1.0 INTRODUCTION
In
this age, most countries including Malaysia is left without a choice but to
face heavy responsibility of developing a land administration system that is
able to meet the needs of globalization. Knowing how valuable the land is, each
nation would govern their own state’s land using their own legislation. As if
in Malaysia, National Land Code 1965 become the main Act used to govern laws
relating to land. While the other laws that governing land matters include Government
Act 1976, Uniform Building by Law 1984, Environmental Quality Act 1984, Local
Government Act 1976, Street, Drainage and Building Act 1974, Town and Country
Planning Act 1976, Town Planning Act 1995, Housing Developers (Control and Licensing)
Act 1966, Strata Tittles Act 1985, Fire Services Act 1988 and Sewerage Services
Act 1993. Seeing all these, we can see how the law taking the position of land
law in Malaysia seriously as it is considered as one of highly valuable and irreplaceable
natural sources. That is why the value sometimes can be unreasonably high and
will keep increasing depending on the demands at each place. For example, land
price in urban areas tend to be higher than that in rural areas because of the
high demand put on such lands.
Knowing
the high value of lands, each nation must be very wise in deciding what
categories the land should be in order to fulfil the needs of the nation and
the people in it whether it should be used for agricultural purpose, industrial,
developing or housing purpose. It must be noted that the current population as
of today in Malaysia has reached 30, 764, 727 according to Countrymeters
website[1].
Looking through a large number of populations, there is a need for efficient
and systematic housing development in this country. This is why Malaysia had implemented
the first Housing Plan in 1966 to govern the issues on housing development
within context of land laws in Malaysia. The main objective of this plan is to allocate housing
as part of social services and thus enhancing the welfare protection to the
people.
A
study shows that housing purchasing trend in urban Malaysia is determined by
demographic profiles, mainly by education level, age, gender and income. The
finding also shows that the main concerns for house buyers in urban areas are
price and location of the house. Most of people feel that houses price in urban
Malaysia are too expensive and beyond their affordability. Location of houses
and distance from work place are also regarded as the main concern[2]. That
is why housing development is very crucial to provide the living place for
people.
In
the course of developing the housing projects, the developers faced a huge
problem when they ultimately discover that the lands are not suitable for
housing development and that to proceed with the development until completion,
they would require substantial additional funds. This problem usually led to
the abandonment of the project[3].
When this happened, the one who would be affected the most are the purchasers. Apart
from having to make loan from financial institutions and repay such high loan
for housing purpose, they also have to face the risk of abandoned housing project.
This issue often appear in news.
Even
though Housing Development (Control and Licensing) Regulations 1989 is being
made mandatory for all housing developers in Peninsular Malaysia to ensure
protection to house purchasers against irresponsible housing developers,[4] these
issues are still seem unsettled. These issues are mainly about the abandonment
of such project, loan issues and also the unreasonable high price of the house
itself. That is why throughout this paper, we are going to discuss particularly
on the topic relating to housing development and also making analysis on how to
overcome such problem. We are also going to make a disclosure on how Bank
Negara especially government react to the said problems. In addition, we are
going to make a thorough explanation regarding Town Planning, Housing
Development and its relation with land law dealings in Malaysia, as well as
land acquisition in relation to housing development. Our main objective in
conducting this research is to determine the problems faces by housing purchasers
and critically find a way on how to overcome it.
2.0 INLUENCE OF THE INTERVENTION OF
GOVERNMENT POLICY IN THE GROWTH OF HOUSING DEVELOPMENT
Despite
being receptive to new ideas, Malaysian housing developers must be responsive
to the demands imposed upon the industry. One of the external factors that
influence the growth of housing development firms is the intervention of
government. The role of government in shaping the housing industry is pertinent
because most of land matters involve dealing directly with local and state
authorities. The regulations imposed by the government are perceived as
imbalanced and serve only to increase the challenges confronted by housing
developers to maintain their survivability.
Globally,
housing developers act as core coordinators within the development of national
facilities and infrastructures[5].
In general, developers are classified as entrepreneurs who embark on and
implement land development projects[6].
The projects normally involve numerous regulations created by the government to
protect the interests of both purchasers and developers. Policy and regulatory
changes by the government must be embraced because the role played by the
government in the competitive housing development industry is essential. A handful
of scholars have found that government policies influenced the price of land[7]
and the types of land input[8].
