The first issue in this stage (variation of the land use), is the failure of Ministry of Housing and Local Government (MOH) to observe and ensure that the category of land use and conditions of the purported land intended for housing development, had been duly converted or varied for a housing development project, before any housing developer’s licence can be granted to the applicant developer. The consequence of this failure is that it may open to fraudulent practices by the developer concerned. For instance, even though the applications for variation of conditions, restrictions in interest and land use have yet been approved by the land authority, the applicant developer has opened up the prospective housing units, lots or ad hoc units for sales to public and collect deposit. Later, probably due to changes in the approval or rejection of the applications for variation of conditions, restrictions in interests and land use or due to the dishonesty of the applicant developer, the first sales of these ad hoc units could not be proceeded with. The dishonesty of the applicant developer may be committed through the elimination of the proof of sales (such as receipts or booking forms or verbal sales or other proof of sales) for the first sales, causing uncertainty of the actual units sold, in order for them (the applicant developer) to carry out double or multiple sales of the same units, dishonestly, which have been sold to the first purchasers, to subsequent purchasers.
A further problem can also occur if rehabilitation of the abandoned housing project, were to take place, when additional costs are in need to finalise the application for variation of conditions, restrictions in interest and land use, and thus this will prolong or may complicate the rehabilitation scheme.
The above problem can be illustrated in Taman Universe, Lot 1556, Mukim 13, North East District (NED), Pulau Pinang (developed by Cariwang Properties Sdn. Bhd), where upon the execution of the sale and purchase agreements with the purchasers and after collecting the required deposit, the developer left the project and did not even proceed with an iota of development on the project land, leaving the purchasers in the lurch. This was also the case in Taman Shoukat, Lot 2219, Mukim 13, NED, Pulau Pinang (developed by Syarikat Showkhat Industries & Realty Sdn. Bhd).