housing and construction in malaysia (process and procedure to develop a land)

Malaysian Torrens System

___________________________________________________________________________

1 ___________________________________________________________________________

AQS 2244 Legal Studies (Construction) for Quantity Surveyors

HOUSING AND CONSTRUCTION IN MALAYSIA

(Process and Procedure to Develop a Land)

In the Malaysian context project development is divided into three (3) stages, namely, the

predevelopment stage, the construction stage and the post construction stage. The post

development stage is when the completed property is handed over to the owner as required

and stipulated by the Housing Development Act (HDA, 2010). The flow of the procedures

and activities start from the initial right up to the delivery of a completed property, plays a

pivotal role in the planning of property development. A crucial brief overview of a typical

planning process in Malaysia, covering the legislature in the planning process, the

development plan and general implementation of development plan.

In a case study, Rosmah inherit 1000 acres of Agricultural land and she wants to

develop the said land into a mixed housing estate. She is engaging with the consulting

Quantity surveyor due to a Turnkey basis. Therefore, based on the housing and construction

environment in Malaysia, the following are the methods and steps that need to be taken by

her and the related parties due to develop the land;

1.0 Appointment of Developer

Turnkey basis is a buildings and the construction that is designed, supplied, built, or

installed fully complete and ready to operate. The term implies that the end user just has to

turn a key and start using the building which are completely constructed.

Complying with the measures, in order for Rosmah to develop the 1000 acres of land

into housing estate, Rosmah is engaging with the consultant Quantity surveyor due to deliver

her requirements regarding the development of the land. Due to that case, the quantity

surveyor form a developer company consist of all the related parties who are the architect,

civil and structure engineers, mechanical and electrical engineers and town planners.

After that, it is needs to ensure that the developer appointed is registered and having a

certified licence due to develop the land. For example, the collaboration parties (the parties

whom the quantity surveyor had engaged) formed a registered developer company named


___________________________________________________________________________

2 ___________________________________________________________________________


Shuhada Shamsudin Sdn. Bhd. The registration process can be done at the ROC. After having

done register as developer, then the developer (SS Wide Sdn. Bhd.) can apply for housing

developer license in accordance to Housing Developers (Control and Licensing) Act.

It is mandatory for a housing developer to be in possession of a valid license issued

under the Act before he undertakes any housing development that is under Section 5(1) of the

Act. According to ref 3 of the Housing Developers (Control and Licensing) Act, an applicant

for a license under Section 5 of the Act shall submit his application in the form prescribed in

Schedule A of the Regulations, together will such documents as are specified in Section 5(3)

of the Act, and furnish all other relevant particulars or information as may be required by the

Controller of Housing.

A license is required in respect of each housing development and where a housing

development is to be undertaken in phases, a license is required for each and every phase of

such housing development. Any developer who carries out any housing development without

having been duly licensed under Section 5 of the Act or fails to comply with any of the

conditions imposed on the license shall be guilty of an offence and shall on conviction be

liable to a fine not less than RM 50,000 and not more than RM 500,000 or imprisonment not

exceeding years or both that is under Section 18 of the Act as amended by the Act.

1.1 Statutory Duties of Licensed Developers

Once the housing developer license of SS Wide Sdn. Bhd. has been approved, then

only with that it is permissible to commence the housing development work and to do an

advertisement to sell the properties. However, a licensed housing developer has certain

statutory duties to perform under Section7 of the Housing Developers (Control and

Licensing) Act.

Under Section 7A of the Act, it requires developer to open and maintain a housing

development account. Under this new provision, unless the developer is undertaking what is

known as the build and sell (build now and sell later) housing project, he is required to open

and maintain a housing development account with a bank or a finance company for each

housing development undertaken by him. Where the housing development is developed in


___________________________________________________________________________

3 ___________________________________________________________________________


phases, the developer is required to open and keep such an account for each phase of housing

project.

The developer is required to pay into the account all purchase monies received by him

from the sale of the housing accommodation in the project and any other sum which may be

required by any regulations made under the Act to be paid into such an account. The

developer is not allowed to withdraw from the account except as authorised by the Housing

Developers (Housing Development Account) Regulations 1991 (hereinafter referred to as the

1991 Regulations).

The authorities are serious about the state of the housing development account

because under subsection (8), the Minister of Housing is given the power, where he considers

it necessary to do so, to appoint an approved company auditor to investigate the books,

accounts and transactions of such an account. The costs of such an investigation are to be

borne by the developer. A developer who fails to comply with Section 7A shall be guilty of

an offence and on conviction shall be liable to a fine not less than RM 10,000 but not

exceeding RM 100,000 and shall also be liable to imprisonment of up to 3 years, or both.

Under the 2002 Amendment Act, the penalty has been increased fivefold, a fine of not less

than RM 50,000 and not more than RM 500,000.

In addition to the above, the developer is also required to comply with every direction

given by the minister under Section 11 of the Act for the purpose of safeguarding the interests

of purchasers as well as other general directions given under Section 12 of the Act.

2.0 Ensuring the 1000 acres land is registered in the name of the Owner.

After appointing the developer, the land consultant (on behalf of the developer) need

to ensure that the 1000 acres of agriculture land is registered in Rosmah’s name. This due to

ensure the ownership of the land is exist. Therefore, the land consultant needs to go to a

Land Office doing the search to ensure the register document of title of the 1000 acres land is

belong to Rosmah.


___________________________________________________________________________

4 ___________________________________________________________________________


2.1 Mirror Principle and Curtain Principle

The main purpose why it is important to ensure Rosmah needs to register the 1000

acres land is because, the register will reflects all the facts material to the registered owner’s

title in the land. These also include the material facts which refer to the name of the

proprietor for the time being, the land which has been alienated, its area and location, its

survey plan and its boundary limits.

The Mirror Principle states that the register reflects all the facts and interests of the

land such as the name of proprietor, land descriptions, area of the land and particulars of the

persons that have registered interests on the land. The Curtain Principle states that the

potential land buyer may only need to look at the register to get the information on the land

that he is interested in without counter checking with other documents.

The cumulative effect of these principles is that the Torrens system has conferred an

indefeasibility of title to the registered owner. As in accordance to case law of Teh Bee v K.

Maruthamuthu, the court held that under the Torrens System the registration is everything.

2.2 Indefeasibility of title

As Rosmah has registered the land in her name, surely her registered title cannot be

defeated. Indefeasibility means that the state guarantees that the registered proprietor’s title is

unimpeachable, unchallengeable and unquestionable. Indefeasibility of title is guaranteed

under the Malaysia NLC 1965 pursuant to Section 89 and Section 340 but it is not absolute.

Under Section 89, it specifies the importance of register document of title as the

conclusive evidence of ownership of the land. While under Section 340 of Malaysia NLC

1965 it provides the concept of indefeasibility of title and interests in land. The expression

“indefeasibility of title and interests” means that the title or interest in respect of which the

holder is registered is immune from attack by adverse claims affecting the same land or

interest. However, the supremacy of such title is still subject to the following:

a) Certain statutory exceptions as spelt out in Section 340(2)

b) Exceptions in equity


___________________________________________________________________________

5 ___________________________________________________________________________


c) Exceptions under Malay custom or adat

On the issue whether indefeasibility under the Code is immediate or deferred, the

Federal Court held, in Ardorna Properties Sdn Bhd v Boonsom Boonyanit. In this case, the

Respondent was the registered proprietor of a piece of land which had been sold and

transferred to the Appellant. The Respondent claimed that the vendor had forged her

signature, sold and transferred the land to the Appellant. The High Court dismissed the

Respondent’s claim. The decision of the High Court was reversed by the Court of Appeal and

the Appellant appealed. One of the questions of law posed for decision of the court was:

“Whether the Appellant, a bona fide purchaser for valuable consideration without notice,

acquired an indefeasible title to the land by virtue of Section 340(3) of the Malaysia NLC

1965.”