According
to Bell (2002), the government can be classified as a cluster of public
entities entrusted with the formal authority to represent the entire community,
especially in decision making affairs. In Malaysia, the government consists of
three authorities, i.e., federal, state and local governments. Specifically,
the federal government provides policy frameworks in general terms, whereas, at
the state level, the policy is translated into more detailed and strategic
requirements. At the local government level, the prepared plans are made more
exhaustive with specific elaborations[9].
For reference, land housing matters in Malaysia fall under the authority of the
state government and local councils. Due to the nature of the homebuilding
industry, it is already fraught with risks and challenges, which are further
aggravated by the vagaries of the government rules that entailed multiple
components of housing projects, differing significantly among diverse regions
and countries.
Each
nation has a unique housing system with regard to the fundamental and
distinctive roles played by the respective governments in enforcing the
industry structure through revitalisation of policy measures that affect
building materials, professional practices (e.g., real estate transactions),
subsidy programmes and incentive patterns for average households.
Specifically,
the current scenario of land development in Malaysia sees local authorities
having the overriding power to either approve or disapprove development
proposals. The regulations imposed by the Malaysian government include the
following: the allocation of 30% of houses for low-cost units, the requirement
to obtain a housing licence and advertising permit to sell the house, approval
of land subdivision and conversion, and imposition of levies on foreign
ownerships. Such regulations encompassing building codes and standards,
environmental policy regulations, land use and development restrictions were
the key hurdles in efficient markets and their housing delivery. Considered as
government induced problems that involve bureaucratic obstacles for private
housing developers, the other impact of regulations is associated with the
housing prices resulting from the manipulation of the housing supply.
In
addition, in the Journal of Engineering, Design and Technology[10], Abdul
Aziz, Ho and Jaafar remarked that the Malaysian housing industry is highly
controlled by separate laws, policies and guidelines. In the same journal it
was outlined that a range of pertinent and critical laws that should be
complied, which include the following: National Land Code (NLC) 1965 (NLC,
2008), Government Act 1976 (Act 171), Uniform Building by Law 1984 (UBBL),
Environmental Quality Act 1984, Local Government Act 1976, Street, Drainage and
Building Act 1974 (Act 133), Town and Country Planning Act 1976 (Act 172), Town
Planning Act 1995, Housing Developers (Control and Licensing) Act 1966, Strata
Tittles Act 1985, Fire Services Act 1988 and Sewerage Services Act 1993.
In
this context, when designing the layout of the proposed housing project,
housing developers must take into account the requirements imposed by the local
authority as well as market demands[11].
Given the importance of the housing business to the Malaysian economy and the
exposure to risks arising from the capricious regulations imposed by the
government, conducting an exploratory enquiry to investigate the challenges
confronted by private housing developers in Malaysia, and the management of
such challenges are considered as vital.
2.1 Housing Development Process in
Malaysia.
Basically,
the housing development process involves three main stages[12].
The process begins with the pre-development process (planning stage), followed
by the construction stage, and finally, the post construction stage. During the
post construction stage, that is the third stage, a certificate of completion
of compliance (CCC) will be awarded to the developer who then would have
successfully completed their (housing) project[13].
It
must be noted that a developer first has to obtain all planning approvals
before any physical work could commence on site and prior to issuance of any
advertising permit by the relevant authorities. Under the new guidelines by the
One Stop Centre (OSC), the principal submitting person (PSP) has an option to
either submit all four (4) planning applications for simultaneous approval or
to submit it by stages. The planning applications are include;
(a) planning permission
application[14];
(b) building plan
application;
(c) road and drainage
plan application, [15]
and
(d) the various 'works'
plan [16]
The
local authorities shall stipulate conditions subject to comments from their
technical department. The total number of technical departments that exist is
peculiar to that local authority where the plans are being submitted every
stage involves various activities and processes, yet, the most crucial part is
the planning phase. The most important process in the pre-development stage is
the approval of the application for the proposed.
A
developer must first obtain all the planning approvals before any physical work
can be commenced on site, along with prior to issuance of any advertising permit
by the relevant authorities. Due to the thorough assessment by various
departments, this process can be quite time-consuming. The value of proper
planning and control in housing development processes is recognized because
this is a central factor in determining the type and size of housing supplies.
Consistent with this notion, government interventions in housing planning have
both positive and negative impacts on housing development. Similarly, it also
indicates that the planning system is an important factor that greatly
influences housing supply in Malaysia.
