South Economic Development Region #5: Where is Iskandar Development Region (IDR)?

Many have this mis-perception saying that Iskandar Development Region is Nusajaya. This is wrong, as Nusajaya is having approximately 10,000 hectares of development land, and is only one portion of the whole IDR planning.

The whole IDR covers areas the following areas:
(1) The whole Johor Bahru District
- Majlis Bandaran Johor Bahru
- Majlis Perbandaran JB Tengah

(2) Pihak Berkuasa Tempatan Pasir Gudang

(3) Majlis Perbandaran Kulai

(4) Part of Pontian
- Mukim Jeram Batu
- Mukim Sg. Karang
- Mukim Serkat

The above gives us a total area covered of 2,217km sq.

And all developments will be concentrated at the following existing urban areas:
(1) Johor Bahru city
(2) Pasir Gudang
(3) Nusa Jaya
(4) Senai-Kulai

I hope i've given you all a better picture on where does IDR actually covers.

Real Estate Tips #6: How to identify a Registered Estate Agent from those illegal brokers on a newspaper advertisement?

Whenever you open the page for the classified ads on a newspaper, you tend to see many ads on properties to let or for sale, how do you distinguish the Registered Estate Agent's (REA) or those from an illegal brokers?

The answer is simple, look for four (4) elements:

(1) Company name
e.g. Tiram Realty
(2) Company registration number
e.g. E(3)0077
(3) Company contact number
e.g. 607-3558877
(4) All advertisements by REA must be specific
e.g. Double storey house at Taman Johor Jaya selling at RM150,000, NOT Double storey house at RM150,000 , which is too general.

Look for the abovementioned elements, then you will know whom to call (the REAs), whom you shouldn't call (the illegal brokers). Refer to Real Estate Tips #1 on why you should always engage a REA in malaysia.

Real Estate Tips #5: What does 3+1 mean in a property transaction?

3 + 1 simply means that in any property transactions, the vendor (owner) will usually give the purchaser a time frame of 3 months (free of interests) plus 1 month (with interests) in order to complete the whole conveyancing (property transfer) process.

In other words, should the purchaser's took more then 3 months to pay the vendor the full settlement sum, the purchase can be charged interests on the amount owning, based on an agreed rate, normally between 8%pa to 10%pa.

What if the case drag on to longer than 4 months? In most instances, the purchaser can request for extension, bearing similar interests, this is however not automatic, and it is really depends on the decision of the vendor whether or not to accept your request. This is also why sometime, we also see 3 + 2, or even 4+ 1 which came into existence. But this 3+2 or 4+1 is normally pre-agreed upon signing the Sale and Purchase Agreement.

Therefore, always do a regular check on your solicitors (probably once or twice in a month) to find out the progress of the transfer process, so as to avoid your 10% deposit being forfeited by the vendor as a result of non-compliance of time frame given.

Real Estate Tips #4: Congratulation to all the newly elected councillors of MIEA.

Please allow me to congratulate and introduce to you some newly elected councillors for Malaysian Institute of Estate Agents (MIEA) over last weekend (21st April 2007):

President:
Mr. K. Soma Sundram
Vice President:
Mr Raymond Leong
Ms Shirley Chai
Honorary Treasurer:
Mr. Kelvin Yip
Councillors:
Mr. Terry Wong
Mr. Gavin Tee
Ms. Angeline Chin
Mr. Sivashanker

Together with other existing office bearers and councillors, i wish you all the best in leading MIEA towards to paradigm shift to new professional level in view of the globalization effects which are due to take place in near future.

South Johor Economic Region #4 : How do i qualify myself for Iskandar Regional Development Authority (IRDA) status?

Already many of my singaporean clients asking me this question, as they are all very interested to know the details so as to benefit from the incentives given by the government, especially on tax.

Before i start answering the question, here's a brief elaboration for you on the IRDA status. For the purpose of boasting the initial investment into Iskandar Development Region (IDR) , our government has come up with this thing called Incentive and Support Package (ISP). This package is targeted at the service sector.

