THE National House Buyers Association (HBA) read with trepidation again (as the same issue resurfaced in 2019) that the cabinet has approved the expedited drafting of a redevelopment law that will be tabled next year.
Housing and Local Government Minister Datuk Nga Kor Ming said the Urban Renewal Act will be drawn up by next year.
He pitched it as an act to ensure “systematic, well-planned and efficient urban renewal efforts that will spur the country’s economic growth”.
“The proposed act would lead to better redevelopment planning for isolated, old, and uneconomical areas and turn them into zones that can offer a good quality of life to urban dwellers,” Nga said.
Significantly, he said the act would also look into reviewing the “consent threshold”, where currently agreement from 100% strata title owners is required for any renewable measures to take place.
He revealed that a total of 139 sites with an area of 1,297ha have been identified and should be redeveloped.
HBA strongly opposes any setting of a “consent threshold”, other than 100% participation.
HBA’s stand is that any redevelopment, rejuvenation, or renewal plan must receive the consent of all because every owner is important.
While some quarters have viewed this proposed Urban Renewal Act as a step in the right direction, HBA reiterates that this is a regressive move because it would become an unconstitutional piece of law that circumvents Article 13 of our federal constitution, which stipulates the rights to own property.
Proceeding with a “consent threshold”, better known as an “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 of Article 13, and the passing of 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 of such a law.
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)?
The government seems to be under the mistaken belief that it can circumvent all these legal principles and take away a 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 forced strata sale?
We can certainly enact a law for the greater good of the public, but the Madani government must ensure, towards this end, that 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.
En-bloc strata sale is where land with buildings erected on it is identified for acquisition by developers. More often than not, it is purely a commercial decision. The developers will then approach the owners and persuade them to part with their properties in consideration of, perhaps, the market rates.
Once they obtain the land, the original buildings are demolished and a new development is erected on the land, most likely a mixed development encompassing residential and commercial components that are priced high above the original rates of the demolished buildings.
The aim, as perceived by HBA, is the forceful acquisition of land by developers for profitable returns.
A law that facilitates en-bloc sales only enforces the might of the majority, with profits being the main driver.
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.
You will be surprised at how a quiet and peaceful housing estate suddenly turns upside down when the talk of redevelopment begins. It is not a straightforward business deal. It involves money and emotion, and gives rise to mistrust and suspicion among neighbours.
The minority homeowners may feel pressured to succumb to the majority, who decide to trade their respective properties for returns.
Meanwhile, the main parties who benefit from all this are property developers and their agents.
Good examples from Singapore, Hong Kong?
The minister has pointed out that the rates for the consent threshold are much lower in certain developed countries.
The previous government administration also took Singapore as an example to justify the enactment of this law, but they did not take into account 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.
In Malaysia, we have both freehold and leasehold land, but what is more glaring is that we have significantly more land masses compared to 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 2021 United Nations data.
While en-bloc sales are arguably a necessary evil in Singapore and Hong Kong due to the pressing need for urban redevelopment, this argument does not apply to Malaysia.
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.
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 in the Klang Valley for jobs.
Why don’t we develop the outskirts around the various railway station towns? The policymakers should ask the Railway Assets Corporation for its cooperation in nation-building.
Are minority concerns negligible?
The ministers then and now also seem 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, and 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.
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 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, unsafe?
Most of the targeted properties for redevelopment are older strata buildings, especially in 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 1990s 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 infrastructure that has 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 of any sustainability strategies. Worries about traffic congestion, an increase in 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 that is the case, why did the Madani government allocate RM50 million to repair run-down lifts in low-cost strata houses in Budget 2023? Doesn’t that mean that with proper care and maintenance, old buildings can continue to be liveable?
We also have the Strata Management Act 2013 (SMA), which provides for contributions by owners to the maintenance account and sinking fund account so that strata buildings can be properly maintained, refurbished, and upgraded without falling into disrepair.
There are sufficient laws in place to push for sprucing up dilapidated buildings without sacrificing the interests of the owners. If the entire Madani government has genuine intentions, perhaps they should look at the Uniform Building By-Laws to see what upgrades could be introduced so that older buildings are safer and cleaner for their occupants.
In the oft-cited Desa Kudalari Condominium, whose attempt at “en masse sale” was stopped short by the objection of about 30% of the owners, some quarters have claimed that subsequently, the building became so dilapidated that its value dropped below that offered by the developer as compensation for the en masse sale.
However, according to the last HBA checked, as we understand, Desa Kudalari is doing very well under a new management committee, which comprises mostly owner-occupiers, rather than investors who are all too eager to dispose of the property for a quick profit.
Current law enough to effect land acquisition
We already have a reasonably just law in place for the acquisition of land named the Land Acquisition Act, which includes procedures to ensure no forceful acquisition is undertaken without considering the interests and opinions of all the owners, not just the mere majority. There are prescribed justifications provided in the said Act, which are basically confined to the “benefit of the public” and not to commercial interests.
Even with these prescriptions in place, abuse has been known to happen, where owners have been hoodwinked by unscrupulous developers with the “assistance” of the authorities.
The current Land Acquisition Act and the SMA, which are in line with Article 13 and Section 340 of the NLC, are already adequate to be effected in cases where redevelopment is needed.
Yet, the minister says the current Land Acquisition Act is against redevelopment. Why are we furthering the potential of innocent owners being short-changed into giving up their homes and properties with another irrelevant practice and law?
Homeowner’s right to decide
Homeowners should have the freedom to decide how to redevelop their housing schemes without a law that allows the majority and third parties to override the constitutional rights of minority homeowners who may have no living relatives or a voice.
Until and unless a building is declared “condemned” by an area’s respective local council, no building should be demolished without the willing prior consent of all its owners.
HBA hopes the Madani government will not be swayed by any one-sided persuasions 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.
If the Urban Renewal Implementation Guidelines launched on September 5 is deemed a fair and holistic proposal where no single owner is disadvantaged or short-changed, why doesn’t the ministry reveal its details for public opinion? – October 10, 2023
Datuk Chang Kim Loong is the honorary secretary-general of the National House Buyers Association