Clearly, housing development in Malaysia
requires developers to undergo various procedures before the project may begin.
In short, several researchers have identified the following activities normally
conducted by housing developers in this nation:
1. purchasing of land,
2. land use conversion
and subdivision,
3. preparation of
various plans, such as subdivision, earthwork, layout, building,
engineering and landscape,
4. approval of various
plans,
5. obtaining
advertising and marketing permits,
6. construction and
7. issuance of
certificate of fitness.
The
above notwithstanding, an eminent developer commented that in the middle of
such activities, some developers may need to obtain bridging loans from
Challenges Faced by Malaysian Housing Developers, financial institutions,
followed by having lawyers preparing the legal documents including the sale and
purchase agreement to be signed by the purchasers, once the project is launched
in the market.
The
basic procedures involved in developing and marketing housing projects in
Malaysia are thus numerous and perceived as burdensome. Malaysian housing
developers are thus required to act within the legislative frameworks designed
by the government authorities as well as take on the inherent risks in dealing
with property development.
3.0 TOWN PLANNING IN MALAYSIA
3.1 Historical Background of Town Planning
Town and country planning was introduced in Malaysia
in early 1920s, when the country was known as Malaya (Peninsular Malaysia)
under the British Colonial administration. Town planning legislation had
undergone several exercises to include necessary changes to attain the present Town
and Country Planning Act[17].
The first amendment was made in 1995 to include provisions for environmental
considerations that should be considered by planning authorities in forward
planning and development control activities. The latest amendment to Act 172
was in 2001 which is referred to as Act 1129 and introduced a three-tier
planning system (National Physical Plan, State Structure Plan and Local Plan
which is for local planning authority area.) Through the new Town and Country
Planning Act, the housing policies can be more easily interpreted and adapted
for the local circumstances, through the adoption of the local plan.
3.2 Current Position of Town Planning
In Malaysia, town planning appears on the concurrence
list of the Federal Constitution and is structured parallel to the Malaysian
system of government. The administration system is divided into three levels
which are the federal, state and local levels. Each level possesses its own
town planning authorities. At the federal level, the Federal Town and Country
Planning Department of the Ministry of Housing and Local Government formulates
and administers policies pertaining to town and country planning nationally. At
the state level, all states have their own state town and country planning
departments which serve as an advisory body of the state government. At the
local level, the local planning authorities execute town planning functions. Town
and Country Planning Act defines a local authority as the local
planning authority of a particular district or area.
3.3 Purpose of Town Planning
According to Taylor, town planning was mainly intended
to guide the development of towns and cities through the use of simple land-use
maps; later, these maps developed into comprehensive town plans illustrating
infrastructures, intensity of uses, and land-use zoning.[18] Malaysian town planning
system consists of development plans and development control procedures that
comprise interrelated matters for planning considerations. Few studies have
been carried out which provide empirical evidence of the effects of land-use
planning on housing development in Malaysia. However, those empirical evidences
did not sufficiently identify the causes of town planning effects. It is
imperative for the causes of these effects to be identified so as to enable
town planners and decision makers to make the right choice to avoid undesired
outcomes.
3.4 The Role of Town Planning
The role of town planning control can be examined at
each step of this development process. As Adams and Watkins[19] suggested, the actual
market outcomes in terms of price, output or housing density should be first
observed and then followed by investigations of the ways in which the town
planning control or policies are being implemented. In the context of housing
development, the planning system in Malaysia affected housing provision through
land development planning and control. The housing policies set-up by the
government in various five-years plans are incorporated into the long-term
planning, that is, the development plan system which comprise of structure and
local plans. Structure plan usually plans for 15-20 years ahead.
Local authorities may face problems when matters
within the structure plan are misinterpreted by local plan study groups, or
when certain concerns may have not been able to be addressed. The structure
plan preparation took a long time to be adopted and therefore changes in the
market and economy such as economic booms and recessions may affect the
implementation of the housing policies outlined by the structure plans. Lack of
adequate information and of skilled professionals in the process of formulating
policies may raise questions as to the credibility of the structured plan
policies, at a practical level, the affected people might dispute these
policies.
