HBA: Is the National Housing Policy (2018 – 2025) on track?
Datuk Chang Kim Loong is the Honorary Secretary-General of the National House Buyers Association
Both the Tenth and Eleventh Malaysia Plan (MP) have stated that housing development will focus on providing adequate housing while ensuring a safe, healthy, and harmonious living environment with complete public amenities and quality recreational facilities.
Background on National Housing Policy (NHP)
A National Housing Policy (NHP) was then drafted and launched in 2018 to provide the direction and basis for the planning and development of the housing sector by all relevant ministries, departments, and agencies at the federal, state, and local council levels alongside the private sector.
To ensure that the housing sector will achieve the desired development and positively contribute to continuous economic growth, the NHP is expected to be able to solve problems and challenges on the quality of construction, the issue of abandoned housing projects, as well as affordability to rent or own houses via an effective distribution system.
However, in fulfilling these needs, housing affordability, development cost, and selling prices persistently influence the supply and demand in the housing sector. Based on the current market, housing development is concentrated in urban and suburban areas where there is higher purchasing power and a more extensive market.
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.
The Ministry of Local Government Development (MLGD), formerly the Ministry of Housing and Local Government, 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.
The MLGD has also been taking steps to revive abandoned projects through the Special Task Force (STF) for Revival of Abandoned Housing Projects. The STF focuses on 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 of the NHP
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:
I. Quality of the houses built;
II. Abandoned housing projects;
III. Affordability and accessibility of the people to own or rent houses;
IV. Demand exceeding supply for low-cost and medium-cost houses;
V. Construction of affordable public housing at non-strategic locations; and
VI. Distribution of affordable public housing.
Low construction quality woes
Although most houses built have met the minimum quality requirements set, there are still developments that have not met the standard requirements, stemming from low-quality construction. Low-quality construction materials and a lack of skilled workers also contribute to lower quality homes.
Besides that, weak adoption of state-of-the-art technology in construction and high dependency on unskilled and cheap foreign labour also contribute to the decline in the quality of homes.
Weaknesses in implementation and compliance
Before a housing project commences, it has to go through the application and approval processes at the land office and the Local Authority (LA). MLGD is responsible for issuing housing development licenses and advertisement and sale permits after the development order (DO) before the local authority approves building plans. 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.
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 requirements must be understood and complied with to ensure housing projects are implemented based on the issued approvals. However, there is still much room for improvement in the control, implementation, and enforcement of these laws.
In building affordable public housing, several agencies and bodies are 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 systematic and equitable 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 in 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 (5) policy statements that was 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 the year 2019 (transition from Sell Then Build (STB) to BTS 10:90 concept) to year 2023 (transition from STB to absolute BTS i.e. 0:100 concept).
The diagram below will reflect the timeline that was drafted in the National Housing Policy but it appears that the timeline imposed in the blueprint of the NHP has not been adhered to:
Abandoned housing issues remain
Abandoned housing projects in the country continue to dampen the hopes of many house buyers and their families from realising their dream of owning their 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 does the lack of enforcement by MLGD nor the reputation of the errant developers.
Although most developers have fulfilled their delivery promises to house buyers, some 'bad apples' still reneged on their end of the bargain when they abandoned projects.
BTS 10:90 system is a far safer practice
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. 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 suffered in silence for more than 22 years.
We had previously urged the Government to make exemplary the implementation of the Build-Then-Sell (BTS) 10:90 system as the industry's housing delivery model from year 2015 as was recorded in Parliament’s Hansard. The National Home Buyers Association (HBA) had previously urged the Government not to deviate from the original road map 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, home buyers only need to fork out the initial down payment of 10% when buying a house and only need to make further payment once the vacant possession of the property is delivered to them. As such, the servicing of the end-financing loans do 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 are not able to match or counteract fresh problematic projects that have been labelled as 'sick' or 'delayed', eventually adding to the statistics of 'abandoned projects'.
BTS 10:90 is a far safer mode of home delivery system. Without further delay, the government should compel the housing industry to adopt the system as we believe it will drastically reduce, if not eliminate, cases of abandoned housing projects.
This is precisely why the Government is encouraging it and offering incentives to developers who opt to adopt this mode of selling their products. Regrettably, 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 eliminate the scourge of abandoned housing projects.
'Phase–In' period towards BTS 10:90 concept
The Government could consider a gradual 'phase-in' period to avoid a significant paradigm shift in the housing market after factoring in the setbacks of the Covid-19 pandemic.
• By 2023 - BTS 10:90 should be mandatory for the affordable housing category.
• By 2025 - the 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 and vision vis-à-vis the housing aspect. Lest the Government may have forgotten the NHP, HBA feels many aspects of the housing policy need to be remembered or reemphasised.
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 organisation manned by volunteers.
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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