The Federal Court, comprising a panel of 3 judges, unanimously held that by virtue of

the proviso to section 340(3) of Malaysia NLC 1965, a purchaser in good faith and for

valuable consideration is excluded from the application of the substantive provision of

Section 340(3) of Malaysia NLC 1965. Therefore, this category of registered proprietors

obtains immediate indefeasible title to the land even if they acquired title through instruments

of transfer which are forged.

This decision drew much criticism from the legal parties as being 'clearly wrong'. It

also caused grave concern amongst land owners who became vulnerable to losing their land

even through the use of forged instruments of transfer. Many courts reluctantly followed

Adorna Properties as it was a judgment of the apex court of Malaysia.

The Federal Court, comprising a panel of 5 judges, first considered the question

whether Adorna Properties was correctly decided. According to their Lordships:

a) Subsection (3) of Section 340 of Malaysia NLC 1965 merely provides that any

title or interest which was defeasible by any of the circumstances specified in

subsection (2) shall continue to be liable to be set aside in the hands of a

subsequent holder of such title or interest.


___________________________________________________________________________

6 ___________________________________________________________________________


b) The proviso at the end of subsection (3) was directed towards the provisions of

that subsection only and could not be projected into the sphere or ambit of any

other provisions of section 340.

c) Although subsection (3) of Section 340 of Malaysia NLC 1965made reference

to subsection (2), subsection (3) was restricted to subsequent transfers or

interests in the land. It did not apply to an immediate transferee of any title or

interest in land. As Adorna Properties did not fall under the category of

subsequent acquirers, it should not have been allowed to take advantage of the

proviso to subsection (3) to avoid its title from being impeached.

The Court, in a unanimous decision, concluded that the judges in the Federal Court in

Adorna Properties had misconstrued Section 340(1), (2) and (3) of Malaysia NLC 1965 by

coming to the erroneous conclusion that the proviso to subsection (3) applied equally to

subsection (2). By doing so, the Federal Court in Adorna Properties gave recognition to the

concept of immediate indefeasibility under the Malaysia NLC 1965 contrary to the provisions

of Section 340.

Therefore, it is essential to make sure that Rosmah is registered owner toward the 100

acres of agriculture land. Thus, once Rosmah has registered the land, her title cannot be

defeated, hence easier the process for the development.

2.3 Application of title from qualified to final to determine the boundaries of the land-

section 176(2) NCL

Rosmah’s 1,000 acres land must be changed from qualified title to final title due to

determine the boundaries of the land. This is stated in section 176(2) NCL. Qualified title

shall confer on the proprietor the like rights in every respect as those conferred (as mentioned

in section 92) by final title, that the boundaries of the land shown on the document of title

thereto shall be provisional only except so far as any of them may have been established by

any earlier survey. Unless otherwise provided for under this Act, the land shall not be capable

of being sub-divided or partitioned, or included in any amalgamation, nor shall any building

thereon be capable of sub-divisions.


___________________________________________________________________________

7 ___________________________________________________________________________


Where any land held under qualified title has been duly surveyed in accordance with

the provisions of section 396, final title may be issued in continuation of the qualified title in

accordance with the following provisions. The procedure in case of land which became held

under qualified title upon alienation is the provisions of section 83 shall apply to its survey

for the purposes of the issues of final title. On completion of the survey, all items of land

revenue previously paid in respect thereof which were computed on the basis of the area

provisionally approved for alienation shall be recomputed on the basis of the actual area of

the land as established by the survey. Any amounts underpaid or overpaid in respect of any

such item, or in respect of survey fees, shall become payable to or by the State Authority and

in the case of amounts underpaid, shall be paid before final title is issued.

In the case of land which became held under qualified title on a sub-division, partition

or amalgamation is on completion of the survey for the purposes of the issues of final title,

the rent payable in respect thereof shall be recomputed on the basis of the actual area of the

land as established by the survey. Any amounts underpaid or overpaid by way of rent in

respect of the period during which the land was held under qualified title, or in respect of

survey fees, shall become payable to or by the State Authority and in the case of amounts

underpaid, shall be paid before final title is issued.

The documents of final title to be prepared, registered and issued in respect of any

land shall consist of a register document in the form of a grant, State lease, Mukim grant or

Mukim lease, according as the land is held under the form of qualified title corresponding to

Registry title or that corresponding to Land Office title, and in perpetuity or for a term of

years and also an issue document in the form appropriate under this Act to the register

document in question. Where an issue document of qualified title exist in respect of the land,

the Registrar or Land Administrator, as the case may be, shall, before issuing final title is by

call for its production in section 166 and if it is not produced, take the further steps specified

in section 168.

The registration of register documents of title that has been prepared shall consist of

their authentication under the hand and seal of the Registrar or Land Administrator, as the

case may be, and the date of registration shall be inscribed on every such document by the

Registrar or Land Administrator. The provisions of section 89 to 91 shall apply to documents


___________________________________________________________________________

8 ___________________________________________________________________________


of final title that has been prepared as they apply to prepared documents of final title.

Provided that where the land to which any such documents related is subject to a charge or

lien, nothing in section 90 shall be taken to authorize the issue of the issue document to the

proprietor of the land.

Every document of title shall be prepared in the name of the person or body last

registered as proprietor in the subsisting register document of title. Then it shall specify the

date on which the land in question was first alienated, the title number originally allotted

thereof and (if different) the number of the subsisting register document. It is also shall

contain, except in so far as they relate to matters which have ceased to be effective, the like

memorials, endorsements and other entries as are contained in the subsisting register

document (but, where that document merely refers to any conditions or restrictions in

interest, setting them out in full).

3.0 Power of Attorney

At common law, where an agency was granted by deed giving specified authority to

the agent, it was called a “power of attorney”. A power of attorney (POA) or letter of attorney

is also known as written authorization to represent or act on another's behalf in private affairs,

business, or some other legal matter, sometimes against the wishes of the other. The person

authorizing the other to act is the principal, grantor, or donor (of the power). The one

authorized to act is the agent or, in some common law jurisdictions, the attorney-in-fact

(attorney for short).

Referring to the concept, as the developer company have been formed, the owner

(Rosmah), can delegates her power to the developer company formed. By doing this, the

developer need to commence all the works and progress required due to develop the housing

estate on the land. If necessary, there will be an agreement between the both parties due to the

delegation of power.

4.0 Conversion from Agricultural Land to a Mixed Housing Estate


___________________________________________________________________________

9 ___________________________________________________________________________


The existing category of Rosmah’s 1000 acres of land is agricultural land. However,

as Rosmah wants to develop the said land into a mixed housing estate, Rosmah need to apply

to State Authority to alter, impose and convert the status of the land from agricultural land to

a mixed housing estate. Conversion is said to take place when a landowner (Rosmah) applies

to the State Authority to alter her present category of land use for example from land use of

agriculture to land use of building or industry. Under the Malaysia NLC 1965, this is done by

invoking Section 124 and Section 124A.

Under Section 124, an application can be made to the State Authority for “alteration

of any category of land use” or for the “imposition of any category”. Application can also be

made under this section for the rescission of any express condition or restriction in interest

endorsed on, or referred to in, the document of title, or for the amendment of the same.

In addition, application can also be made under this section for the removal from the

document of title of such expression as “rubber”, “kampong” or any other express conditions

pertaining to land use.