ISP consists of the following:

(i) Exemption from the Foreign Investment Committee rules;
(ii) Freedom to source capital globally;
(iii) The ability to employ foreign employees freely within the approved zones, depending on the amount of space occupied in these zones;
(iv) Exemption from corporate income tax for a period of 10 years from commencement of operations for activities within the zone and outside Malaysia, provided these operations commence before the end of 2015; and
(v) Exemption from withholding tax on royalty and technical fee payments to non-residents for a period of 10 years from commencement of operations.

So, in order to qualified for the above incentives, the company must be an IRDA-status company. There's two general criteria to fulfil in order to qualify as an IRDA-status company, namely:

(1) Amongst the six Qualifying Activities
(i) Creative industries
(ii) Educational services
(iii) Financial advisory and consulting services
(iv) Healthcare services
(v) Logistics services
(vi) Tourism related activities

(2)Situated in the designated IRDA-approved zones
To my best knowledge, there are two such zones available, and the first zone is already in the process of finalizing.

Doesn't sound very tedious, does it? Please note that this initial ISP is targeted mainly on service sector at current stage. As for the detailed qualifying process, we were told finalised report will be released latest by the third quarter 2007.

South Johor Economic Region #3: Developer:" Why do i find it tough to sell my project?"

Many developers in Johor especially, have been struggling to dispose of their launched housing project. Why? Many old timer Johor developers found themselves left with hundreds of unsold units idling, again the same question, why? Isn't the Iskandar Development Region bringing a boast onto Johor Bahru's property market already?

To answer the above questions in the residential housing context, the answer is simple:

(1)there is an imbalance between the supply and demand in the local market.

For your information, the population growth for SJER is only approximately 4.1%p.a.[1] but the approved new housing schemes is 4.3%p.a.[2] for Johor state, and majority of it is in south johor!

At one glance, people might ask me, hey, isn't that a balance you are giving here? Please allow me to further feed you with the following information, do not forget that Johor state has already the most overhang properties in the whole Malaysia, we are already in a suplus for many years, without being able to resolve the overhang issues, but at the sametime building more than our population growth, you tell me, what will be the consequences in the end of the day.

To add things worse, all locals wanted to sell their existing old house and buy/move over to their new houses with all the stylist looks , security and peaceful environment, who's going to take up all the existing old houses? We have seen this trend of decentralisation from Johor Bahru City Central going on for the past few years and it is moving fast.

(2) I hardly hear any developer asking this question, what do Johorean really wants?

There are still many developers in Johor who simply build at their whims, without exploring the local market to survey what exactly is the kind of product/houses we local wants. This is what I called marketing. Marketing is not what most people say, sell, sell, sell. Marketing is about understanding what the market wants, and customize the product for them, then sell the product to the market which already existed.

SP Setia is one of the more successful developer in Johor which has capitalised on the marketing strategy even at the initial stage of choosing a strategic location, house type, infrastructure and style of living for their project. They understand the local, so, they succeeded.

So, for the rest of you, when do you want to start knowing your customer before you sell your product to them?

Footnotes:
[1] Figures obtained from the SJER Comprehensive Development Plan
[2] Figures obtained from Dato' Mani Usilappan's talk during the MIEA 2007 Annual Convention.

Property Auction #2: 6 Things to watch out during auction!

(1) Always READ the Proclamation of Sales (POS) carefully, as it will denote few important details such as :
- the earnest money payable to
- terms and condition
- who's paying the maintenance fees, sinking fund,indah water (IWK), assessment and quit rent and utility bills owed?

(2) Watch out for syndicate
- don't worry about them, just ignore them and make your bid, they are NOT genuine bidder

(3) Watch out for timing
- especially for highcourt cases, always make sure your solicitor can complete the transfer within the prescribed time, usually 90 days or 120 days, if not, your 10% earnest money will be forfeited without questions

(4) Watch out for *caveat*
- always do a title search before auction date, should u find any caveat lodged against the property, the BEST way is to buy CASH. If you are thinking of getting partly funding from the banks for the caveated property, think twice.

(5) Watch out for the previous ownings
- always check and verify the prevous owner's owning to the Management Corporation, Indah Water, assessment , quit rent and utility authority.
- In most cases, the bank will be responsible to maintenance fees, quit rent and assessment,however, this is not automatic, please always check with bankers or POS.

