National Housing Department Hopes to Reduce Sick Housing Projects to 3 percent by 2030
The National Housing Department has outlined its commitment to decreasing the incidence of problematic and abandoned housing projects to three percent by the year 2030.
Datuk K.N Jayaselan, the director-general, emphasized the ongoing efforts undertaken by the department to address the challenges associated with sick and abandoned housing projects.
He said presently, there are 117 housing projects classified as abandoned, with an additional 497 categorised as sick projects. He added that the department's goal is to significantly reduce the proportion of such projects to three percent by 2030, a notable improvement from the current level of almost 15 percent. These remarks were made during his appearance as a guest on the 'Jendela Fikir' program produced by Bernama Radio.
Jayaselan outlined the initial steps the department intends to take, with a primary focus on diminishing the number of projects classified as sick. He further explained that the subsequent step involves restoring sick projects by establishing a task force chaired by Deputy Local Government Development Minister Akmal Nasrullah Nasir.
Highlighting the proactive approach, Jayaselan mentioned that the task force convenes monthly to strategise on addressing the issue, before announcing successfully restored sick projects on a monthly basis.
A sick housing project is one that has been delayed by more than 30 percent from its anticipated completion date, or one whose sale and purchase agreement (SPA) has lapsed.
Other options on the table
The government had revealed in October that it is exploring the possibility of raising the minimum issued and paid-up capital for new property developers and implementing measures to blacklist directors associated with sick or abandoned projects. This initiative aims to strengthen the sustainability of the housing sector.
Deputy Local Government Development Minister, Akmal Nasrullah Mohd Nasir, indicated last month during a parliamentary session that the government is was evaluating potential amendments to the Advertising Permit and Developer’s License Act (Act 118). As per the current provisions of the Act, the minimum issued and paid-up capital for a property developer is RM250,000, with an additional minimum deposit of RM200,000 required with the Controller of Housing.
Addressing the proposed increase in the minimum capital requirement, Akmal Nasrullah emphasised that this adjustment aims to ensure that only companies with a robust financial standing and a proven track record of successfully completed projects participate in the industry.
Furthermore, in line with efforts to uphold accountability in the sector, he affirmed that the blacklisting of directors would extend to those associated with failed projects, developers who neglect to settle compounds, violate Tribunal for Homebuyers Claims awards, and engage in property developments without the required license.
In response to queries by Datuk Shamshulkahar Mohd Deli [BN-Jempol] regarding efforts to prevent abandoned projects and enhance the management of the property development sector, the government is considering the introduction of options to purchase pre-sale and purchase agreements.
This option contract would incorporate an exit clause for both developers and homebuyers, providing a feasible solution in cases where property development cannot proceed due to the developer's failure to achieve targeted sales within a specified period. This mechanism would allow for the early termination of the sale and purchase agreement in instances of unsold projects and cash flow challenges.
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