Budget 2024: National House Buyers Association (HBA) Shares Perspective on Housing Aspects
The National House Buyers Association (HBA) acknowledges the challenges faced by our Prime Minister and Finance Minister, Datuk Seri Anwar Ibrahim, in tabling Budget 2024 from the MADANI Government on Friday, 13th October 2023 in view of the rising cost of living and various global headwinds such as the ongoing was in Ukraine, rising oil prices, the escalating crisis in the Middle East, global high inflation which is affecting the local and global economy.
The events of the past 3 years, starting with the Covid-19 pandemic and its consequences, the disastrous floods and pollution of our waterways that affected millions of households, the several changes in government leadership, the rise in inflation and cost of basic food items and utility bills, the dearth of good-paying jobs in the market and the rise of unemployment – to name a few – can put a damper on the hopes of many ordinary folk who are struggling to rise above all these challenges.
The hardship has brought out the tenacity, strength and unity among Malaysians, and we heartily celebrate this Malaysian spirit today. At the same time, all of us are hoping for a brighter future, and for this to happen, we need effective and sustainable policies that are properly thought out and implemented with the rakyat’s interest in mind.
Resolve Long-standing Plights of House Buyers
The National House Buyers Association (HBA) would like to see solutions to our long-standing woes – solutions that will indeed lead to a better Malaysia:
- Tangible actions by the authorities to resolve project abandonment issues instead of merely re-categorising them as sick or delayed projects;
- Timely handovers of projects without cowing to the pressures and demands of industry players to grant extensions of time arbitrarily at the expense of denying house buyers’ rights to receive statutory compensations for such delays;
- Stricter actions to prevent defective and poor workmanship;
- A more balanced financing system that will not burden ordinary house buyers with 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;
- Deterrent controls against developers who have the habit of winding themselves up to avoid their contractual and statutory obligations;
- Strict monitoring, supervision and enforcement of the Housing Development (Control & Licensing) Act and its Regulations. There is a dire need for an enforcement program by Kementerian Pembangunan Kerajaan Tempatan (KPKT).
- Pre-emptive measures (must be adopted) and safety net (to be cast) to avoid future abandonment of housing projects.
BUDGET 2024 Announcement
Our concerns, comments and response to Budget 2024 on matters relating to the property sector only are as follows:
1: Tahun ini, Kerajaan telah menggerakkan pasukan khas di bawah KPKT untuk menyelesaikan isu projek perumahan swasta lewat, sakit dan terbengkalai yang menghimpit pembeli rumah. Setakat Ogos, 256 projek sakit atau lebih 28,000 unit rumah telah dipulihkan melibatkan Nilai Pembanginan Kasar RM23.37 billion.
Secara keseluruhan, RM2.47 billion disediakan untuk melaksanakan projek perumahan.
*dana jaminan khas berjumlah RM1 billion bagi menggalakkan pemaju yang berwibawa memulihkan projek terbengkalai yang telah dikenali pasti.
The unfortunate house buyers are left without a home and have to service the housing loan that has been drawn down for the abandoned property. There are cases of house buyers whose projects have been declared as abandoned more than 20 years ago and still have no visibility whether their project will ever be revived.
HBA’s concern is that the ‘pasukan khas’ at KPKT may be made up of the very people entrusted to license, monitor and enforce the Housing Development (Control & Licensing) Act. If they have failed miserably in their gatekeeping role (resulting in the voluminous problematic housing projects), how can they now be entrusted to revive sick and abandoned projects?
HBA also applauds the grant of RM1.0 billion to encourage developers to revive abandoned projects. It is hoped that with this grant, the developers can revive the abandoned projects without requiring the existing house buyers to pay large sums of money, as most of these house buyers of abandoned projects already suffered financial losses and may not be able to come up with large sums of monies to revive their project.
HBA’s suggestion is for the ‘Special Guarantee Fund’ (Dana Jaminan Khas) to be monitored by the Ministry of Finance with an intelligent team undertaking the selection process of responsible housing developers, reputed contractors/ builders and white knights who have proven track records and good financial standing. The Government cannot afford to have the ‘abandoned project’ abandoned again by errant salvagers. The Government must ‘select the low laying fruits’ ie those abandoned projects which are near finishing, to undertake the revival process with the maximum result and with such Government guaranteed funds.