(6) Auction property is always sold without vacant possession
- it simply means that it the property is tenanted, you got to let the existing tenant to continue occupy the premises until the end of the tenancy period, however, i would always advise you to sign a brand new tenancy agreement with the tenant.

Real Estate Tips #3: Malaysian Institute of Estate Agents (MIEA)

Unlike Bar Council for lawyers or MIA for the accountants, MIEA doesn't act like a regulatory body for Registered Estate Agent (REA). However, as a proud member of MIEA, i'm happy to say that it does provide a platform for ALL REAs to come together to lobby for our rights and welfare for the same industry.

I salute to all national councillors, whom have been sacrificing their time and efforts for the Institute, even when they are always on the receiving ends of various critics/comments from members. I must congratulate you all for your patience and hardworks, for making the 2007 MIEA National Convention a great success.

Our industry are in need of MORE dedicated and diligent personnels like YOU to join MIEA, to jointly enhance our service quality and to lobby the rights and welfare for the Registered Estate Agents.

Feel free to visit MIEA's website, i.e. www.miea.com.my.

Property Auction #1: General info on property auction in malaysia

There's basically 2 types of auction in malaysian property industry, i.e. the more popular public auction due to default payment with banks and also auction arranged by individual owners.

(1) Public Auction due to default payments with banks
Frequently called as highcourt auction as the majority of public auctions are always handled by highcourt. In actual fact, it can be done through highcourt, land office and also by the banks respectively.

Due to the problems in late issuance of subdivided/individual titles in recently years, there is 2 types of public auction emerges, i.e. LACA cases, which refers to property without individual title issued, and Non-LACA cases, i.e. property with individual title issued. The former ones are normally conducted by each individual banks and always in bulk sales, like what you can see these days where the banks are auctioning away 200 properties in one single day. The latter however is the conventional auction through highcourt and landoffice.

(2) Auctions conducted by private owners
This is merely one alternative method of selling your property as compared to private treaty and tender. Normally through the assistance from the lawyer and registered estate agents, the owners can opt to sell their properties through public auction. The procedure is somewhat similar to those from the banks, only that it's not what we would call a *fire-sale* property. In overseas like Australia, New Zealand and United States of America, this has proven been one of the best method of selling in getting the best price of the property in shortest time period.

Property Law #2: Tenancy Law - fire insurance

One of our client's tenanted factory has recently got burnt down, and he isn't covered by fire insurance! He suspected it was an act of arson by someone he knew, and he asked me for advice.

First thing i told him, go to a lawyer for professional advice. To my best knowledge, this is what he can do:

(1) Report police and let the police the investigate the cause of fire
(2) Cancel the existing tenancy, and full refund the deposits collected as the building has already become unfit for occupancy
(3) Fork up own money to repair/rebuild the factory building
(4) Should the police found any evidence of arson and suspect, you may then sought legal advice on the possibility of lodging a civil suit against the offender asking for compensation. Can you get back the compensation from that suspect? More often not, nobody can give you a definite answer.

All property are made compulsory to renew fire insurance by the financial consitution if your property is still charged to the bank. Problems occurs when the owners has finished pay up the owning and the property become free of any encumbrances, many owners from then on forget to renew their fire insurance on a yearly basis.

Did you find the above tedious especially when it comes to getting compensation? Yes, they are very tedious, so, PLEASE ALWAYS PURCHASE AND RENEW YOUR FIRE INSURANCE AGAINST YOUR BUILDING EVERY YEAR!

South Johor Economic Region #2: Free Access Zone being dropped?

The free access zone plan to allow foreigners from Singapore to freely enter and leave the Iskandar Development Region (IDR) has been dropped, according to Johor Menteri Besar Datuk Abdul Ghani Othman early April 2007.

I have no problem at all with this adjustment, and i fully understand that any systems or policies are bound to be change due to many objective factors.

However, i also believe that in reaching a long term plan as in the one like South Johor Economic Region, our policy maker should strive to achieve a long term CONSISTENCY in their decision making process and the implementation of the plannings.

Consistency will bring the foreign investor's mindset to at ease, and it will be due to consistency again which will retain the foreign investors' to jointly development our country for us in long run.

