2 days Ago
SINGAPORE: Singapore's renovation industry has been dogged by complaints about delayed projects, shoddy work and unfinished homes . Homeowners often struggle to get refunds from interior design firms, exposing weaknesses in consumer protection and raising questions about the industry's integrity. Between 2017 and 2023, the Consumers Association of Singapore (CASE) received an average of 120 complaints annually about prepayment losses for unfinished renovation projects .
CASE was able to help consumers recover their money in only half of the cases they negotiated. How did Singapore’s renovation and interior design sector get such a bad rap? The lack of mandatory certification is one factor. Unlike architects who must be registered, anyone can claim to be an interior designer, leading to a market filled with individuals of varying skill levels.
Online platforms for renovation and interior design firms, while convenient for buyers, may also drive prices to unsustainable levels. The fierce competition forces firms to underbid, sacrificing quality and reliability, resulting in projects that are overpromised but underdelivered. The practice of underbidding also causes cash flow issues, especially for small- and medium-size firms that operate on tight margins and rely on advance payments from clients.
When these firms take on too many projects without sufficient capital, financial distress ensues. Unforeseen expenses and mismanagement can exacerbate these challenges, leaving firms unable to fulfil their commitments, including refunding clients. MORE ROBUST ENFORCEMENT MECHANISMS NEEDED Even when homeowners successfully obtain a court order for a refund, their options for recourse are limited if firms do not comply.
Orders from the Small Claims Tribunals are only enforceable through further legal action, such as applying for a writ of execution or a garnishee order. A writ of execution allows the seizure and sale of the firm's assets to satisfy the debt, while the latter enables the homeowner to intercept payments the firm is due to receive from third parties. However, these measures are not only time-consuming and costly, but ineffective if the firm lacks assets or declares bankruptcy.
A more robust enforcement mechanism is needed. One solution is insurance for renovation and interior design firms, ensuring funds for refunds even in financial difficulties. Deposit protection schemes could also be implemented, ensuring that consumers' deposits are safeguarded in case a company fails to complete the work or goes out of business.
Stricter regulations could prevent firms from owing money they can't repay. Mandatory reporting and auditing requirements could be put in place to ensure greater transparency and early detection of financial distress. Finally, a regulatory body could be created to maintain integrity in the interior design sector.
This body can be responsible for setting and updating industry standards. It can regularly inspect and evaluate firms to ensure they are following regulations. Additionally, the body should have the authority to enforce necessary actions, such as issuing warnings or revoking licenses, against firms that fail to comply.
This enforcement capability will deter malpractice and foster a culture of accountability and professionalism within the industry, ultimately protecting both homeowners and reputable design firms. However, these proposed solutions have downsides. Interior design companies could simply pass any additional costs to consumers, raising the price of renovations.
The establishment of any regulatory body or laws will also take time. TIPS FOR HOMEOWNERS If you’re about to renovate your house, how can you minimise financial and legal risks? First, conduct thorough research before engaging an interior designer. Reading testimonials from previous clients is essential.
When hiring an interior designer, request a detailed contract that outlines the scope of work, payment schedule and deliverables. Insist on using an escrow payment system, where funds are released only after satisfactory completion of project milestones. Second, prioritise working with firms that have recognised industry accreditation.
For instance, the Singapore Interior Design Accreditation Scheme, developed by the Society of Interior Designers, Singapore, defines the core skills and competencies of the industry. By being informed and vigilant, consumers can significantly reduce the chances of falling victim to unscrupulous practices. LESSONS FROM RIDE-HAILING REFORM Singapore’s interior design industry could draw inspiration from the ride-hailing sector's successful transformation.
The ride-hailing industry initially faced significant issues, such as unqualified operators, frequent customer complaints and difficulties in enforcing regulations. To overcome these, the Land Transport Authority introduced the Private Hire Car Driver’s Vocational Licence, ensuring drivers meet specific safety and service standards. Additionally, ride-hailing platforms established their own accreditation systems, requiring drivers to maintain high ratings while adhering to codes of conduct.
They implemented clear refund and compensation policies, providing consumers channels for resolving disputes. Close collaboration between ride-hailing companies and regulatory bodies promoted compliance, leading to a more stable and reliable industry. Similarly, in the interior design sector, beefing up regulatory schemes, enhancing consumer education and improving dispute resolution mechanisms can elevate industry standards and strengthen homeowners’ trust.
Samer Elhajjar is Senior Lecturer at the Department of Marketing, National University of Singapore Business School. The opinions expressed are those of the writer and do not represent the views and opinions of NUS..
