Both the Tenth and Eleventh Malaysia Plans have stated that housing development efforts in the country will focus on the provision of adequate housing, as well as ensuring a safe, healthy and harmonious living environment equipped with complete public amenities and quality recreational facilities. Unfortunately, it seems like Malaysia’s housing blueprint has been placed on the back burner.
What is the National Housing Policy (NHP)?
A National Housing Policy (NHP) was drafted and launched in 2018 to provide the direction for the planning and development of the housing sector by all relevant ministries, departments and agencies at the federal, state and local levels as well as the private sector.
The NHP is expected to be able to solve the problems and challenges pertaining to construction quality, the issue of abandoned housing projects as well as housing and rental affordability.
Factors such as affordability of the buyers, development cost and selling price persistently influence the supply and demand in the housing sector.
Based on the current situation, housing development is concentrated in urban and suburban areas, where the purchasing power is higher and the buyer market is extensive. In order to address the current housing needs, both the Government and the private sector must play their respective roles to fulfil their social obligations, especially to the low-income and middle-income groups.
Who is driving the National Housing Policy?
In line with the NHP, the Ministry of Housing and Local Government, now renamed Ministry of Local Government Development (KPKT), has been monitoring the implementation of housing development projects by the private sector and enforcing the Housing Development Act (Control and Licensing) 1966 [Act 118] and its Regulations to ensure housing projects are implemented according to the schedule and completed within the stipulated timeframe.
KPKT has been taking steps to revive abandoned projects through the Special Task Force for Revival of Abandoned Housing Projects (STF). The STF focuses on efforts in reviving abandoned housing projects, solidifying the legal aspects and ensuring more effective enforcement, as well as establishing the direction and policy of the housing industry.
Issues and Challenges in the housing market
To ensure that the housing sector achieves healthy development and continuously contributes positively to the nation’s economic growth, various issues and challenges related to the housing sector need to be effectively addressed.
Among the issues identified are:
- Quality of the houses built;
- Abandoned housing projects;
- Affordability and accessibility of the people to own or rent houses;
- Demand exceeding supply for low-cost and medium-cost houses;
- Construction of affordable public housing (APH) at non-strategic locations; and
- Distribution of affordable public housing
Low Construction quality
Although most houses built in Malaysia have met the minimum quality requirements set, there are still developments which have not met the standard requirements. The use of subpar construction materials and lack of skilled workers also contribute to the low quality of houses built. Low usage of state-of-the-art technology in construction and high dependency on unskilled and cheap foreign manpower also contribute to the decline in quality of houses.
Delays at the local authority level
Before a housing project commences, it has to go through the application and approval processes at the land office and the Local Authority (LA). KPKT is responsible for the issuance of housing development licenses and advertisement and sale permits after the development order (DO) and building plans are approved by the LA. If there is a glitch in any of the processes, the whole system or development process would be disrupted and the project would not start on time.
Gaps in monitoring and enforcing housing laws
There are various laws which are applicable to the housing development. Amongst them are the National Land Code 1965 (KTN), Housing Development Act (Control and Licensing) 1966 [Act 118], Local Government Act 1976 [Act 171], Town and Country Planning Act 1976 [Act 172], Street, Drainage and Building Act 1974 [Act 133] and a host of other State’s regulations and land laws. The need to abide by these legal aspects and regulations is vital to be understood and complied with to ensure housing projects are implemented based on the issued approvals. However, there are still weaknesses in the control, implementation and enforcement of these laws.
Coordination between housing agencies is required
In building affordable public housing, there are several agencies and bodies involved such as PR1MA Corporation Malaysia, Syarikat Perumahan Negara Berhad (SPNB), statutory bodies and State Economic Development Corporations (SEDC). Coordination amongst these agencies is needed so that the construction and distribution of these houses can be executed in a more orderly, systematic and just manner in each state. In this regard, the NHP proposes that the role and collaboration among agencies and related bodies are further strengthened.