Real Estate Tips #2: How do you identify a Registered Estate Agent?

To answer the questions i posted yesterday, i'm going to share with you few easy steps to identify a registered estate agent (REA):

(1) Namecard
- identify their position, if it says negotiator, it means he/she is a real estate sales person engaged by a REA, if it says principal, meaning he/she is the license holder themself.

- Check their E Number. Basically in this industry, we are made compulsory to put in our company registration number under Ministry of Finance, which we call E number. There are 2 types of E numbers you may find, i.e. one company E number (e.g. E(3)0077 for Tiram Realty) and also personal E number ( e.g. E1690 for Lim Boon Ping).

(2) Call the office
Do call up the office number on the namecard to verify the personnel is the actual employee from the real estate agency

(3) Search the E number with the Board of Valuers' Website
You can always do a Search for E number for verification at the Board of Valuers's website, i.e. www.lppeh.gov.my, as some registrant's licensed might have lapsed or suspended for many reasons.

Whenever you deal with a registered estate agent or negotiator, ALWAYS write your cheques in favour of the COMPAMY'S NAME only. I repeat, NEVER write your cheques, be it earnest money, commission or other kinds of payments related to the transaction in favour of PERSONNAL NAME, this is to safeguard your interest and to ensure all your money is well indemnified by the insurance company.

Real Estate Tips #1: 8 reasons why you should always engage a Registered Estate Agent

Over the years chairing the Malaysian Institute of Estate Agents Johor Branch, i always get dumbfolded everytime i receive complaints from the public against illegal real estate brokers. Huge question occurs to me, why do people still sourcing for services from the illegal brokers while there are so many registered estate agents around in the market?

After much contemplation, I find *education* is the main cause. Here i am, going to share with you all why you should always choose a registered estate agent (REA):

(1) a REA is a professional personnel recognized and governed by the Board of Valuers, Appraisers and Estate Agents Malaysia (known as the Board for the following column), under the Ministry of Finance.

(2) a REA is a certified professional by the Board, who has undergone 12 papers examination (minimum 2 years), and minimum 2 years of Test of Professional Competence training under a registered person. Therefore, for a REA to get registered, he/she shall need a minimum 4 to 5 years of professional training.

(3) a registered estate agency is made compulsory by the Board to indemnify all clients against negligence through Professional Indemnity Insurance. Hence, your earnest deposit or client's money will always be indemnified and safe with us. Do not attempt however, to write the cheque in favours of the individual negotiator, you shall write all payment ONLY in the COMPANY'S Name.

(4) a REA has to regularly improve themselves through what we call a Continuous Professional Development (CPD) programme on a yearly basis, in order to renew our licence. Therefore, you can be assured that all REA shall always have the most up-to-date property information and knowledge to serve you.

(5) a REA is bound to work under the professionalism framework set by the Board, and to follow the ethical conduct, rules and regulation, for which, any adverse actions or omissions will result in diciplinary actions from the Board against the offender.

(6) a REA is accountable to all their negotiators' (real esate sales personnels) conduct, henceforth, you can always rest assured that all negotiators are well controlled and managed by the REA. Should there be any issues arrise with the negotiators, you can always bring the matters up to their principal, i.e. the REA.

(7) you will NEVER be overcharged by a REA because the professional fees schedule has been clearly spelled out in the Valuers, Appraisers and Estate Agents Act.

(8) All REAs belong in a big family, sometime we do compete, but most often than not we are actually co-operating amongst ourselves (co-agency) in order to sell/rent out your properties in the best price and shortest time possible.

So, why still use an illegal broker where there's no guarantee on the services rendered and security against your money?

Meanwhile, some of you might start wondering, how do you differentiate between a REA and an illegal broker? I'll answer to this question on my next post.

South Johor Economic Region #1: Iskandar Development Region, will it be successful?

Everybody has since middle 2006 talking about South Johor Economic Region a.k.a. Iskandar Development Region (IDR), people has been asking me whether or not it will be a success?

Let me start off by asking you all one simple question, i.e. do you want IDR to be successful? If the answer is positive, then we shall have a good start at the very least.