An applicant under Section 124 of Malaysia NLC 1965 must fulfil the following

conditions that are:

a) The consent of all interested parties has been obtained

b) All dues to the State Authority have been paid

c) Pay such further premium is required

d) Pay such fees and other charges as prescribed

e) Pay the newly-determined quit rent

f) Comply with all such other conditions as may imposed by the State Authority

In relation to the land of Rosmah, as a housing estate will be developed, there will be

several types of residential types for example low cost housings, medium cost housing as

well as the high end housing to be develop. All of this also need to be notified to the

authorities. Besides, the essential procedure of the conversion from agricultural land to mixed

housing land, the land consultant must fill up applicable forms made available at Land Office

that are:


___________________________________________________________________________

10 ___________________________________________________________________________


a) 2 copies of form 44C application through section 124 (1) a and C of NLC or

b) 3 copies of form 7D application through section 124A or

c) 3 copies of form 12D application through section 204D or

d) 3 copies of form 12A and 2 copies of form Schedule 1 application through

section 197 and 96 of NLC

e) Surat Wakil should be registered at High Court and Land Office if the

presentation done by third parties.

f) 7 copies of Layout Plan and Pre computation plan as certified by Planning

Dept.

g) 15 copies of Key Plan, Location Plan, Site Plan prepared by Registered

Planner

h) A copy of Development Proposal as required by JPBD

i) Official Search of Title

j) Receipt of Quit Rent effective year of assessment

k) Original copy of Title

l) A copy of company’s statutory declaration

m) A copy of Memorandum of association or articles of association

However, an additional premium is imposed on the conversion of land use. The basis

for the computation of additional premium is provided in the various State Land Rules and it

is differs between rules. The roles of valuers are to determine the value of land according to

the basis adopted by the various states as stipulated in their respective Land Rules. Thus, the

next procedure of the land conversion is Rosmah need to the payment for land conversion.

The value that need to be paid by Rosmah are as follows:

For section 124 (1) A and C

i. Less than Hectare RM 50.00

ii. A hectare to 10 Hectares RM 100.00

iii. More than 10 hectares RM 100 for every exceeding 1 hectare

For Section 124A

i. Less than Less than 10 hectares RM 100 10 hectares to 50 hectares RM

300 More than 50 hectares RM 500


___________________________________________________________________________

11 ___________________________________________________________________________


For Section 204 D

i. RM 15 for every title document

For Section 197 and 76

i. Less than hectare RM 50.00

ii. A hectare to 10 hectare RM 100.00

iii. More than 10 hectare RM 200.00

4.1 Express and Implied Condition

Under conversion of land, express condition and implied condition is imposed. If the

event of conversion is approved, the developer can challenge the express condition. When the

application to convert the land into another type of land for example conversion of

agriculture land to the building land state authority may imposed a condition for a 99 years

lease in exchange for their title in perpetuity.

In other word, the free hold land own by Rosmah must be change to leasehold land.

However, the applicant who is the land consultant on behalf of Rosmah may make an appeal

to the court to avoid from being change to the leasehold land.

5.0 Application for Planning Permission

Due to do the development, there must be permission of the development planning

which is approved by the state authorities. Therefore, a development proposal plan need to be

prepared by the town planner and submit it together with the details documents required.

There are also several conditions and analysis that should be fulfil before the development

proposal plan being submitted. Among them are;

5.1 Zoning search

For the procedure to do the zoning search, consultant or the town planner must go to

the land office to look for the master title. The consultant needs to make sure the surrounding

area of her 1000 acres land is permissible to do the housing development. Local governments

often pass zoning laws which control what buildings can be built on a lot and what they can

be used for. For example, certain areas are zoned for residential buildings such as houses.

Other areas can be commercially, agriculturally, or industrially zoned.


___________________________________________________________________________

12 ___________________________________________________________________________


Zoning is the term used for designating permitted uses of certain parcels of land by

local governments. The word is largely self-explanatory: the local government will designate

various zones for different uses of land, such as industrial, agricultural, commercial, and

residential. Zoning is also frequently used to designate the types of buildings that can be

erected in a particular area, such as high density housing, high rises, maximum height

restrictions, etc.

The primary philosophy behind zoning regulations is to separate different,

incompatible property uses. For example, keeping large, smoke producing factories away

from residential neighbourhoods. However, in many instances, variances, or exceptions to the

zoning rules, are possible. For example, a small residential variance might be granted to

allow for a home in an industrial zone to house the night watchman. Usually, variances are

granted because of some perceived hardship caused by the particular nature of the property in

question or to satisfy a unique need that is not otherwise against the public interests.

Generally, in urban areas, zoning will be divided five major categories: residential,

mixed residential-commercial, commercial, industrial, and special (e.g., power plants, sports

complexes, airports, shopping malls etc.). Often, these categories will also have a number of

sub-categories. For example, within the commercial category there may be separate zones for

small-retail, large retail, office use, lodging and others, while industrial may be subdivided

into heavy manufacturing, light assembly and warehouse uses.

Of course, zoning laws are not without their critics or misuse. Along with potential

property right infringements, zoning has also been criticized as a means to promote social and

economic segregation through exclusion. By improper use of various land-use restrictions,

such as maximum density requirements, municipalities are able to artificially maintain high

housing costs, increasing the tax base while effectively excluding lower income groups.

However, sometimes zoning laws establish other restrictions such as a minimum lot

area and/or frontage length for building a house or other building, maximum building size, or

minimum setbacks from a lot boundary for building a structure. This is in addition to building

codes which must be met. Also minimum lot sizes and separations must be met when wells


___________________________________________________________________________

13 ___________________________________________________________________________


and septic systems are used. In urban areas, sewers and water lines often provide service to

households. There may also be restrictions based on covenants established by private parties

such as the developer. There may be easements for utilities to run water, sewage, electric

power, or telephone lines through a lot.

Therefore, in accordance to the zoning laws, if the surrounding neighbour of the 1000

acres land owned by Rosmah is already developed with the buildings type development

(housing), the application for planning permission for housing development to her land will

be approved if the consultant and the town planner prepare the complete and comprehensive

development proposal report.

5.2 Condition upon Approval

In the process of planning, there are several conditions that the developer deem to

follow. One of the conditions that they must aware upon approval is for example in allocating

several percentage for low cost housing and also zoning search whether the place is zoned by

building, for residential and public purposes (road, treatment plant, green zone and etc).

Low-cost housing was officially introduced in the First Malaysia Plan (1966-1970)

“to promote the welfare of the lower income population”, and implemented through the State

with financial assistance from the Federal Government. During the First Malaysia Plan, most

of the low-cost housing was constructed to resettle squatter settlements in urban areas, and

for renting purposes).

Low-cost housing in Malaysia is also a mandatory section of housing development;

abided by housing developers to provide 30% of their total housing development for low-cost

housing. The policy is imposed through administrative procedures that force developers to

provide a portion of development for low-cost housing in order to gain development approval

by local authorities.

This red tape method of delivery challenges the quality of construction, as it is not the

primary venture of private developers and merely for approval purposes. Low-cost housing is

also subjected to additional standard guideline for construction i.e. the Construction Industry

Standard - CIS 1: 1998 (1-2 storey) and CIS 2: 1998 (high rise flats). The CIS 1 and 2,


___________________________________________________________________________

14 ___________________________________________________________________________


produced by the Construction Industry Development Board (CIDB) specifies minimum

design and planning requirements for low-cost houses to ensure that “housing estates for low-

income dweller are developed to minimum standards suitable for human habitation”. The two

standards used for low-cost residential construction covers minimum requirements on layout,

space and configuration; between four aspects of habitation which are:

a) Safety,

b) Adequate infrastructure,

c) Physical and mental health, and

d) Community

5.3 Green Zone

Protect existing natural resources and prevent future pollution from newly developed

lands are also the consideration that the developer need to take into account. Therefore, in

development plan, there is green zone. Green zone is the preservation of green area in a land

for development such as playground, landscaping work, parks and walkways. Normally, a

portion of land in a development must be voluntarily surrendered to the green zone area to

ensure a balance in the area e.g. 5% of the land in development use to develop the green

zone.