2: Bagi memudahkan pembangunan semula skim strata, ambang persetujuan Penduduk untuk jualan en-boc akan dikurangkan daripada 100% kepada tahap yang konsisten berdasarkan amalan antarabangsa seperti di Singapura. Ini akan menggalakkan pembaharuan semula Bandar dan menggalakkan pembangunan semula bangunan usang di Bandar
First and foremost, ‘Penduduk’ (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).
No rightful homeowner should be disadvantaged in any scheme in the name of redevelopment, rejuvenation, en-bloc or revitalisation when there are plenty of reasons such a move is unnecessary.
The Government must mandatorily conduct a “Regulatory Impact Analysis” (RIA) before proposing a new rate for the so-called “consent threshold”, which currently requires 100% agreement from strata-title owners before any renewable measures is permitted.
Contravention of Article 13 – Rights to Own Property
HBA reads with trepidation at this resurfaced issue, which we thought had been put to rest in 2019.
HBA strongly opposes any setting of a “consent threshold”, save and except 100% participation. HBA’s stand is that any redevelopment, rejuvenation or renewal plan must receive all consent because every owner is important.
While some quarters have viewed this proposed Urban Renewal Act as a step in the right direction, HBA reiterates this is a regressive move because it would become an unconstitutional piece of law that circumvents Article 13 in our Federal Constitution, which stipulates the rights to own property in this country.
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 purported redevelopment law will be in blatant contravention to Article 13 of the Federal Constitution, and passing such a law will not legitimise it.
We hope the present Government will not emulate the footsteps of its predecessors who tried to ignore the unconstitutional impact such a law would have on homeowners, whether within or without the Federal Territories. And if we are not careful, the potential redevelopment law could also be extended to cover landed non-strata schemes.
Does the Government not realise the implications and far-reaching damage the proposed law would have on Article 13 and the principles of indefeasibility of title as enshrined in the National Land Code (NLC) that we are all bound by? The Government seems to be under the mistaken belief that it can circumvent all these legal principles and take away a rightful property owner’s right to refuse by simply enacting a redevelopment law and imposing the might of developers on homeowners. We hope the Government is not being swayed by the whispers of mercenary developers whom the Government often refers to as economic drivers.
Another Guise for En-bloc Strata (forced) Sale?
We can certainly enact a law for the greater good of the public, but the MADANI Government must ensure, towards this end, the soon-to-be-tabled “redevelopment law” is not another guise for the impugned “en-bloc strata (forced) sale” proposal that was put forth by commercial developers more than 10 years ago, which was to accord them the right to “confiscate” land from owners for profit and not for any novel purpose of rejuvenation or benefits to owners.
Triggering War Between 'sell' and 'stay' Owners
Enacting this new law for en-bloc sale without obtaining the genuine consent of all the owners will pave the way for disharmony in any development – strata or not – and potentially lead to social unrest.
You will be surprised how a quiet and peaceful housing estate suddenly turns upside down when the talk of redevelopment via en bloc begins. The minority homeowners may have to succumb to pressure from the majority homeowners who decide to trade their respective properties for handsome profits.
It is not a straightforward business deal. It involves money, emotion and uncertainty among neighbours. Meanwhile, the main parties who benefit from all these are property developers and their agents who canvas their wares.
Good Examples from Singapore and Hong Kong?
The Government has pointed out that the “consent threshold” rates are much lower in certain developed countries. The previous government administration also took Singapore as an example to justify enacting this law, but they did not consider Singapore’s circumstances.
HBA has explained numerous times that in Singapore and Hong Kong, there is only leasehold land for existing buildings, and new development land is scarce on the islands. We have both freehold and leasehold land in Malaysia, but what is more glaring is that we have significantly more land mass than Singapore and Hong Kong. The latter two were ranked as the world’s third and fourth most densely populated countries respectively while Malaysia was ranked far behind at 46th, based on the United Nations’ data as at 2021.
While en-bloc sale is arguably a necessary evil in Singapore and Hong Kong due to the pressing need for urban redevelopment, this argument does not apply to Malaysia.
Percentages that have been touted by industry players emulating overseas countries are: 90% for buildings less than 10 years old; 80% for those between 10 and 20 years old; and 75% for those above 20 years old.
Why Encourage Urban Migration to Already Congested Cities?