In addition to that, the planning approval process
also contributes to delays in housing development. Planning approval process
requires rigorous assessment on the appropriateness of each application as well
as comments from various technical agencies. The effort of planning authorities
to expedite the approval process by using a non-statutory local plan, local
plans in drafted forms, as a guide engenders uncertainties to developers. The
non-statutory plan is not legally binding and is subject to change without
public notification.
3.5 Position of Town Planning Under National
Land Code 1965
Another main legislative provision related to land
development is the National Land Code[20]. All land
transactions, changes in usage, alienations, subdivisions and partitions in
Peninsular Malaysia must be in accordance to the Code 1965. Under the Code,
land matters falls within the jurisdiction of the state authority. Inevitably,
this caused further delays and may result in problems such as increased
production cost, prolonged housing problems, and disruptions in the supply of
housing land. According to Harvey[21],
the supply of housing land is affected due to some restrictions placed on the
land ownership which may then lead to the unwillingness of the land owners to
release their land for residential development until such time as the property
market becomes attractive to the land owner and housing developers.
3.6 Factors Influencing Town Planning
Initially, within this premise, several factors
necessitate the active and purposeful role of town planning to translate in
physical terms the achievements made through policies and strategies embedded
within the national economic and development planning process within the
Malaysian context. The main factor is the social factor which covers the
challenges and sensitivities on multi racialism, multi-cultural and religion.
Secondly, we need to have a look on the economic factors which includes the
transformation to higher or complex economy, the income disparity and access to
economic activities between rural and urban areas. The quality of life is also
taken into account as an important factor by viewing the access to facilities
such as schools, hospitals, market and so on between the urban and rural area.
It is also important to ensure there is adequate housing especially in the
urban areas to ensure it will not affect urban housing development. For
example, in the capital city of Kuala Lumpur.
4.0
DEALINGS UNDER NATIONAL LAND CODE 1965 WITH RELATIONS TO HOUSING DEVELOPMENT
‘Dealing’ as interpreted in the National Land Code 1965
refers to a transaction with respect to alienated land affected under the
powers conferred by Division IV[22].
According to Section 205(1) of the NLC, dealings that capable of being effected
under the Code with respect to alienated land and interest shall be transfers,
leases, charges and easements. The most common dealing under NLC that related
to housing development is dealing of transfers and charges.
Firstly, for dealing of transfer, it can be seen through
Sales and Purchase Agreement (SPA) by transferring the title of property from
housing developer to buyer. It must be noted that Sales and Purchase Agreement
is a legal contract that obligates a buyer to buy and a seller to sell a
property. It is governed by the Housing Development (Control and Licensing) Act
1966 where all purchases that is direct from housing developers must use
Schedule G (for purchases of houses) or the Schedule H (for the purchases of
apartment) respectively of the Housing Developers. A memorandum of transfer,
which is Form 14A of the NLC must be completed and complied with in order to
transfer the title from the seller to the purchaser. In situation where the title
has not been issued, and the purchaser is the developer, the developer will
undertake in the sale and purchase agreement to transfer the the title when it
was issued. If the purchase is through a sub-sale, the transfer will be through
an assignment between the developer and the seller (Principal of Sale and
Purchase Agreement).
Apart from that, dealing of charge is another common
dealings that related to housing development. A charge is a form of security
dealing created by a registered proprietor or a lessee by using his land as a
collateral or security in return for the loan given to him by the lender. The
charged is made to secure the repayment of any debt or the repayment of any sum
other than a debt or of any annuity or other periodic sum[23]. A
person may either go to a bank or a finance company to borrow money and in
return, may pledge his land as security to pay back the money with interest.
Under Section 241(1)(a)(b)(c) of National Land Code 1965, the owner of an
alienated land has power to create a charge of his land irrespective of whether
final or qualified title or as a parcel in strata title. The landowner’s powers
to create a charge is subject to the restrictions imposed in Section 241(3) of
the NLC 1965. In relation with housing development, a buyer charged his land as
a security for the loan given by the bank in order to purchase the house from
the developer. If he failed to pay his debt, than the bank can take an legal
action against him.
On the other hand, an easement is a right benefiting one
parcel of land (known as the dominant tenement) that permits the rightful users
(not necessarily solely the owner) of that land to perform specified actions
over a neighbouring parcel of land (known as the servient tenement). Probably
the most commonly used easement is one that allows the underground services
(water, drainage, gas, electricity, telephone and TV cables) of one property to
pass beneath the land of one or more neighbouring properties. Perhaps the most
widely known easement is the private right of way. Easement that related to
housing development that has been used by real estate developers is a
conservation easement. When developing a tract of land into, say, a housing
development, the developer might prohibit construction on a section of that
tract, preserving the area in its natural state. The easement is a legally
binding agreement between the landowner and a conservation organization, and
the restriction passes to all future owners of the land.