In development land, there are required to develop a green zone area to maintain the

high quality living environment. In general, the features of green zone in residential area to

create high quality which:

a) Prioritize walking, cycling and public transport, and minimize the need to

use cars;

b) Deliver a quality of life which residents and visitors are entitled to expect,

in terms of amenity, safety and convenience;

c) Provide a good range of community and support facilities, where and when

they are needed and that are easily accessible;

d) Present an attractive, well-maintained appearance, with a distinct sense of

place and a quality public realm that is easily maintained;

e) Are easy to access for all and to find one’s way around;


___________________________________________________________________________

15 ___________________________________________________________________________


f) Promote the efficient use of land and of energy, and minimize greenhouse

gas emissions;

g) Promote social integration and provide accommodation for a diverse range

of household types and age groups;

h) Enhance and protect the green infrastructure and biodiversity; and

i) Enhance and protect the built and natural heritage.

There are many principles or guidelines that can be referred by the developer in order

to provide green zone in residential area. Some of the principles are as below:

a) Promote the concept of walkability and connectivity through the provision

of a pedestrian and cycling as a whole in a neighbourhood

b) Connect the system and the location of public transport with walking and

cycling routes

c) Create green networks as a whole through the provision of open spaces,

recreational areas and planting trees along the road

5.4 Treatment Plant

A wastewater treatment plant is a physical plant where various physical, biological or

chemical processes are used to change the properties of the wastewater (e.g. by removing

harmful substances) in order to turn it into a type of water (also called effluent) that can be

safely discharged into the environment The treatment of wastewater belongs to the over-

arching field of sanitation, with the management of human waste, solid waste, sewage

treatment, storm water (drainage) management, and water treatment.

Wastewater treatment plants may be distinguished by the type of wastewater to be

treated, which are whether it is sewage, industrial wastewater, agricultural wastewater or

leachate. Treatment plant in residential area are commonly referred to as ‘sewage treatment

works’ which is interpreted in the Water Service Industry Act 2006 (Act 655) as a facility

designed to accept and process sewage and sewage sludge before disposal to a receiving

medium but does not include septic tanks.

Before the developer develop the land, they must first identify the method to be use in

the housing area whether septic tank, bio filtration, oxidation pond or others. The selection of


___________________________________________________________________________

16 ___________________________________________________________________________


the methods must be based on the population, density and also suitability of the area. The Act

provides the legal framework for regulation of the water and sewerage service industries in

the country to ensure that the treatment plant are well placed and properly design. There are

several methods that can be choose and implemented the housing or residential area.

For example, septic tank means a basic form of on-site treatment facility consisting of

one or more compartments that provides treatment of sewage by means of sedimentation and

anaerobic process.

Besides, oxidation ponds, also called lagoons or stabilization ponds, are large, shallow

ponds designed to treat wastewater through the interaction of sunlight, bacteria, and algae.

Algae grow using energy from the sun and carbon dioxide and inorganic compounds released

by bacteria in water. During the process of photosynthesis, the algae release oxygen needed

by aerobic bacteria. Mechanical aerators are sometimes installed to supply yet more oxygen,

thereby reducing the required size of the pond.

Bio filtration is a pollution control technique using living material to capture and

biologically degrade process pollutants. Common uses include processing waste water,

capturing harmful chemicals or silt from surface runoff, and micro biotic oxidation of

contaminants in air. The use of indigenous microorganism enables this system to operate this

minimal maintenance due to its biological regeneration, thus this system serve as sustainable,

effective and economic filtration method in various waters and discharges for the

improvement of water quality. The bio filter can be very useful in various waste water due to

the efficiency for biological purification, good integration in environment and low sludge

production.

Therefore, all the sewerage system, treatment plant and the drainage and irrigation

plan need to be prepared and send for authority approval include together in the development

proposal plan.

5.5 Percentage of Land Use

Based on the above analysis and requirement, there are several percentages should be

determined by the town planner and the other consultants due to be allocate for the

development. The amount of the percentage allocated is also determined by the area of the


___________________________________________________________________________

17 ___________________________________________________________________________


development which are depending on the requirement set up the local authority of the area.

All of these have been mentioned in the Town Country Planning Act.

Besides, for the residential building, there will also being divided into several

categories and numbers of building. For instance, these proposed land, the owner want a

mixed development housing estate. Thus these can comprise of 40 houses for low cost

building, 40 houses for medium cost building and 40 houses and high end buildings will be

build. However, the number and types of houses being develop depend on the requirement of

the owner (Rosmah).

5.6 Submission of Application for Planning Permission

After all the analysis required and document needed have been produced as well as

including them in the development approval plan , the next step that town planner needs to do

is applying for the planning permission. Based on the Section 21(1) of Town and Country

Planning Act, the application for planning permission shall be made to the local planning

authority which is must be in form and along with the documents, plans of the development

and fees.

Upon the application, local planning authority will gives written directions to the town

planner (applicant). This is mentioned in the Section 21(3) of the Act. Due to construct houses

and accommodation (buildings), town planner needs to follow all these following matters

which are prescribed in the written directions given by the local planning authority;

a) The level of the site of the building;

b) The line of frontage with neighboring building;

c) The elevations of the building;

d) The class, design, and appearance of the building;

e) The setting back of the building to a building line;

f) Access to the land on which the building is to be erected; and

g) Any other matter that the local planning authority considers necessary for

purpose of planning.

After receiving the written directions from the local planning authority specified, the town

planner shall amend the plan submitted with the application before accordingly (if there is only


___________________________________________________________________________

18 ___________________________________________________________________________


any amendment need to be done). Then it is need to resubmit the plan within the time that may

be stipulated by the local planning authority.

If necessary, the town planner is allowed to submit an appeal to the local authorities on any

requirement deemed unfavourable during this process. The appeal may be to retain aspects of

the initial proposal or to negotiate the conditions imposed on the initial submission proposal.

In some cases, the town planner would propose several alternatives in order to comply the

requirement under the conditional approval. Therefore, in this situation, the local authority may

consider the appeal send to them and bring forward for further analyse and discussion.

However, there is another consequences if the town planner fail to resubmit the plan as per

time stipulated by the local planning authority, the application may be withdrawn. The town

planner then can resubmit a fresh application to the local planning authority again. These all

are stated in the Section 21(5) of the Town and Country Planning Act.

Apart from that, based on Section 21A (1), there are another additional documents need

to be submit together with the documents and the plans required under Section 21(1). Town

planner needs to submit a development proposal report which shall contain the following;

a) development concept and justification;

b) a location map and a site plan;

c) particulars of land ownership and restriction, if any;

d) – a description of land including its physical environment,

topography, landscape, geology, contours, drainage, water bodies and

catchments and natural features thereon;

- a survey of all trees and all forms of vegetation; and

- particulars of a building which may be affected by the development;

e) a land use analysis and its effect on the adjoining land;

f) layout plans, the details of which are specified in section 21b; and

g) such other matters as may be prescribed by the local planning

authority.

In facts, any development that involves land area larger than 50 hectares in size, is

required to be supported by a study on the potential impact it may have on the local


___________________________________________________________________________

19 ___________________________________________________________________________


environment. The environmental impact assessment (EIA) study is a requirement imposed by

the authorities on the party who submit. The submitted plans must go through the various

technical departments for example the department of environment, who handles all matters

pertaining to the environment, the Department of Sewerage on matters concerning sewerage,

the Department of Drainage on drainage matters and the Board of Water Management that

manages water matters.

