By Datuk Chang Kim Loong

Is the Ministry of Housing and Local Government (KPKT) capable of monitoring and taking on the challenge of the proposed Urban Renewal Act in the name of redevelopment? With the current number of abandoned housing schemes or problematic projects, have the authorities not failed in their gatekeeper role?

Resolve long-standing woes

The National House Buyers Association (HBA) want solutions to our long-standing woes, such as:

  1. Tangible action by the governing and licensing authority, that is KPKT, to resolve project abandonment issues instead of merely re-categorising them as delayed or sick projects before declaring them as abandoned.
  2. Timely handover of projects without bowing to the pressures and demands of industry players to grant extensions of time (EOTs) at the expense of denying house buyers the right of compensation for delays.
  3. Stricter action to prevent poor workmanship and use of defective, substandard materials.
  4. A more balanced financing system that will not burden house buyers on repayment terms with an interest rate that is higher than our average salary increment without the possibility or terminating the arrangement even when faced with abandonment problems.
  5. Deterrent controls against errant developers who have the habit of scheming to avoid contractual and statutory obligations.
  6. Strict monitoring, supervision and enforcement of the Housing Development (Control & Licensing) Act and its regulations.
  7. Pre-emptive measures must be adopted to avoid future abandonment of housing projects.

Under Budget 2024, the Madani Government had announced on Oct 13, 2023, that: “In order to facilitate the redevelopment of the strata scheme, the residents’ consent threshold for en-bloc sales will be reduced from 100% to a consistent level based on international practice such as in Singapore. This will encourage the renewal of the city and encourage the redevelopment of obsolete buildings.”

Firstly, residents or occupants have no say in any dissolution of stratified properties or en-bloc. The rights and entitlement rest with the owners (whether registered or having beneficial interest). HBA strongly opposes any setting of a consent threshold, except for 100% participation. Any redevelopment, rejuvenation or renewal plan must receive the consent of all because every owner is important.

No homeowner should be disadvantaged in the name of redevelopment. Projects that take away citizens’ rights have far-reaching effects, no matter how good they may be. While there are those who view the proposed Urban Renewal Act as a step in the right direction, HBA reiterates that it is a regressive move because it will become an unconstitutional piece of law that goes against the right to own property.

Proceeding with a consent threshold or better known as en-bloc sale with any rate of majority vote will deprive certain homeowners of their properties. As such, the proposed redevelopment law contravenes Article 13 of the Federal Constitution, and if we are not careful it could be extended to cover landed non-strata schemes.

Revived and ready to occupy?

The statistics on problematic projects are mounting and even the former Deputy Housing and local Government Minister had remarked in his past press statement that it is a scary situation. In his Budget 2024 speech, Prime Minister Datuk Seri Anwar Ibrahim declared that as of August 2023, a total of 256 sick projects or more than 28,000 houses have been revived involving about RM23.37bil in development value.

Implementing a process does not amount to successful revival. Redevelopment can only be deemed complete when the Certificate of Compliance and Completion (CCC) has been issued, vacant possession delivered with keys, and ready utilities.

Task force of failed gatekeepers

HBA is concerned that the special task force under the present minister may be made up of the very people entrusted to license, monitor and enforce the Housing Development (Control & Licensing) Act and its regulations. If they had failed in their gatekeeping role, how can they be entrusted to revive sick and abandoned projects?

Let’s acknowledge the fact that there is no solution to abandoned housing projects; we just have to prevent them. Thus, a safety net is needed to pre-empt project abandonment.

And it’s not that we don’t have sufficient laws. Look at Section 7(f), Sections 10, 11 and 12 of the Housing Development Act. What is lacking is supervision, policing and enforcement. We hope the task force will not waste too much time on what has already been deliberated and worked on to pre-empt abandonment issues but be empowered to press the reset button.

Owners may end up losers

With the proposed Urban Renewal Development Act coming under KPKT, we fear that legitimate property owners may be worse off if they take part in these schemes. Not only will house owners suffer, banks and the Government will do too. The possibilities of devastating effects are as follows:

  1. Bare promises of one unit exchanged for another. Whether contractual or otherwise, it means nothing if the project fails and is abandoned. Owners will be left in the lurch like victims of existing abandoned projects.
  2. Erected buildings on-site will be demolished in exchange for a bare promise and a pie in the sky.
  3. If the redevelopment scheme falls through, what’s the use of costly and lengthy litigation? The owner will continue to be poorer without a house.
  4. A property developer, contractor or builder will, for good administrative sense, normally set up separate companies or subsidiaries to undertake new projects. In law, they are separate legal entities; if they go belly up, the mother company (syarikat induk) will not be liable. The affected owners will see their dreams vaporized.
  5. Owners who succumb to redevelopment (under the pretext of urban renewal) will be crying and blaming the Government for the misguided legislation when those developers, contractors or builders fail in their obligations.
  6. The adage property developers over-promise and under-delivers holds true.
  7. KPKT will continue to issue developer licences, so too will the lackadaisical attitude towards monitoring and enforcement.

Is KPKT capable of handling the urban renewal development legislation when it has failed in its role to safeguard house buyers under the current Housing Development (Control & Licensing) Act and HD (Project Account) Regulations, and other laws? Can the Government guarantee there will be no abandoned and problematic projects in the future? Not enough is being done to stop problematic projects from coming on-stream, as statistics have shown.

*Datuk Chang Kim Loong is the secretary-general of the National House Buyers Association (HBA)

Source: StarProperty.my

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