Urban Renewal Act: Is KPKT biting more than it can chew?

• A new Act will surely come with its own set of challenges, but is KPKT capable of monitoring it when it has not been able to resolve the current spate of problematic projects?

The Ministry of Local Government Development (KPKT) has recently announced that the Urban Renewal Act will be tabled next year. Among the main considerations in the proposed Act is lowering the rate for the “consent threshold”, which currently requires 100% agreement from strata-title owners before any renewable measures is permitted.

In a previous article: “Potential en-bloc sale under proposed Urban Renewal Act unconstitutional”, the National House Buyers Association (HBA) has voiced our concerns on why the consent threshold should remain 100%.

In this article, we would like to point out the prerequisite issues that must be settled by KPKT before the Urban Renewal Act can be enforced, or else the ministry would end up biting more than it could chew and leave house buyers in a worse-off state than when they began.

Resolve long-standing plights of house buyers

The statistics of problematic projects are mounting and even the KPKT deputy minister Akmal Nasrullah Mohd Nasir had remarked them as a “scary” situation, and acknowledged that the weak monitoring of housing development accounts are among factors contributing to problematic projects.

And though in the Budget 2024 speech, Prime Minister Datuk Seri Anwar Ibrahim had stated that as of August, a total number of 256 “sick projects” or more than 28,000 units of houses had been revived, HBA would like to point out that implementing the revival process does not equal successful revival.

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 i.e. strata titles for stratified properties and title deeds for landed properties.

Hence, at the risk of being repetitive, HBA would like to stress that to truly lead to a better Malaysia, KPKT must: 

1. Take tangible actions to resolve project abandonment issues instead of merely re-categorising them as delayed and sick projects before declaring them as “abandoned”.

2. Ensure timely handovers of projects without cowing to the pressures and demands of industry players to grant extensions of time (EOTs) arbitrarily at the expense of denying house buyers’ rights in receiving statutory compensations for such delays.

3. Enforce stricter actions to prevent defective, substandard materials and poor workmanship of housing projects.

4. Introduce a more balanced financing system that will not burden ordinary house buyers to lifelong repayment terms with an interest rate that is higher than our average salary increment without the possibility or ease of terminating the arrangement even when faced with abandoned housing problems.

5. Stipulate deterrent controls against errant housing developers who have the habit of “scheming” to wind themselves up to avoid their contractual and statutory obligations.

(Read: Invoke Section 18A of the HDA to prosecute delinquent housing developers)

6. Strictly monitor, supervise and enforce the Housing Development (Control & Licensing) Act (HDA) and its regulations.

(Read: Abandoned housing projects: enforcement of existing laws, not new laws, needed)

7. Adopt pre-emptive measure and cast safety nets to avoid future abandonment of housing projects

(Read: Abandoned projects: When will preventive action be taken?)

(Read: Abandoned housing projects – will the special task force be effective this time?)

Worse off

Without these measures in place, we fear the legitimate property owners who might partake in the “renewal schemes” might end up worse off if the fate of abandoned projects befell them.

Not only would the house owners suffer but the banks and the Government would also be burned. The possibilities of the devastating effects are as follows:

1. Bare promises of one unit in exchange for one unit, whether contractual or otherwise, mean nothing if the project fails and is abandoned. The owners will surely be left in the lurch like victims of current abandoned housing projects.

2. The physical buildings which once house their properties would have been demolished in exchange for a pie in the sky.

3. If the project of redevelopment falls through, what’s the use of costly and lengthy litigations in the courts of law? The owners would continue to be house poorer notwithstanding.

4. Property developers/contractors/builders normally, for good administrative sense and risk management, would set up separate companies/subsidiaries/associates to undertake new projects. In law, they are separate legal entities and if they go belly up, the mother company (syarikat induk) would still not be liable. The affected owners would be going after a bankrupt company.

5. The owners who succumb to the redevelopment (under the pretext of urban renewal) would be crying and blaming the Government for the misguided structured legislation for their ill-fated scheme when those developers failed in their obligations.

6. Without proper enforcement of protective measures, most property developers would continue to over-promise and under-deliver.

7. KPKT would continue to issue developers’ licences but have a lackadaisical attitude towards monitoring and enforcement, as in the current situation.

So, HBA’s question is whether KPKT is capable of handling the urban renewal development legislation when it has failed in its role to safeguard the buyers of housing units under the current HDA and its regulations; housing development (project account) regulations, etc.

The current adverse statistics speak volumes of its failure and “mis-achievements”. How then do you account for the mounting problematic projects? There are clear insufficient efforts being made to halt and cease problematic projects coming on stream.

Can the Government guarantee there will be no abandoned and problematic projects in the future? How then can KPKT take on another new Act for urban renewal redevelopments and ensure the proper licensing, monitoring, supervision and policing of its laws?

Isn’t it better to do one thing well than many things poorly?

Instil maintenance culture

We also wonder why the Government wants to encourage knocking down a totally good building structure when it is not certified “condemned” by an engineer and the local council. Don’t they know that the average lifespan of an apartment is 50-60 years?

Moreover, their lifespans can be improved by carrying out regular maintenance that can preserve, restore and even rehabilitate dilapidated buildings through refurbishment. Isn’t it more in line with sustainability to instil in the rakyat a culture of efficient maintenance, which by the way, is also lacking in government buildings, public facilities and amenities?

This article is written by National House Buyers Association (HBA) honorary secretary-general Datuk Chang Kim Loong. HBA is a voluntary non-government and not-for-profit organisation manned wholly by volunteers.

HBA can be contacted at: 
Email: [email protected]
Website: www.hba.org.my 
Tel: +6012 334 5676

The views expressed are the writer’s and do not necessarily reflect EdgeProp’s.

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