Another standard compliances include the building setback line requirement for

different building types, for example in this case is referring to the housing type. In fact, the

density, plot ratios, public facilities, retention ponds, supply of electricity (by the National

Board of Electricity) and road levels of the development plans need to be comply with the

requirement too. All planning approvals is subject to the planning permission process referred

to under Section IV, Town and Country Planning Act, 1976 (Act 172). Generally, the local

authorities would only offer an initial conditional approval. The submitting party, that is the

planner appointed by the developer, shall then make the necessary amendments in

compliance with to the requirements stated in the letter of conditional approval issued by the

various technical departments.

Before the introduction of One Stop Centre (OSC), submission for approval was done

separately and in sequence to the authorities involved for example land office, Local

Authority Planning Development, Local Authority Building Development, Local Authority

Engineering Department and any Technical Department. Only upon approval of the layout

plan can the building plan be submitted for approval with the rest of the drawings to follow

suit.

However, with the implementation of the OSC, the town planner has the option to

submit all five (5) drawings, namely the layout plan, building plan, road and drainage plan,

earthwork plan and landscape plan simultaneously at one place. This systematic planning

process have benefited the developers, consultant, town planner and the authorities. It is

imperative that all the town planner and the developer should comply the guidelines, rules

and regulations stipulated in the standard manual drawn by Department of Town and Country

Planning (DTCP) and the Malaysia Housing and Local Government (MHLG) to ascertain a

smoother planning approval process.


___________________________________________________________________________

20 ___________________________________________________________________________


After town planner submitted all the requirements, the application for planning

permission will start to be evaluated by the local authority who is the OSC Secretariat,

pursuance to Section 22 of the Act. Then, the local planning authority shall decide on the

application for planning permission as soon as possible upon receiving it. Besides that, the

town planner also need to make sure that the application for planning permission are

according to the criteria that need to be considered by the local planning authority when they

are evaluating the application. This is because during the evaluation, there are many other

related parties will having discussion and meeting regarding the plans, documents and the

development report sent. In regard to Section 22(2), among the matters that are being

considered due to their opinion expedient or necessary for proper planning permission are;

a) The provision of the development plan, if any

- The direction given by the committee

b) the provisional that it thinks are likely to be made in any development plan

under preparation or to be prepared, or the proposal relating to those

provisions;

- the provision of the Sewerage Services Act 1993;

- the development proposal report; and

c) the objection, if any, made under Section 21

All of these criteria set up will be followed by the local planning authority due to access

and evaluate the application for planning permission that had been sent by consultant. After

taking into consideration all the above matters, the local planning authority may grant

planning permission directly or subjected to several conditions that they think fit to impose or

refuse to grant planning permission. Preliminary discussions will take place between the

planning consultant and the planning department at the respective local authorities during the

layout plan or planning permission submission process. Here, the planners shall endeavour to

work together with the planning department of the respective local authorities on fulfilling

the checklist requirement prior to submitting a final layout plan for approval. However, there

are conditions stated in the Section 22 (4), where the local planning authority shall not grant

the planning permission if;


___________________________________________________________________________

21 ___________________________________________________________________________


a) the development in respect of which the permission is applied for would

contravene any provision of the development plan; or

- the development is respect of which the permission is applied for would

contravene the provision of paragraph (2)(aa),

b) the applicant for planning permission has neither paid the development

charged payable in respect of the development nor obtain the permission of

the local planning authority under Section 34(1) to pay the development

charge by instalments.

Besides that, another important tool used to manage land development is planning

control, referred to in Part IV of the Town and Country Planning Act (TCPA), 1976 and

planning guidelines. In Section 19, the TCPA states that “no person, other than the local

authorities, shall, commence, undertake, or carry out any development unless planning

permission in respect of the development has been granted to him under Section 22

(treatment of application or extended under Subsection 24 (3) (lapse of planning

permission)”. Therefore, consultant needs to ensure that she fulfill all the requirement needed

in order for her to be easily granted of the planning permission.

After layout plan has been approved and planning permission has been obtained, the

developer can proceed with the process of obtaining bridging loan and end financing.

6.0 Subdividing of Land

After obtaining approval for the planning permission from the state authority, the

licenced surveyor will make an application to the land office due to subdivide the land into

individual land property. This is pursuance to Section 304 of NLC which state about how

instrument to be registered, and time from which registration effective. The subdivision can

be done according to the number of housing area constructed as well as the size of the lots

provided.

Applying to the above matter, for example, in this case, there will be 120 titles

obtained from the subdivision of land because the number of housing development lots are

120. These comprise of 40 houses and lots for low cost building, 40 houses and lots for

medium cost building and 40 houses and lots for high end buildings will be build.


___________________________________________________________________________

22 ___________________________________________________________________________


7.0 Financing

After the layout plan has been approved and planning permission has been obtained,

the developer can proceed with the process of obtaining bridging loan and end financing. The

purpose of obtaining bridging loan and end financing is to ease the developer cash flow

during the construction period.

7.1 Obtaining Bridging Loan & End Financing from Various Financial Institutions

First, the consultant on behalf of the developer will have to apply for bridging loan.

This loan is a type of short term loan which provides additional funding for the development

of the projects usually for a period of two weeks to three years depends on the arrangement of

larger or longer term financing. In other words, the bridge loan is an interim financing until

permanent financing is obtained. It is to ensure the smoothness and the continuation of the

proposed property development project till its completion. One general requirement for

obtaining a bridging loan is collateral. The developer will have to charge the property which

is the 1000 acres land to the bank in order to secure the loan. The loan also will only be

provided if the consultant attached the documents and details together the certificates from

the architects, engineers and quantity surveyors and give it to the bank. Examples of the

certificates are;

a) Copy of valuation report (if available)

b) Feasibility Study and Market Study on the project

c) Copy of the land title to be developed and Location Map (if available)

d) Copy of all approvals granted pertaining to the project such as building

plan, advertising permit, etc. (if available)

e) Company/group profile

f) Profile of Directors/Main Shareholders

g) Copy of land title

h) Cash flow projection for the specific development to be financed with

assumptions

i) Breakdown of the development cost and Gross Development Value (GDV)

j) List of past, current and future projects/development

k) And etc.


___________________________________________________________________________

23 ___________________________________________________________________________


Instead of that, the consultant also required to obtain end financing. End financing or

end loan is a permanent and long term loan used to pay off a short term construction loan or

other form of interim financing. It is an arrangement with the project developer to provide

financing to the end-buyers to part finance their purchase of the properties under the

development project financed by the bank. This will allow the third party which is the buyer

to deal with only one lender (bank) in order to ease them to apply for the loan. She can

choose any financial institution in Malaysia to apply and obtain the bridging loan and end

financing, such as Maybank, Alliance Bank and the likes.

8.0 Construction Process

After the approval from the authorities has been obtained, the, the developer can

move for construction stage. In the construction stage, the construction team will start

commencing their works and start to develop the land by construct the buildings and all the

facilities and amenities. However, several steps and measures of construction need to be

focus as follow;

8.1 Engagement of Professionals

As the next steps after the funding obtained, the developer has to engage with

qualified consultant such as architect, engineers and quantity surveyors in order to develop

and construct the buildings and facilities on the land. Their roles in developing the proposed

project are as described:

8.1.1 Architect’s scope of works:

Generally, an architect are responsible in monitoring the architectural aspects of the

development of the design project and also production of the construction documents such as

plans and specifications. This usually involves managing the needs of an owner (Rosmah),

designer and technical staff, and other consultants such as structural engineers, mechanical

engineers, landscape architects and others. All of them are associated with architectural

design, construction materials and methods as well as the production of construction

documents.