In Malaysia, there is plenty of development land within the Greater KL vicinity, without having to saturate the capital city with more high-end condominiums and commercial buildings, which are already bogged down by overhang and low-occupancy issues.
Of course we need to develop our cities, but Kuala Lumpur and its fringes are already congested enough. We have to avoid over-building within the city.
Studies have shown the adverse effects of urban migration. What is required is to develop other parts of the country so Malaysians do not have to keep huddling into the Klang Valley for jobs.
Why don’t we develop the outskirts along around the various railway-station towns? The policy makers should ask the Railway Assets Corporation for its co-operation towards nation building.
Minority’s Concerns Negligible?
The Government then and now also seemed to be in the dark about the effect Singapore’s en-bloc sales have on the homeowners who objected.
While the minority owners in the city republic are given replacement units on the renewed and redeveloped land itself and not in some far-off tertiary location, the success stories do not highlight the plight of the minority owners who are often old folks and the infirm, who tend to face hardships in adapting to new surroundings.
They may not want to sell their properties even with considerable compensation because they have lived there their entire lives – raising families, losing their spouses, etc. Is the MADANI Government saying that these considerations are negligible compared to the money made under the name of redevelopment?
We have to be mindful that property issues are different from company or corporate arrangements where the majority shareholders in a company can make decisions without garnering the consent of the minority shareholders, provided it is done for the benefit of the company. The minority shareholders in such cases are still rewarded. Not so for homeowners who fall into the minority segment should such a draconian law be allowed.
The younger owners may have the means to easily relocate and adapt to new surroundings, but the older ones often have difficulty doing so.
Does this proposed law envision the right of the minority should they want to be given a replacement home on the same site after redevelopment without having to pay extra, including all expenses for temporary accommodation to be borne by the developers?
How will the proposed law guarantee the rights of the minority owners as enshrined under Article 13 and the owners’ indefeasible titles over their properties? HBA’s view is that there are no guarantees.
Old Buildings out of Place and Unsafe?
Most of the targeted properties for redevelopment are older strata buildings, especially in the KL city, so the proponents argue that they no longer complement the modern high-end buildings surrounding them.
However, HBA notes that developments in the 90s were fairly well done with moderate density and plenty of open spaces under decent planning guidelines.
In contrast, developments in the city today are only based on maximising profits with maximum density. It is unlikely for existing infrastructures that have sustained a block of walk-up flats built 40 years ago to cater to a new development of 50 storeys on the same site, regardless any sustainability strategies. Worries about traffic congestion, increase of carbon footprint, infrastructure challenges and accessibility to basic amenities are valid.
Some argue that the old buildings’ worn-out conditions make them dangerous for occupation.
If so, why did the MADANI government allocate RM100 million to repair run-down lifts in low-cost strata houses in Budget 2024? Doesn’t that mean that old buildings can continue to be liveable with proper care and maintenance?
Homeowner’s Right to Decide
Homeowners should be free to decide how to redevelop their housing schemes without a law allowing the majority and third parties to override the constitutional right of minority homeowners who may be old, infirm, or have no living relatives or a voice.
HBA hopes any one-sided persuasions will not sway the MADANI Government and impulsively condone the unconstitutional position to take away the rightful properties of Malaysians all in the name of rejuvenation, renewal, reinvigoration or redevelopment, which we view as surface slogans to hide the nefarious intentions of certain avaricious property developers who walk the corridors of power.
3: Grant of RM546 million to build 36 Program Perumahan Rakyat (“PPR”) and grant of RM358 million to build up to 3,500 units of Program Rumah Mesra Rakyat (“Rumah Mesra”)
HBA welcome the grant announcement to build PPR and Rumah Mesra units. PPR and Rumah Mesra are forms of social housing for the B40 and hardcore poor segment of the Rakyat. HBA has always stressed that the Government, not private developers should provide any form of social housing.
However, HBA urges the Government to ensure that these PPR and Rumah Mesra units reach the intended target segment and is not abused by unscrupulous people such as being used as foreign workers dormitory.
PPR units built are only temporary living quarters for those looking to, in future, to buy their own houses. They should only be rented out by the relevant agencies. The objective and aspiration of the Government is for these transit homes to provide a temporary living place for those who want to save enough money before buying their own homes. Those renting the PPR flats should not regard them as their permanent homes but merely a temporary abode to shelter their family and have a roof over their head whilst striving to look for a permanent home.
