Middle-class Consumers Vulnerable

The middle-class residential market of owning a Rp 200 million-Rp 1 billion housing unit is considered a vulnerable group. Developers are hit by land licensing issues to finance residential projects.

KOMPAS/AGUS SUSANTO

A heavy equipment is leveling the ground at the Meikarta District 1 project in Cibatu Village, Cikarang Selatan District, Bekasi Regency, West Java, Friday (6/1/2023).

JAKARTA, KOMPAS — Consumers who are looking for a house with a price under Rp 1 billion are often easy targets for malicious developers. Manipulative marketing strategies in the form of massive promotions, multiple discounts and affordable prices often fool consumers.

Based on data from the National Consumer Protection Agency (BPKN), consumer complaints related to housing are one of the highest. From 2017 to 6 January 2023, housing complaints received by the BPKN reached 3,034 cases. The housing issue is only a level below consumer complaints in the field of financial services which reached 3,081 cases.

From data by the Indonesian Consumers Foundation (YLKI), complaints related to housing over the past five years with a high percentage occurred in 2018 and 2021, namely at 14 percent and 11.40 percent. In 2021, complaints were dominated by stalled housing construction, namely at 37 percent.

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The construction of stalled residences, especially the vertical housing category, is currently being experienced by a number of Meikarta consumers in Bekasi and Cimanggis city in Depok, West Java. In Meikarta, there are a number of consumers who have even paid off the purchase of apartment units, but the handing over of apartment keys, which should have been done according to the initial promise in 2019-2020, have not yet been realized.

Ferry Silaban, one of the Meikarta consumers, for example, bought an apartment in District 2 of Meikarta, Cikarang, Bekasi regency, using a gradual cash payment of 12 months in 2017, which was paid off by September 2018. The total payment for the 35-square-meter apartment unit reached Rp 254 million.

I have not taken care of it.

Meikarta offered Ferry to relocate to District 1 of Meikarta. However, Ferry was asked to pay some additional money. He refused the offer. The Lippo Group, through its subsidiary PT Lippo Cikarang (LPCK), said disputes with Meikarta buyers had been resolved through a peace agreement at the Central Jakarta District Court. The agreement in the form of a homological decision was declared permanent or an inkracht (legal force) on 26 July 2021.

LPCK Corporate Secretary Veronika Sitepu said PT Mahkota Sentosa Utama (MSU), as a subsidiary of the LPCK, which manages the Meikarta project, had informed the homologation decision to all buyers who had not received their unit. In the decision, the submission of the units is carried out in stages until 2027 (Kompas, 15/12/2022).

"I have not taken care of it," said Lippo Group Communication Director Danang Kemayan Jati, Monday (23/1/2023).

KOMPAS/AGUIDO ADRI

Victims of the promise of an apartment developer in front of the gate of Cimanggis City, Depok City, West Java, (16/12/2022), while unfurling protest banners and demanding to return the money they had paid.

In Depok, Cimanggis City Apartment consumers are also still waiting for the promise of the developers. The location of the apartment project is on an area of about 1 hectare on the edge of Jl. Raya Bogor. The land is now filled with shrubs and there is only a rusty cement mixer machine.

From Kompas.com records, the Cimanggis City Apartment project at the end of 2018 posted sales of 685 units. The unit price range was between Rp 300 million and Rp 500 million. Last week, the marketing office at the same location was empty.

Targeting the middle class

Chairman of BPKN Advocacy Rolas Budiman Sitinjak said consumers who were vulnerable to being fooled were consumers who bought site dwellings or flats that had not been built, or pre-project selling. Developer manipulation through massive promotions, multiple discounts, to low prices makes consumers feel empowered. Consumers often forget and are not observant to check the land status, licensing and track record of developers.

"Consumers who are deceived generally are those who buy houses at a price of Rp 200 million to Rp 1 billion. Their targets (developers) are middle to lower class," Rolas said on Monday (16/1/2023) in Jakarta.

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Jakarta Property Institute Executive Director Wendy Haryanto said residences with a price range below Rp 1 billion, which often end up harming consumers, were usually built by new developers. They frequently, when applying for loans to banks, are subject to high interest rates because they do not have a track record in the property business.

"If they want to reduce the interest, the developer must give a large down payment to the bank. The risk to the developer is certainly higher," said Wendy on Tuesday (17/1).

Expenditures in large quantities from the beginning become a consideration for the developers to start the sale of residential units earlier. However, massive sales and negotiations with a number of parties, for example with contractors, could be deadlocked because the development costs requested by contractors are far greater.

The weak position of the consumer

YLKI Daily Management officer Sudaryatmo on Monday (1/23) said buying houses that have not been built is definitely risky for consumers. According to Sudaryatmo, consumers have always been in a weak position since the contract. Until now there has been no authorized institution that oversees buying and selling agreements between developers and consumers.

Consumer injustice in contracts was attempted to be overcome in Law No. 8 of 1999 on Consumer Protection. Article 18 of the regulation states that business factors, when offering goods or services, are prohibited from including standard clauses or unilateral terms and conditions prepared in advance in each document or agreement.

However, the article in the law initiated by the Trade Ministry to anticipate unfair contracts has not become a reference.

Sudaryatmo suggested that the Public Works and Housing Ministry, which has the authority in public housing projects, oversees the construction of houses and give channels that accommodate consumer complaints.

This article was translated by Hyginus Hardoyo.