Another responsibilities are also includes the zoning and building code management,

determining the material specifications, maintaining quality control by checking and making


___________________________________________________________________________

24 ___________________________________________________________________________


revisions to drawings, discussing the objectives, requirements and budget of a project. The

architect will also have to prepare and present the feasibility reports and design proposals to

the developer in regards of requirement request by the client (Rosmah), advising on the

practicality of the project, contribute to the creative and constructive process of value

engineering and maintain a thorough working knowledge of architectural regulations and

standards.

Besides, all the drawings, lay outs and related plans produced by the architects need to

be approved by the authorities involved. For example for the fire resistant lay out for the

building need to be approved by the fire brigade department. This is to ensure that the

drawings, lay outs and related plans produced are fulfil the requirement and the standard

measures of the authority.

8.1.2 Engineers’ scope of works:

An engineer has major responsibility of producing a complete, accurate, biddable, and

buildable set of plans for all the structures in a project. He will perform a technical,

organizational and supervisory role on construction projects, setting out and determining the

location for above and underground infrastructural installations involved in construction

operations. Other responsibilities are also includes coordinates structural details and design

features within the project, conducts meetings with designers, schedule preparation, pre-

planning for engineering and other technical activities relating to the project. An engineer

must also provide technical advice to all parties involved within the project. The typical work

activities for an engineer involving:

a) Setting out, levelling and surveying the site

b) Liaising with the local authority (where appropriate to the project) to ensure

compliance with local construction regulations and by-laws

c) Preparing reports as required

d) Resolving any unexpected technical difficulties and other problems that may

arise

e) And etc.

In facts, the engineers scope of works can be subdivided into more details as they are

also can be appointed regarding their expertise in the construction project. For example, there


___________________________________________________________________________

25 ___________________________________________________________________________


are civil engineers, structure engineers, mechanical engineers as well as the electrical

engineers due to specify and carry out the work. All of them are interrelated each other in

delivering the works and responsible to manage the work based on their expert.

8.1.3 Quantity Surveyor’s scope of works:

Quantity surveyor and sometimes referred as cost consultant or commercial manager

act as an advisor on construction costs. The quantity surveyor manages all costs relating to

building and civil engineering projects, from the initial calculations to the final figures. A

quantity surveyor also help to ensure that proposed projects are affordable and offer good

value for money, helping the owmner (Rosmah) and the design team assess and compare any

options available, and track variations, make sure that the costs remain under control as the

project progresses. Quantity surveyor can specialize in a specific aspect of construction costs.

Tasks will differ depending on the nature of the project, but they might include:

a) Preparing tender and contract documents

b) Undertake cost analysis for repair and maintenance project work

c) Prepare and analyse costings for tenders

d) Analysing outcomes and writing detailed progress reports

e) Valuing completed work and arranging payments

f) And etc.

Hence, all of these parties will also have to tolerate and work together with each other

due to gain a comprehensive and workable project for the development.

8.2 Tender Exercise for Work

After the approval of all the related drawings, lay outs and related plans produced, the

next stage the developer need to do is opening for tender in order to find the most eligible

main contractor for the construction work.

When mentioned about tendering, it is involved some kind of complicated process

and procedure. Before any tendering process can be done, professional team who are the

architect, engineers and quantity surveyors and employer must make sure all necessary tender


___________________________________________________________________________

26 ___________________________________________________________________________


documents have been prepared, checked and approved. The sources of the funding also must

have been identified and the project financing put in place. The procedures for subsequent

stages should have been established with the express consent of the employer to ensure the

tendering process will go smoothly.

As per mentioned earlier, after all documentation regarding to proposed work have

been completed, developer will appoint main contractor through tendering process. The types

of tendering that employer want to choose is depends on nature of contract, complexity of the

construction, expertise needed and several reasons. There are several types of tender

commonly used in Malaysia, i.e. open tender, selective tender and negotiated tender.

In this situation, assuming that the type of tendering that will be used by the developer

is open tender as it has many benefits. This is to ensure that the procurement and works to be

done in fairly manner without prejudice. There are many advantages of using open tender

methods as it allows any interested and qualified contractor to tender. Therefore, it gives

opportunity for an unknown contractor to compete for the work. Not only that, open tender

also allows competitive tender sum as many contractors tendering for one job. Thus, the

developer can choose any contractor that produce the nearest figure of tender sum or the

lowest offer price as produced by the developer’s quantity surveyors. The following below

are other advantages of using open tender methods:

a) The tender list can be long as too many contractors tendering for one job.

b) Allowing the tender list to be made without bias. Client will obtain the bargain

possible. No favouritism in selecting contractors.

c) Ensuring good competition not obliged to accept any offers.

d) Traditional method of tendering, familiar to all sector of the engineering and

construction industry.

In order to obtain offers from the contractors, the developer will advertises the tender

offer in the local newspaper or any other mediums giving detail and key information of the

proposed works and inviting interested contractor to tender. In the legal sense such tender

notices constitute invitation to treat, a mere request by the employer for suitable contractor to

submit their bids or offers.


___________________________________________________________________________

27 ___________________________________________________________________________


This process will go through the standard tendering process which the interested and

qualified contractor need to go to the office selling tender to obtain the tender documents, go

to specified site visit (if any) and submit their tender bids or offer before the closing date.

8.2.1 Selection of suitable contractor

This process often named as evaluation of tender. This involves the selection of a

suitable contractor and the establishment of a level of pricing for subsequent negotiations.

The objective is to select suitable contractor as early as possible and work together with the

professional team and to establish a level of pricing for subsequent negotiation.

The criteria for short listing is normally confined to items such as technical and

financial capability, experience in similar works and extent of resources (manpower, plant

and equipment). When the tender evaluation process done, the employer will send a letter of

intent or intent letter to the contractor, stating the intention to received or hire their works for

the particular projects. Letter of acceptance will be issued to the successful contractor.

8.2.2 Appointment of Sub-contractor

Commonly in construction industry particularly in Malaysia, subcontractor will be

appointed to do particular works based on direction given by the main contractor and the

works will carry out on behalf of the main contractor works. Letting work to subcontractors is

a very common practice in construction industry. Sub-contracting as a phenomenon is not

unique to the construction industry.

In the construction contract, there are two nature of subcontractor which is:

i. Nominated sub-contractor

Nominated subcontractor was selected by employer through the contract

administrator. The selected person then will enter into subcontracts with the main contractor.

ii. Domestic sub-contractor.

A domestic sub-contractor is any sub-contractor, other than a nominated-sub

contractor, that the main contractor sub-contracts to carry out part of the works. The work of

the sub-contractor is the responsibility of the main contractor as far as the contract between

the main contractor and the client is concerned.


___________________________________________________________________________

28 ___________________________________________________________________________


A sub-contractor can be considered domestic if:

a) They were freely selected by the contractor.

b) They were selected by the contractor from a list of at least three possible sub-

contractors.

In this situation, main contractor appointed by the developer as employer will appoint

the subcontractors to do the work on their behalf. As the appointment of subcontractors will

be made by the main contractor, thus it fall below domestic subcontractor. The subcontractors

needed in this project are earthwork contractors and building contractors.

Earthwork Contractors

Earthworks are engineering works created by moving or processing that part of the

earth's surface comprising soil or unformed rock. These materials may be moved to other

locations and transformed into any desired shape for any purpose. Most earthworks involve

machine excavation and fill or backfill. Some of the roles for earthwork contractors are:

a) Site preparation

b) Moving dirt around

c) Excavation services

Building Contractors

A building contractor is someone with a wide range of duties and responsibilities

when it comes to the construction of residences or businesses. This individual has a job that

entails hard work and thorough review of many processes which accompany the building of

structures.

a) Engage in the planning, developing and coordinating of activities which

coincide with the building of structures.

b) Oversee the construction and ensure all necessary measures are taken to result

in the completed finished product.


___________________________________________________________________________

29 ___________________________________________________________________________


c) Completing the project in a manner which coincides with all laws, rules and

regulations which may be in existence and correlate with construction.

