Waiting for the Effectiveness of Regulations for the Next Five Years

Based on BPKN data, there were 3,034 cases of housing consumer complaints from 2017 to January 6 2023. Consumer complaints were mostly related to stalled housing construction, namely 37 percent.

AGUS SUSANTO

Motorbike riders cross a stalled residence in Satria Jaya Village, South Tambun District, Bekasi Regency, West Java, Thursday (5/11/2020).

JAKARTA, KOMPAS — From a regulatory standpoint, the public’s financial losses due to the delay in housing projects have been answered through government regulations. However, the effectiveness of this regulation can be seen only after it has been implemented for at least five years. It means that currently there is no guarantee that the regulation will be able to resolve the problem in buying and selling housing which often harms consumers.

Head of the Advocacy for the National Consumer Protection Agency (BPKN), Rolas Budiman Sitinjak, said consumer complaints received by the BPKN before the Covid-19 pandemic were dominated by those related to housing. Meanwhile, when Covid-19 cases spiked in the country, consumer complaints shifted to the issue of financial services.

“Entrepreneurs are only looking for loopholes. There are gaps that they can exploit and the gaps are big," said Rolas on Tuesday (17/1/2023).

The developers usually exploit house buyers with a price range of Rp 200 million and Rp 1 billion (US$67,000). Housing that residents buy in installments often ends in disaster because what is marketed by the developer has not been built or the ownership certificate turns out to be fake.

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The BPKN handled a fraudulent housing scam involving the Violet Garden housing complex in Kranji, Bekasi city, West Java, in 2016. Initially, the developer received Rp 65 billion in funds from a private bank to develop a housing complex.

After completion, the developer sold the houses using a housing credit (KPR) scheme in cooperation with a number of state-owned banks. Consumers paid the houses with installment schemes of 5 years, 7 years and 10 years.

"Apparently, in the sixth year, these residents who had paid all the loans suddenly received subpoenas and were asked to leave because the land and house they bought belonged to a private bank," he said.

This is just in Violet Garden. There is also a similar case in Parung.

Hundreds of consumers were deceived. The company was later declared bankrupt. However, consumers still could not obtain the ownership certificate of the houses because they did not have proof or deed of home ownership. “This is just in Violet Garden. There is also a similar case in Parung," said Rolas.

Based on BPKN data, there were 3,034 cases of housing consumer complaints from 2017 to January 6 2023. According to data from the Indonesian Consumers Foundation, the percentage of housing complaints in the last five years was quite high. It reached 14 percent and 11.40 percent, respectively, in 2018 and 2021. Consumer complaints were mostly related to stalled housing construction, namely 37 percent.

KOMPAS/AGUIDO ADRI

Victims of developer fraud stand on vacant land where the Cimanggis City apartment is planned to be built, Depok City, West Java, (16/12/2022). They unfurled protest banners and demanded that the developer return the money they had paid.

Taking five years

The large cases of housing sales which harmed consumers were then answered by the BPKN and the Public Works and Housing (PUPR) Ministry through PUPR Minister Regulation Number 11 of 2019 concerning the Preliminary Buying and Selling Agreement System. This rule was then replaced by the Government Regulation Number 12 of 2021 concerning Implementation of Housing and Residential Areas.

“(However) Every house built before 2020, I don't know their fate. After 2020, it will be better,” said Rolas.

According to Rolas, even though this regulation can reduce housing sales that harm consumers, the effectiveness of this regulation can be seen only after five years.

Head of the Public Communication Section at the Directorate General of Housing of the PUPR Ministry, Wahjoe Soeharlin, said that developers with stalled housing projects were not under his office’s supervision. The supervision of the property developers was handled by the Directorate General of Infrastructure Financing (DJPI).

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The duties of the Directorate General of Housing are only related to the construction of houses for low-income people. "Property developers are handled by the DJPI. All developers are registered in the Developer Registration System (Sireng) application. If there are irregularities, they are also handled there," he said.

The Director General of Infrastructure Financing of the PUPR Ministry Herry T Zuna will arrange an interview with Kompas and the DJPI public communications team.

Overall, in Indonesia, as of 2021, there are at least 12.7 million households who do not have a home. Every year there are an additional 680,000 new families who need homes. The government targets the housing shortage could be addressed by 2045.

Weakening

Agrarian Law Lecturer at the School of Law, Gadjah Mada University, Dyah Ayu Widowati, who was contacted separately, said the position of consumers in the property law system was actually very strong. From the beginning, there were rules related to the binding sale and purchase agreement (PPJB), which can only be realized if it fulfills a number of requirements, one of which relates to the certainty of the status of land rights.

However, the factor that causes many consumers to be deceived is because some people do not have legal awareness. Another factor that deceives many consumers is the absence of an institution that oversees various rules related to protection for property consumers.

It used to be there, now it doesn't even exist. This can weaken the buyer's position.

According to Dyah, before the Job Creation Law was introduced, the existence of Law Number 1 of 2011 concerning Housing and Residential Areas made it possible for criminal sanctions to be imposed on officials who gave permits to legal entities to build inappropriate housing.

“It used to be there, now it doesn't even exist. This can weaken the buyer's position," said Dyah.

This article was translated by Hendarsyah Tarmizi.