By Joseph Wong
The Ministry of Housing and Local Government (KPKT) has pushed back its plans to table the Urban Renewal Act, a legislative move aimed at rejuvenating ageing urban developments across the country, to next year.
The delay could prove beneficial, offering for the involved parties additional time to refine and strengthen the proposed Act as there are still areas of concern. For a start, the National House Buyers Association (HBA) has urged caution, warning that the government must first address long-standing issues in Malaysia's property sector before implementing this sweeping legislation. According to the association, pushing forward without resolving critical systemic failures could leave existing home owners worse off and further damage the public's trust in urban redevelopment schemes.
HBA honorary secretary-general Datuk Chang Kim Loong pointed out that the ministry may be biting off more than it can chew. The association is concerned that if the Urban Renewal Act is implemented without first fixing fundamental flaws in the housing system, the nation risks creating a situation where legitimate home owners could lose their properties, especially if projects fail mid-way, he told StarBiz 7.
Among the key concerns are project delays, abandoned developments and weak enforcement of current regulations. These problems have persisted for years and continue to plague both new and existing homeowners, casting a long shadow over any future initiatives that rely on effective governance.
The sick project problem
Although Prime Minister Datuk Seri Anwar Ibrahim stated during the 2024 Budget speech that 256 sick housing projects—comprising more than 28,000 residential units—had been revived as of August, the HBA stressed that such revivals are often superficial.
"Only when the Certificates of Compliance and Completion (CCC) have been issued and physical vacant possession have been delivered with water and electrical ready for tapping by the owners that the property is deemed complete. On top of that, there is still the issue of ownership papers such as strata titles for stratified properties and title deeds for landed properties," he explained.
Many so-called completed projects still fall short of these standards, leaving home owners in limbo. Moreover, buyers are often left burdened with mortgage repayments for homes they cannot occupy, with little legal or financial recourse.
Core reforms needed
The HBA outlined a comprehensive set of reforms it believes must be implemented before the Urban Renewal Act is even considered:
- Tackle abandoned projects: KPKT must go beyond relabeling projects as delayed or sick and take decisive legal action to resolve them.
- Timely handover: Arbitrary extensions of time (EOT) granted to developers often come at the expense of buyers, who lose their right to claim compensation.
- Improve construction quality: The use of substandard materials and poor workmanship must be addressed through stricter enforcement.
- Reform housing loans: Malaysia needs a more equitable financing structure. Ordinary buyers should not be locked into long-term, high-interest loans with no exit option, particularly when developers fail to deliver.
- Hold developers accountable: The government must use legal tools such as Section 18A of the Housing Development Act (HDA) to penalise developers who default or engage in fraudulent practices.
- Enforce existing laws: The Housing Development (Control and Licensing) Act and its associated regulations must be properly monitored and enforced.
- Prevent future failures: The government must implement preventive mechanisms to ensure that new projects do not face the same fate as existing failed developments.
The risks of rushing renewal
HBA warns that without these safeguards in place, the Urban Renewal Act could open the door to a host of new problems. For instance, some redevelopment schemes promise homeowners a new unit in exchange for their old one. However, if the developer fails, residents could be left with nothing—their original homes demolished, and the promised replacements undelivered.
"You cannot eat promises," said Chang. "If a project collapses midway, no amount of court action can bring back what was lost."
He also pointed out that developers often create separate legal entities for new projects. If these subsidiaries go bankrupt, the parent companies are usually shielded from liability. This tactic makes it difficult for homeowners to seek restitution in the event of failure.
The consequences of such oversight are not theoretical. Malaysia has seen numerous cases where residents were left stranded when developments were halted. Thousands of units remain unsold or unoccupied, further adding to the nation’s overhang problem.
Oversupply and vacant units
Beyond abandoned projects, the government must also address the growing number of completed but unsold or unoccupied units, often referred to as overhang. Developments like Forest City serve as a stark reminder of what happens when planning and market demand diverge.
"The Urban Renewal Act cannot operate in a vacuum," said Chang. "It must consider existing problems such as overhang, abandoned units, and oversupply. Otherwise, we are simply adding fuel to a fire we have yet to put out."
Vacant units not only represent financial losses for developers but also degrade surrounding communities. They can become safety hazards, breeding grounds for crime, and eyesores in otherwise thriving neighbourhoods.
The HBA questions whether KPKT has the capacity to effectively implement and manage the Urban Renewal Act. The association argues that the ministry’s current track record—especially in enforcing existing housing regulations—leaves much to be desired.
With mounting problematic projects and insufficient enforcement of existing laws, the HBA believes that the government’s priority should be to restore confidence in the current housing framework before introducing new initiatives.
The statistics speak for themselves. Unless KPKT takes meaningful action to fix the deep-rooted issues plaguing the sector, any new legislation—even with the best intentions—risks becoming another failed promise, said Chang.
Stay ahead of the crowd and enjoy fresh insights on real estate, property development and lifestyle trends when you subscribe to our newsletter and follow us on social media.