The appointment of subcontractors by the main contractor appointed by developer,

can be made through tendering process handled by the main contractor itself.

The main contractor can choose any types of tendering process i.e. open tender,

negotiated tender or selective tender to hire or appoint the subcontractors.

8.2.3 Standard Form of Contract

A standard form contract is a contract between two parties, where the terms and

conditions of the contract are set by one of the parties, and the other party has little or no

ability to negotiate more favourable terms.

There are many types of standard form of contract commonly used in Malaysia such as:

a) Standard Form of Contract to be used where Bill of Quantities form part of the

Contract PWD 203A (Revision 2007) published by JKR

b) Standard Form of Contract to be used where Drawings and Specifications

form part of the Contract PWD 203 (Revision 2007) published by JKR

c) Agreement and Conditions of PAM 2006 with quantities published by

Pertubuhan Arkitek Malaysia (PAM)

d) Agreement and Conditions of PAM 2006 without quantities published by

Pertubuhan Arkitek Malaysia (PAM)

e) CIDB Standard Form of Contract for Building Works 2000 Edition, published

by Construction Industry Development Board Malaysia (CIDB)

f) and many more.

For this situation, the most suitable standard form of contract to be is Agreement and

Conditions of PAM 2006 with quantities published by PAM. This is due to the nature of the

project which is private project.

Agreement and Conditions of PAM 2006 with Quantities


___________________________________________________________________________

30 ___________________________________________________________________________


The Malaysian Institute of Architects (Pertubuhan Arkitek Malaysia – PAM) form of

contract for building works are by far the most often adopted standard forms of contract used

for building works in the Malaysian private sector. PAM 2006 is the third generation of the

PAM standard form has been adapted greatly from the first generation version known as

PAM 1969. The standard provisions included in the contract form of PAM are Contractor’s

obligation, Architect’s Instruction (AI), Contract Documents, programme and As-Built

Drawings and many more.

Reflected the standard provisions in the contract form, there are several special

provisions that can be included either to protect the interest of the employer, contractor or

both. Example of special provision is variation of price. Some of the purposes, usage and

advantages of using the Agreement and Condition of PAM 2006 with quantities are listed

below:

Purpose

a) To provide the basic legal framework evidencing the legal relationship

between the parties i.e. identifying the rights, obligation and duties

b) To furnish a mechanism for regulating the conduct of the commercial

relationship between the parties

c) To put in place the administrative procedures necessary to effect the

legal and commercial relationship between the parties for achieving the

purposes of the contract.

d) To establish the ambit of the powers and duties of the contract

administrators under the contract between the parties

Usage

Essentially for:

a) Private sector projects

b) Building works

c) Contracts undertaken through Traditional General Contracting

Procurement


___________________________________________________________________________

31 ___________________________________________________________________________


d) Contracts based on Bills and Quantities

Advantages

a) The forms have been arrived at through a process of negotiation

between the various sectors of the industry and as a result act as a

compromise between the various powerful interest group

b) They have been widely adopted because experience has shown that

they facilitate the conduct of trade and have addressed the common

pitfalls and shortcomings

c) The forms satisfy the equitable principle requiring that similar projects

demand similar contracts

d) Fair risk allocation to all the parties

e) More detailed and accurate pricing of works as the pricing are based on

the quantity from BQ produced by the Quantity Surveyors.

9.0 Sales of Developed Properties under Housing Developers and Control Licensing Act

Purchasers of property direct from a housing developer will execute the standard

agreements known as Sale and Purchase Agreement (SPA) as provided for in the Housing

Developers (Control and Licensing) Act 1966(“HDA”). This Act aimed at safeguarding the

interest of the Purchasers. Basically, there are 2 methods that can be choose for the developer

in order to sell their housing project which are sell then build concept by virtue of Schedule G

and Schedule H and the other method is to build then sell by virtue of Schedule I and

Schedule J.

9.1 Purchase within Construction Period (Sell then Build Concept)

In this situation, the form used for sales of the developed properties is schedule G and

schedule H. The purchaser can purchase the house from developer during the construction

period. This method or process involve higher risk to be abandon project. These concepts

give more impact to the buyer and more benefit to the developer itself as the buyer only buy

the house based on the plans or the advertisement.

Every Sale and Purchase Agreement for landed housing accommodation (such as

bungalows, terrace houses and semi-Ds) shall be in the form prescribed in Schedule G of the


___________________________________________________________________________

32 ___________________________________________________________________________


Housing Developers (Control and Licensing) Act 1966, while Sale and Purchase Agreement

for building or land intended for subdivision into parcels (such as condominiums, apartments,

landed property in gated and guarded community and townhouses) shall be as prescribed in

Schedule H.

Schedule G – landed property individual titles

Schedule G is for the selling of landed property, which is sold using individual titles.

These titles are then issued to the purchaser. The purchase will need to sign the transfer form,

which are documents from the housing developer to transfer the property to the purchaser.

The purchaser will then have the individual titles in their name.

In most cases, these titles are kept by the banks that have financed the purchase of the

property. Even so, the purchaser’s name is on the title and nobody can tell otherwise.

Schedule G is the Sale and Purchase Agreement (Land and Building) that need to be fulfilled

b developer and the purchaser within the construction period.

Schedule H – strata titles

Schedule H is the Sale and Purchase Agreement (Land and Building) that need to be

fulfilled b developer and the purchaser within the construction period. The complications

come when using the Schedule H. Schedule H is for the use for landed properties that are of a

condominium style development. So, you have a high-rise where every unit is actually just a

drawing on a piece of paper that is shown at the end of the purchase agreement.

The unit will always be marked with a highlighter to show that it is the owner’s

property. Other than that, it will also show all the existing parcel like parking space or any

other building that is sold with the property.

Schedule H will also have this part where the information about common properties.

Common properties will be things or spaces that the purchasers will share with other within

the development. This can be the garden, visitors’ parking, and can be the corridor, it can be

the other facilities. Those are the common properties that all the purchasers will share. This is

the dynamic of strata living.

9.2 Purchase after the project completed (Build then Sell Concept)


___________________________________________________________________________

33 ___________________________________________________________________________


"Build-then-sell" is a concept where houses are built first and then offered for sale.

The Malaysia Government has also brought into effect two new Schedules, I & J of the

Housing Developers (Control and Licensing) Act 1966, to cater for the “build-then-sell”

concept. Schedule I applies to completed landed property – individual title properties – and

Schedule J applies to completed houses in a subdivided building – strata title properties.

The content in the form are almost identical with the Schedule G and Schedule H, but

based on build and sell concept of agreement except several clauses or terms of conditions.

The benefits of this concept are that the rights and responsibilities of the buyers and

developers will be stated clearly, while banks and financial institutions are able to fund

projects as there is proof of a sales transactions.

There are few items that could be defined to compare both build then sell and sell then

build concept. In terms of upon signing the Sale and Purchase Agreement (SPA), both

concepts were the same where the buyer will pay 10% of the purchase price. Same goes with

the waiting period for Completion of Construction and Notice of Delivery of Vacant

Possession. The waiting periods for both concepts are within 24 or 36 months or more upon

Architect's Certification of Completion.

Therefore, in this situation of Rosmah, the most suitable method to be used is to

purchase within the construction period (sell then build concept). It is not only beneficial to

the purchaser as it will keep their interest, but it is also beneficial to the developer. This is due

to the developers need not be worried about problems of not having a buyer for their projects

when the construction been completed and worried about the demand of houses as well.