The implementation of the NHP Action Plan (2018-2025) will involve various ministries, departments, agencies and the private sector responsible for various aspects of the housing sector as a whole. The main agencies (lead agencies) and implementing agencies for each action and implementation period have also been identified. The implementation period set out under the NHP Action Plan (2018-2025) is as follows:
Estimated time of execution Year
Short Term plan 2018-2020
Middle Term Plan 2021-2023
Long-Term Plan 2024-2025
One of the five policy statements that were outlined in the NHP 3.3 is reiterated below:
NHP 3.3: Encouraging the BTS concept in the housing provision system whereupon a timeline was formulated for 2019 (transition from Sell Then Build (STB) to BTS 10:90 concept) and 2023 (transition from STB to absolute BTS ie 0:100 concept).
The diagram below will reflect the timeline that was drafted in the National Housing Policy but it appeared that the timeline imposed in the blueprint of the NHP has not been adhered to:
Abandoned housing projects in the country continue to be a dampener to the hopes of many house buyers and their families from realizing their dream of being owners of their own homes. Its’ continued presence remains a thorn in the housing industry that does not bode well for the well-being of the affected house buyers; neither the lack of and lax enforcement program by MLGD nor the reputation of the errant developers.
Although the majority of developers have fulfilled their delivery promises to house buyers, there are still some ‘bad apples’ that have reneged on their end of the bargain when they abandoned projects.
The BTS 10:90 is a far safer mode of home delivery system
Besides causing a dilapidated environment, abandoned projects also cause unnecessary hardships to many people as they need to continue with their monthly bank instalments for their housing loans, and in many cases, unless the projects are successfully revived, there will be no end in sight as to how long they have to bear their ordeal. Some victims of abandoned housing projects have to suffer in silence for more than 22 years.
We had previously urged the Government to make good the implementation of the Build-Then-Sell (BTS) 10:90 system as the industry’s housing delivery model from 2015 as was recorded in the Parliament Hanzard. HBA has previously urged the Government not to deviate from the original roadmap to implement the BTS 10:90 system put in place under the Housing Development (Control and Licensing) Act and Regulations. The laws have been amended to adopt the BTS 10:90 model since 2012 with the introduction of Schedule ‘I’ and Schedule ‘J’ sales and purchase agreements.
Under the BTS 10:90 system, house buyers only need to fork out the initial down payment of 10% when buying a house and do not need to make any further payment until the vacant possession of the property is delivered to them. As such, the servicing of the end-financing loans does not kick in until the houses are completed with all the certifications obtained and keys with vacant possession are presented to the buyers.
The Government’s abandoned project revival efforts do not seem to be able to match or counterbalance the fresh problematic projects that have been labelled as ‘sick’ or ‘delayed’ that continue to add to the statistics of ‘abandonment’.
The BTS 10:90 is a far safer mode of home delivery system and the Government should without further delay, compel the housing industry to adopt the system as we believe it will drastically if not totally eliminate cases of housing projects being abandoned.
This is precisely why the Government is encouraging it and offering incentives to developers who opt to adopt this mode of selling their products. But it fell short of compelling the industry to adopt this BTS 10:90 concept concurrently.
HBA now urges the current government to make BTS 10:90 mandatory for all new housing projects to safeguard the interest of the Rakyat and to eliminate the scourge of Abandoned Housing Projects.
Implement BTS 10:90 concept in phases
The Government could consider a gradual ‘phase-in’ period, to avoid a big paradigm shift in the housing market and after taking into consideration of the ‘time freeze’ and drawbacks during the Coronavirus-19 pandemic ie
- By 2023 – BTS 10:90 mandatory for the affordable housing category
- By 2025 – mandatory 50% BTS 10:90 concept is to be adopted for all housing developments
- By 2027 – all housing developments mandatorily adopt the BTS 10:90
Even the Twelfth Malaysia Plan (2021 – 2025) has been launched with the slogan: “A Prosperous, Inclusive, Sustainable Malaysia” and the papers reiterated the same aspirations. The question remains, has there been a marked difference towards improvement?
Is the Government prepared to take the bull by the horns and lead the country forward by eradicating the abandonment of housing projects and saving the rakyat from a life of hardship? After all, the new government’s slogan of (Malaysia) Madani is the Malay acronym for SCRIPT which stands for sustainability, care and compassion, respect, innovation, prosperity and trust.
The Government may have forgotten the National Housing Policy, hence, this is our best way to document them for posterity.
*This article is written by Datuk Chang Kim Loong, Hon. Sec-Gen of the National House Buyers Association (HBA), a non-governmental, not-for-profit organization manned by volunteers.