The government is pushing through the proposed Urban Renewal Act (URA) too hastily, to the advantage of property developers, with insufficient thought to those affected, low-cost home users, and the poor.
Solutions should include the setting up of a property commission for urban renewal and other land matters to help ensure the government preserves its valuable landed assets and protects the legitimate rights and aspirations of the people.
It’s no mystery why the government makes the URA, generally expected to be tabled in Parliament soon, a priority when there are serious outstanding issues. There is money in it, lots of it, as Housing and Local Government Minister Nga Kor Ming told The Edge on June 27 last year. But for whom?
Nga says, “Imagine, if we can push for RM322 billion GDV (gross development value), how many jobs can be created, how much profit can be made?” he drooled in an article titled Urban Renewal Act: Finding a balance between progress and societal needs.
There is little that is known about the URA except some of its main recommendations. This KiniGuide gives some details.
The approval threshold for redevelopment is to be set at 80 percent of all owners for properties below 30 years old, 75 percent for those over 30 years, and 51 percent for abandoned projects. But the problems are much more than mere limits.
There are assurances that owners will get market price as compensation, given alternative accommodation during construction, and that if they choose to remain in the development, they will get better units. But it’s unclear how these will be secured.
Many issues unresolved
Owners of low-cost units are not all poor, and sometimes even rich. They ended up owning low-cost flats by various means, some legal and some not. We don’t know their demographics.
If most of them are not poor and don’t occupy their low-cost units, areas currently earmarked as low-cost accommodation will not be that after redevelopment. Right now, the poor pay a low rent for these units if they don’t own them.
How do you then ensure that gentrification - the movement of the poor out of prime areas by enforced redevelopment - does not take place? Nobody has answers.
If richer owners of low-cost flats rent these apartments out, they have no interest in ensuring that these flats are maintained as low-cost units for rental, which means the thresholds for acceptance of redevelopment are likely to be easily met. You need close oversight to deal with this, which the URA does not seem to provide.
What are the checks and balances put in place before redevelopment to ensure developers do not abuse their powers of purchase and give bad deals to owners and occupiers, especially those who are poor? Who looks after their interests?
Without resolving these issues, which require close oversight by the authorities, the URA is a classic case of putting the cart before the horse, purely for the benefit of, yes, the developer.
Nga offers examples of Singapore and Hong Kong where redevelopment takes place. But in Singapore, if it is low-cost housing, the focus is on upgrading the facilities, not profit. And oversight is strong for other projects. Even Hong Kong has more safeguards than us.
Developers have it good
In Malaysia, developers are poorly regulated and have the profit motive foremost on their minds, and almost any billionaire here has had a mighty finger in property development at one time or another simply because there is much easy money to be made.
Developers in Malaysia have it good, making hundreds of millions by a mere conversion of land use status, from plantations to mixed development for instance, even before turning a bucket of land or unearthing a single boulder.
On top of that, you buy property from a plan here and get a loan or make payments, according to the stage of completion. If a developer does not finish the project, you are saddled with a loan without a property. Thousands have faced this quandary.
In the UK, you pay a deposit of 10 percent which cannot be touched by the developer and is kept in trust when you buy property. You get a loan or pay for the remainder only after the property is completed.
Why has it not been done in Malaysia after all these years? Is that not more urgent for Nga than the URA? Why? We know the answer, don’t we? Is it any wonder that our property developers don’t do great in the UK - from SP Setia to Sime Darby to PNB and Eco Ardence - but do extremely well here?
Set up property commission
And then you have state governments and federal authorities allocating land however they please with no oversight at all, enriching their cronies at the mere stroke of a pen, and getting something back in return. They don’t do these things for free.
So, it is high time we had a Property Commission for all things property, with branches in all the states - much like the Energy Commission for power issues, the Securities Commission for the capital markets, or the MCMC for telecommunications and others.
Yes, it may not be totally independent but it has the force of legislation and laws to uphold and, therefore, better than nothing, which is what we have now - with the strong historical connection between housing developers, the ministers in charge over the years, and the administrators of federal and state land who also approve developments.
Note that where we have commissions, there is much better control of the industry and better safeguards, such as in power, telecommunications, and aviation. But sadly, the commission is no longer there for aviation, removed by none other than the Madani government.
The government, whose minister overseeing aviation is Transport Minister Anthony Loke, dissolved the independent Malaysian Aviation Commission (Mavcom) when Parliament passed the Malaysian Aviation Commission (Dissolution) Bill 2024, last June. How bad is that!
All Mavcom’s assets, functions, etc were transferred to the Civil Aviation Authority Malaysia (CAAM) directly under the Transport Ministry, a highly retrograde step which eroded consumer rights that Mavcom was trying to protect.
The president of the Consumers Association of Penang, Mohideen Abdul Kader, expressed his disappointment in a letter to Malaysiakini.
“Opposition MPs stressed that merging Mavcom and CAAM, with CAAM answering to the transport minister, removes the check-and-balance system previously in place when Mavcom reported directly to Parliament.”
The formation of the Property Commission will ensure that land as an asset is properly preserved by the federal and state governments, developers are closely monitored and supervised, and the rights of property purchasers and house buyers are fully protected at all times.
Sure, there’s much money to be made from redevelopment, but the likely beneficiaries are only developers, unless checks and balances, including the formation of a properly constituted Property Commission, are imposed and written into law before the imposition of the URA.
This is something that Nga should champion for the benefit of all the people involved, instead of just the developers, through a lowering of the approval limit for redevelopment . Otherwise his party risks the moniker of Developers’ Action Party, now being used by some quarters, becoming entrenched for the DAP. - Mkini
P GUNASEGARAM says basic governance is virtually non-existent in some areas, even when it is important for the nation and its people.
The views expressed here are those of the author/contributor and do not necessarily represent the views of MMKtT.
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