Extracting the developers' perspective of the sell then build concept, they mentioned

that the projects which are currently developed could be secured by a pre-commitment by the

buyers. Plus, Other than that, on sell then build concept, the developer could have early data

collection on matters related to demand of the houses constructed, the changes needed as well

as the room for improvement once the selling of the houses project started. More than that, by

using this method, the developer can use the deposited money from the purchasers, normally

10% from the price to be used throughout the construction process.


___________________________________________________________________________

34 ___________________________________________________________________________


Schedule G should be used by the developer for landed property such as bungalow,

terrace house or else, while schedule H should be used for housing accommodation in the

form of a parcel of a building such as condominium or apartment (if any).

10.0 Certificate of Completion and Compliance (CCC)

After the site possession by the main contractor, he will begin the construction work

within allocated time agreed by both parties which are Rosmah and contractor; Certificate of

Practical Completion will be issued by Architect once the construction on or before the

agreed completion date without any delay and extension of time.

Upon the issuance of Certificate of Practical Completion, the defect liability period

will begin for particular time or period before issuance of Certificate of Making Good Defect

by the Architect. After the architect issued CMGD, they then will issued the Certificate of

completion and compliance (CCC) as they seem fit.

In 2004, the Prime Minister calls for the replacement of the issuance of the Certificate

of Fitness for Occupation (CFO) by the local authorities with self-certification by the

professionals

The Ministry of Works (MOW) and Ministry of Housing and Local Government

(MOHLG) initiated meetings or index study with the industry players to seek their respective

feedback and to prepare proposals for this to be implemented. The study recognised that the

issuance of new certification system called Certification of Completion and Compliance

(CCC) has many strengths and benefits.

Section 3 of the Street, Drainage and Building Act 1974, as amended in 2007, defines

the term “certificate of completion and compliance” (CCC) as the certificate given or granted

under any by-laws made under that Act. That by-law is the Uniform Building By-Laws

(UBBL).

Under the earlier system, a CFO is issued by the local authority after it has received

Form E (UBBL), which is the relevant application form for the issuance of a CFO. The old

system i.e. CFO is fraught with many problems, especially delay in certification by technical

agencies or other local authority, as well as due to additional conditions being imposed by the


___________________________________________________________________________

35 ___________________________________________________________________________


local authority at the last hour, and also the lack of technical officers to process the

application.

The CCC system came into effect on 12 April 2007, replacing the CFO which is

Certificate Fitness Occupation. The CFO was issued by the local authority while CCC is

issued by self-certification of the professionals. On other words, CCC is issued by the

housing project’s principal submitting person (PSP) who is either a professional architect,

professional engineer or a registered building draughtsman.

The intention behind the introduction of CCC are:

a) To improve the efficiency of the building delivery system further and

to enhance the competitiveness of Malaysia globally

b) Enabling house buyers to move in as quickly as possible without

compromising their safety

Certificate of Completion and Compliance (CCC) will only address technical aspects.

When these matters have been complied with and there is no apparent threat to health and

safety of the users, then the CCC can be issued.

Before a PSP can issue a CCC, he must ensure that the works have been completed in

accordance to the approved building plans and following the specifications stipulated in the

contract and that he has supervised the works accordingly. All necessary form must be duly

filled and certified, and the PSP must get confirmation of supply or connection in respect of 6

essential services department:

a) Tenaga Nasional Berhad (for electrical supply)

b) Water Authorities e.g. SYABAS (for water supply)

c) Jabatan Perkhidmatan Pembentungan or Sewerage Services

Department (for connection to sewage treatment plant or mains)

d) Department of Occupational Safety and Health (for clearance from

factories and machinery department for lift (if applicable)

e) Fire Service Department

f) Roads and Drainage Department

The introduction of CCC does not in any way affect the powers of the local authority

as the issuance will be made by self-certification of professionals. Local authority can still


___________________________________________________________________________

36 ___________________________________________________________________________


authorise site inspection to check the progress of works. Local authority can also issue a

written notice to PSP not to issue the CCC if any breaches or divergences are not rectified.

Not only that, local authority can also take any actions necessary to rectify any continuous

breach or divergences including reporting to professional boards.

Under Section 22F (1) of the Housing Development (Control and Licensing) Act

1996, any architect or engineer who issue a progress certification knowing that the works

therein referred to have not been completed in accordance with the provisions of the sale and

purchase agreement shall be guilty of an offence and shall, on conviction, be liable to a fine

not less than RM10, 000 and not more than RM100, 000 or to a jail term not more than 5

years or to both.

Subsection 22F (2) provides that any person who knowingly and wilfully aids, abets,

counsels, procures or commands the commission of an offense under subsection 22F (1) shall

be liable to the punishment provided for the offence.

A false and negligent certification of the CCC by an architect is an offence under the

Architects (Amendment) Act 2007 and can constitute valid grounds for disciplinary action,

The defaulting architect can be imposed a fine not exceeding RM50,000 and be suspended

from practise for a period not exceeding 2 years.

10.1 Benefits of CCC

The main benefit of CCC system is that when notice of vacant possession (VP) can

be issued simultaneously with the issuance of CCC that is now under the control of

professionals, this will resolve to a certain extend the problems associated by house buyers

who unable to occupied their fully paid house owing to the delay of the issuance of CFO.

Other benefits of introduction to CCC are as listed below:

a) Self-regulation

b) Self-certification

c) Prevent excessive bureaucracy

d) Speed up housing delivery

e) Reduce the cost and time spent of doing business with the government


___________________________________________________________________________

37 ___________________________________________________________________________


f) Professional in their field not only having the knowledge, but also possess

the requisite expertise in the building development industry derived from

their direct involvement in all phases during the building construction

period

g) Accountability, liability and responsibilities towards the safety and

comfort of the building being erected.

h) Reduce the accountability held by architect or engineer for certifying the

building and fitness.

In relation to this situation, the CCC for the house will be issued by the housing

project’s principal submitting person (PSP) who is either a professional architect,

professional engineer or a registered building draughtsman. Upon issuance of the CCC, the

buyers can immediately occupy the house as the house is certified to be safe and health for

the users.

11.0 Transfer of Property and Instrument of Transfer (Form 14A)

After obtaining CCC, this shows that the buildings are now completed and ready to be

equipped. Then, the developer can make application to transfer the subdivided titles (lots) to

the individual purchasers in the Form 14A. This only can be made after the CCC is obtained

because it is one of the requirement needed for the procedure to transfer. Therefore, during

this stage, the developer also had successfully sold the property and received the payment

from the purchaser. The amount of paid depend on the percentage or stages of payment being

agreed upon the agreement made before.

All of these are due to the matter codified in NLC which stated that every transfer

must be effected by an instrument prescribed by Malaysia NLC 1965 as stated under Section

206(1)(a). Under Section 215(1) it specifies that the transfer of alienated land, any undivided

share in alienated land or any lease must be effected by an instrument in Form 14A.

12.0 Conclusion

In order to develop a land, it is need to ensure that the owner understand the process

and procedure of the development. This is due to ensure that the sequences of work and the

progress that will be done run smoothly and did not restricted by any parties. In facts, it is al

so necessary for the owner to deliver the requirements that workable and manageable by the


___________________________________________________________________________

38 ___________________________________________________________________________


developer to make it become reality. It is also a compulsory measures where the developer

and all the parties involved need to follow all the rules and guidelines implemented by the

authorities due to fulfil the requirement and satisfy the need of all parties.

REFERENCES


___________________________________________________________________________

39 ___________________________________________________________________________


National land code 1965

Town planning country act 1976

Malaysia Uniform By-laws 1984

Local Government Act 1976

Occupational Safety and Health Act 1994

Construction Industry Development Board

Quantity Surveyors Act

Housing Developers (Control Licencing Act)

Laws of Malaysia relating to Housing and Construction 2000 (Volume 1

Section 3,4 & 8) (Volume 2 Section 11 & 14) (Volume 3 National Land Code)