- PPR are for self-occupation and not legible to ‘sublet’
The PPR flat tenants are supposed to self-occupy until they improve in their social standing and to move out and allow those on the ‘waiting list’ to take over possession of their units. Those who flout the rules by subletting their units for obvious gains should be evicted and enforcement should be meted without delay.
They act like landlords and sublet rooms to foreigners and those singles who migrate from their villages to the town. These have been going on for years but it seem enforcement action is slow but sometime thwarted by interference.
It is a betrayal of the purpose of building such PPR housing in the first place, which is to provide a roof for the poor and should not be used by ‘rent seekers aka profiteers’.
HBA has been calling for stricter enforcement of existing rules to ensure that low cost housing and PPR flats are not rented out to third parties and are allocated to the correct target group.
- Means Test and Exit Policy
The tenants should go through a process of ‘means testing’ to measure how much income a person has to decide if they deserve to qualify for PPR ‘handouts’. These social benefits and welfare offered to tenants in the form of renting PPR flats to them should be reviewed every 3 years by a committee within the agencies so that the tenants do not overstay and should gradually allow those incoming target families to take up occupation.
This is where enforcement must be strict so that those no longer eligible must give way to those deserving one but of course not to the extent of ‘throwing them onto the streets’.
4: Additional allocation of up to RM10.0 billion for Housing Credit Guarantee Scheme
HBA welcomes the announcement that the Government will allocate and additional sum of RM10.0 billion for the Housing Credit Guarantee Scheme to guarantee Housing Loans to help those without a stable income such as in the Gig Economy, to buy properties. The Gig Economy has been a lifesaver to many of the Rakyat who lost their jobs and resorted to becoming ride-hailing drivers, food delivery riders and other forms of freelance work.
These employees are still economically productive and such should have access to financing to buy assets such as property. However, their income may not be consistent and many lack the full documents that Banks typically require from fixed income salaried employees.
This Guarantee Scheme would be very beneficial to the employees in the Gig Economy to buy their own property. However, HBA hopes that this Housing Credit Guarantee Scheme will be limited to First Time House Buyers and only for Affordable Properties category.
HBA hopes that this Housing Credit Guarantee Scheme will only be extended to first-time house buyers and only for affordable properties priced below RM300,000 and also available for purchasing secondary properties, i.e. existing completed properties and not just properties directly from property developers.
5: RM100 million for the maintenance of low and medium costs stratified housing properties both public and private across the country.
What is the use of building more low and medium-cost stratified housing units when you don’t have the maintenance culture?
We thank the Government for heeding our call to allocate sufficient monies for the maintenance and upkeep of the current deplorable conditions: cracked roofs, leaking water tanks and water piping, faulty passenger lifts/ elevators and dangerous level of short-circuiting electrical rooms and its wiring. These have resulted in urban slumps and social problems.
The Local Government must initiate a program to educate the owners, occupiers and dwellers of low and medium cost units on the need to form communities to safeguards their interest. The Government must initiate an Education program on the need to preserve and care for the common properties and facilities.
The issue of ‘social mobility’ is equally important Yes, the government should focus on promoting social mobility instead of targeting home ownership.
Social mobility refers to change in a person's socio-economic situation, either in relation to their parents (inter-generational mobility) or throughout their lifetime (intra-generational mobility).
Social mobility is linked to equality of opportunity: the extent to which people have the same chances to do well in life regardless of the socio-economic background of their parents, their gender, age, sexual orientation, race, ethnicity, birthplace, or other circumstances beyond their control.
Social mobility and equality of opportunity can be measured in terms of earnings, income, or social class, but can also be understood to encompass other well-being dimensions such as health and education.
Those children growing up in low-cost housing and some slums must be given the opportunity to get out from the social stigma to another level in life. The Government must create programs for those to move up the ladder rather than see those continuing such a fate in social life.
Dated: Friday, 13th October, 2023
This article is written by Datuk Chang Kim Loong, the Honorary Secretary-General of the National House Buyers Association: www.hba.org.my, a non-profit, non-governmental organisation (NGO) manned by volunteers. He was also a Councillor with the then Subang Jaya Municipality Council (now conferred Subang Jaya City Council status) from year 2008 – 2018.
Disclaimer: Any opinions expressed are entirely the author’s own and do not necessarily reflect the views of PropertyGuru and its entities.
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