KUALA LUMPUR: Local Government Development Minister Nga Kor Ming on Friday announced that the ministry is exploring the introduction of incentives for the build-then-sell concept in local residential developments as part of an effort to reduce the number of abandoned and unfinished projects in Malaysia.
Next month, the ministry plans to engage in discussions with the Real Estate and Housing Developers’ Association (Rehda) Institute to determine what incentives the government could offer to developers to encourage the adoption of the build-then-sell approach.
Nga made this announcement in his welcoming address during the opening ceremony of the Malaysia Property Expo (MAPEX) 2023 at the Mid Valley Exhibition Centre on Friday.
He emphasised that the implementation of the build-then-sell concept would be a carefully planned process, emphasising collaboration with private developers for a mutually beneficial outcome. The ministry aims to start providing incentives for the "build-then-sell" concept to developers early next year, he stated.
Nga explained that this concept aligns with the ministry's goal of reducing the number of abandoned and incomplete private housing projects. He highlighted their success in saving 256 abandoned projects worth RM23.37bil, benefiting over 28,000 buyers.
Rehda president Datuk NK Tong, expressed the association's support for the build-then-sell concept. He pointed out that this approach could be beneficial, especially for abandoned and incomplete projects. Tong pointed out that buyers and developers could opt for either the sell-then-build or build-then-sell approach, as buyers already have such choices, particularly in the secondary market.
To make this concept effective, Tong suggested that financial institutions should offer adequate funding, as developers may require financial support for costs that are not typically associated with sell-then-build properties.
Additionally, Nga revealed the recent launch of Urban Renewal Implementation Guidelines, which will serve as a precursor to a new urban renewal law, with the draft slated for next year. The law is expected to promote and expedite the redevelopment of aged or dilapidated projects for urban renewal and city regeneration across Malaysia.
Regarding the consent threshold for strata scheme redevelopment, Nga stated that the ministry will finalise the requirements by the next year, drawing from international best practices in places like Singapore, Hong Kong, South Korea, and Japan.
Tong, in his speech, highlighted the challenge of affordability for those in the bottom 40% and middle 40% income groups, stating the need for real action to address this issue. He proposed various initiatives for the government to consider, including tax deductions on interest incurred during the construction period for first-time homebuyers, reintroducing a one-off first-time homebuyers' grant, lowering interest rates for first-time homebuyers of affordable housing units, introducing schemes like the Simen Rahmah scheme for high-consumption construction materials, and government intervention to tackle high compliance costs paid to local councils.
Tong said the importance of government intervention in addressing rising house prices, noting that uniformity and consistency across all authorities should be a goal in the pursuit of affordable housing.
Organised by Rehda, MAPEX 2023 will run from Oct 27 to Oct 29, featuring exhibitions from developers, financial institutions, and government agencies, among others. The event will also offer property and financial talks throughout the exhibition.
In a bid to encourage potential homebuyers and boost Malaysia's property market, Nga announced that next year, his ministry will collaborate with Rehda to organise MAPEX 2024.