agreement [PPJB], it's okay,' he said.
Several considerations are behind this, such as the fact that property prices are time-sensitive. The longer the customers wait to buy, the more expensive the property becomes, said Syarif.
YLKI's Sularsi, however, said it should be the other way around.
The PPJB should align with the existing law and, therefore, no developers could actually be able to advertise their products when no progress has been made, contrary to the current practice.
'The law is obvious but the enforcement is absent,' she said.
She said the state's leniency in this matter makes developers too relaxed with the law. Thus, breaches of other regulations persist, ranging from unfulfilled advertisement promises about designs and materials, incomplete and misleading credit plans, illegal building permits and late hand-over of units.
Some big names reported to YLKI last year include Perum Perumnas, Agung Podomoro, Agung Sedayu, Alam Jaya Perkasa, Binakarya Propertindo, Cawang Housing Developer, Cempaka Group, Ciputra Development, Desindo Group, Duta Paramindo Sejahtera, Duta Pertiwi, Hutama Karya Realtindo, Intiland, Jaya Group, Nusuno Group, Paramount Land and Pikko Land.
Ciputra Development corporate secretary Tulus Santoso Brotosiswojo said although the company does receive complaints, they can always settle it without state involvement.
'I think the state has done its best so far. When the Public Works and Public Housing Ministry has new standards or rules, it always notifies us. But for complaints, as long as we can settle it with customers then it's fine,' he said.
Intiland corporate communication head Prananda Herdiawan shared the same view as Tulus, saying that matters between customers and developers will usually be settled without government involvement because it is all already clear in the sales and purchase agreement.
'That's why it's important for customers to always understand well what is written in it to avoid any misunderstanding afterwards,' he said.
Both Ciputra and Intiland management said that they always use legal building permits. The most frequent problem nowadays, the late unit handover, especially for apartments, is caused by many reasons.
One of them is the government's lengthy strata title permit issuance process that must be finished before developers are able to give the units to buyers.
Prananda added that for any damages or poorly designed units, Intiland gives a six-month repair guarantee after the unit is handed over. (rbk)