If you have studied IDR in detail like I did (you can download the whole detailed IDR proposal from http://sjer.com.my/index.php), you will then notice the proposal encompass a comprehensive and thorough development plan in not just economy, but also social economy. Though I find the proposal to be rather seamless, however, implementation is what i really feel the true challenge in the overall planning. Mindset of our government servants involved are required to take a change. It's all about human factor.

The IDR is a gigantic project and vision for all Johorean and our federal government, it will take all the concerted effort we can get in order to make it a success. So, if u ask me the very same old question again, why don't you start asking yourself back, what can you do to help to make IDR a success?

Property law #1: Landowners, beware!

A Thai woman found herself losing her valuable land in Penang, to a con-woman, who forged that Thai woman’s documents, and sold it to a third party. The Federal Court held that the rights of a bona fide purchaser must be protected. So, she lost her land.[1]

I’m not going to comment too much on the court’s decisions except the fact that this is a wrong decision where no one can change it besides the parliament. Many articles are available on this, do your own search on that case reference below, and you should be able to understand the whole case in detail.

It’s my duty however to share with you few tips on how to save yourself from con-man:


(1) Always engage a trustworthy lawyer ( solicitor ) to represent you
· Some lawyers are better in criminal cases (advocates), some lawyers specialize in intellectual property rights, and some lawyers are busier than others (always not in office). Always ensure your lawyer is well-versed in conveyancing cases and can always/readily attend to your case personally rather than his legal clerk. You might find this amused, but I’m telling you that many house purchasers or owners haven’t even got a chance to see their lawyers throughout the whole transaction, they only get to see the legal clerk!

(2) Always request for Quit Rent copies for MORE than one year
· Previously, we only request the most updated/current quit rent receipt in most instances. However, should you have any doubt on the land’s ownership, be brave to ask for quit rent receipt for the past few years as well. Normally, conman will have only one year receipt the most.

(3) Talk to the neighbours
· Before purchasing this land, do visit the said land for a couples of times yourself, to see if you can get a chance to speak to the neighbouring owners, or talk to people at the closest coffee shop you can find, ask them about the ownership of the land, you will be surprised, very often, you can get very good indication from them.

(4) Always caveat[2] your own property when necessary
· What do I mean by necessary? Do I caveat ALL my properties? No, you don’t have to caveat everything. If you have lands, which are free of any encumbrances, vacant and idle, please always engage a lawyer to enter private caveat[3] on your property on a regular basis (renewal is required after a fixed term).

· For your extra reading, the right of a registered proprietor to enter a private caveat against his own land under the National Land Code 1965 was considered in two recent decisions of the High Court, namely, Eu Finance Bhd v Siland Sdn Bhd[4] (M &J Frozen Food Sdn Bhd, Intervener) and Hiap Yiak Trading Sdn Bhd & Ors v Hong Soon Seng San Bhd[5]. For your information, these two cases’ decisions conflict with each other. For those of you who are too busy to go through these law cases, well, just take my word for it, always register a private caveat on your property when necessary.

(5) Charge your land to finance institution
-Always remember, land which are free of any encumbrances, vacant and idle are easy targets for conman. If there are bank charges on the land, your land are normally much safer. If you don’t mind, you may also consider taking up a small amount of mortgage loan from the bank using this land as collateral.

Until such time when the Boonsom Boonyanit’s decision being overturned or the emerge of a proper amendments to our National Land Code, we will always be exposed to the threats of land forgery/fraud cases and we are not protected at all by the court of law in our very own country. Henceforth, do consider doing the above pre-cautious steps I mentioned above.


© 9th March 2007 Lim Boon Ping

Note: This column is brought to you by Tiram Realty for your information only. It does not constitute legal advice. You should therefore seek professional legal advice for your specific needs. Neither the Tiram Realty and Lim Boon Ping shall be liable to any reader who suffers losses as a result of relying on this column.

[1] Adorna Properties Sdn Bhd v Boonsom Boonyanit @ Sun Yok Eng [2001] 1 MLJ 241
[2] In layman terms, i.e. to freeze your property from any dealings/transfer/transactions
[3] 323(1) of the National Land Code 1965
[4] [1989] 1 MLJ 1965.
[5] [1990] 2 MLJ 155.

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