Increase in demand for unregistered contractors taking up renovation works

These contractors usually promised dream renovations with cheap prices 

CASES of contractors absconding after receiving advance payments for house renovation projects or abandoning them halfway are all too common in this country. 

The Malaysian Construction Industry Development Board (CIDB) was reported to have received 150 complaints involving house renovation fraud between January 2022 and June 2023. 

In December last year, Seputeh MP Teresa Kok told the media that she had received around 30 complaints related to renovation scams leaving affected homeowners with losses amounting to millions of ringgit. 

Kok said the victims ended up in a mess after placing their trust in contractors who had promised dream renovations in their social media postings and websites. 

In media reports previously, Deputy Works Minister Datuk Seri Ahmad Maslan advised the public to hire only licensed contractors to undertake any building or renovation work so that action can be taken against them if they don’t keep up their end of the deal. 

Cheap 

Universiti Sains Islam Malaysia Faculty of Engineering and Built Environment lecturer Sharkawi said homeowners tend to hire unlicensed contractors, and even foreign construction workers, to do their renovation work due to their low quotations. 

“They (homeowners) are willing to take the risk as these contractors charge much lower for their work but then they don’t comply with the labour laws or occupational safety and health regulations,” he said to Bernama. 

He said these contractors are also more likely to exploit their workers, mostly foreigners, who end up running away from their employers. Such situations ultimately lead to the contractors abandoning their renovation projects. 

Nasrudin, who is a qualified architect, said in some cases, house owners are deceived by contractors who showcase their so-called impressive work on social media, offering prices significantly lower than legitimate contractors. 

“Homeowners are so taken in by the beautiful photos that they fail to check the contractor’s qualifications and work history before hiring them. They don’t realise the visuals alone don’t guarantee the actual quality of the work. 

“For some homeowners, checking the contractor’s qualifications and reputation can be complicated and time-consuming. So, they just assume the photos displayed on social media are the only way to assess the contractor’s work quality,” he added. 

Nasrudin says these unlicensed contractors are also likely to exploit their workers who then end up running away from their employers

Contravening The Law 

In Malaysia, building contractors, regardless of whether they undertake large-or small-scale projects, are required to register with CIDB, a statutory body under the Ministry of Works. 

However, many contractors involved in small-scale projects such as house renovations tend to assume they are excluded from registering with CIDB, according to Assoc Prof Dr Mohd Suhaimi Mohd Danuri. 

The lecturer at the Department of Quantity Surveying, Faculty of Built Environment at Universiti Malaya said the Malaysian Construction Industry Development Board Act 1994 (Act 520) requires all construction contractors to register with CIDB before starting any construction work, regardless of whether they are large or small in scale. 

Therefore, taking on only small-scale projects is not an excuse for contractors to remain unregistered, he said. 

He said building contractors who undertake projects without first registering with CIDB are committing an offence under Section 25(1) of the CIDB Act. 

“All construction contractors must register…registration is not limited to contractors submitting tenders for government projects or big projects in the private sector,” he said, adding those convicted of contravening Section 25(1) can be fined a minimum of RM10,000 to a maximum of RM100,000. 

CIDB has previously said many contractors assumed that only construction companies bidding for government projects are required to register with CIDB. 

Mohd Suhaimi said, on its part, CIDB has been proactive in raising awareness among contractors in the country about the importance of registering under the agency. 

“It is also quite impossible to assume that CIDB can monitor all construction activities carried out nationwide and detect unlicensed contractors. 

“However, CIDB will certainly take action if there are complaints, and action will be taken based on the existing legal provisions,” he added. 

He said unlicensed or unregistered contractors will boldly continue offering their construction services as long as there is demand from property owners. 

“In this case, the house owners are also committing an offence under the CIDB Act by hiring contractors who are not registered with CIDB,” he said. 

Trustworthy 

Mohd Suhaimi added that the services of CIDB-registered building contractors are costlier than those of unregistered parties simply because they have the competence and capability to complete their projects successfully. Not only is their work quality good but they also prioritise site safety, both during the project and after its completion. 

“But I admit there have been cases of registered contractors disappearing after failing to complete their projects. To avoid this, house owners should check CIDB’s website to ensure the contractor they wish to hire is not blacklisted,” he said. 

He said contractors registered with CIDB have gone through all the evaluation processes and met the criteria set by CIDB, qualifying them to undertake construction projects for their clients. 

He also encouraged homeowners to seek expert advice to ensure the agreements made with contractors include the necessary provisions to protect the owners’ rights and prevent them from being deceived. 

Nasrudin, meanwhile, said the agreement with the contractor must also include details of the work to be carried out and the payment schedule as well as provisions for variations. 

“The homeowner also needs to monitor the project regularly to ensure the work is carried out according to schedule and expected standards,” he said. 

He added that they can also seek the advice of an architect, engineer or quantity surveyor and even appoint one of them as an implementation agent alongside the contractor. 

“We don’t want homeowners to be left helpless when their house renovation work is abandoned and no action can be taken because the contractor cannot be traced in the contractor registration system,” Nasrudin said. 

Nasrudin also said homeowners are reluctant to come forward and file complaints against unlicensed contractors as they feel it would involve a tedious process. 

“When they choose to remain silent and willingly bear the losses, it only emboldens unlicensed contractors who think they are ‘untouchable’ and can continue cheating people,” he said. 

He said there will be no end to renovation fraud as long as the victims fail to make reports against the culprits. 

“Besides causing economic losses to the affected house owners, these illegal contractors’ fraudulent activities or unsatisfactory work can damage the trust and reputation of the construction industry as a whole. 

“This can lead to project owners or clients becoming sceptical of other contractors including those who are registered,” he added. — Bernama 


  • This article first appeared in The Malaysian Reserve weekly print edition