Lastly, dealing under National Land Code 1965 with
relation to housing development would be lease. A lease is a type of dealing
recognised under the NLC 1965 whereby the registered proprietor allows a lessee
to occupy the land for a specific duration in consideration of the payment of
rent. Under the NLC a lease must be for a term above three years and must be
registered at the land office. Under National Land Code 1965, the proprietor of
alienated land may grant leases for a term exceeding three years in respect of
the whole or any part of his land.[24] The
dealing of leases in connection to housing development arises when a buyer
purchases a freehold property from a developer. Here, the developer will
execute a memorandum of transfer to transfer the property to the purchaser.
Usually, when a purchaser purchases a leasehold property from a developer, the
developer will construct and sell the building to the purchaser and the
landowner will create a lease in favour of the purchaser by way of a memorandum
of lease.
4.1
Acquisition of Land in Relation to Housing Development.
In order to develop the house projects, land is needed by
developers. The lands which subject to housing development may either be
acquired by developers through purchasing from interested legal owner, through
joint venture agreement, through alienation of land by the goverment, or may
also be the land already owned by the developers themselves.
Generally, a ‘Joint Venture Agreement’ is a project
undertaken jointly between a landowner and a developer under an agreement for
housing development. Under the power of attorney, the development project
requires the landowner to allow his land to be used or developed by the
developer for a development and in return he would receive:
(a) a certain number of houses upon the completion of the
project;
(b) a certain percentage of the progress payments from
the sale of the property built under the project;
(c) the sales proceed from the property allotted to him
and sold on his behalf by the developer; or
(d) the landowner and the property developer agree to
some other arrangement under the Joint Venture Agreement.
In Malaysia, alienation of land can be exercised by the
state authority pursuant to section 76 of the National Land Code 1965.
Alienation of land can be made either on the application of the federal
government to the state authority or to other persons if the grant will serve
public purposes and or there is there is special circumstance warranting the
state authority to alienate land.[25]
To put in simply, there is a closed relation between alienation of land in land
acquisition with housing development project.
5.0 LEGAL ISSUES ON HOUSING DEVELOPMENT
WITHIN THE CONTEXT OF LAND LAWS IN MALAYSIA
5.1 The Challenges
Malaysia, in promoting housing development in the
country, had initially implemented its very first Housing Plan in 1966 with the
main objective to allocate housing as part of social services and thus
enhancing the welfare protection to the people. The term ‘social’ according to
the World Power Dictionary refers to living in an organized group or community,
(World Power Dictionary 2002). The subsequent Housing plans were, in general,
aims to improvise the Malaysia’s socio-economy remarkably seen in the aspect of
poverty alleviation, and society restructuring. This is when the first formal
and well- designated housing programs were introduced to provide low-cost
housing to fulfill the needs of the poor. As a result, the housing policy local
and national level had shown significant contribution on the rural integration rural
integration, harmony and peace among Malaysian. In spite of all that, there are
still a number of challenges that needs to be overcome in order to further
boost the housing development in Malaysia. In this section of the paper, we are
going to elaborate on difficulties that are typically faced by the parties
involved in the housing development. Among the famous issues struggled by those
developers and buyers in developing housing are matters concerning the land
used for the construction of house, loans issues and also the insanely high
cost incurred in building houses.
In
discussing the issues on the land itself, we can roughly divide it into issues
that are related to the process and procedure in reference to the NLC and also
the issue on the physical condition of the land such as the structure, location
and type of soil which the area is made of. In an abandoned housing project of
Taman Harmoni[26],
it shows that the excessive power given to the state authority and the Chief
Minister in addressing the matters in regards to land had somehow legalized
them to act unprofessionally. Apart from
that, there are also higher chance of misappropriation of power by the state
authority, which usually consists of substantially members from the same
political party and the Chief Minister alike, due to the excessive power
conferred to them by the Delegation of Powers Act 1956 (Revised 1988),
especially in regards to land matter.
Also
in this case, the state the authority failed to make reference on such
development to any spatial multi-criteria evaluation method that may have
recognized the physical condition of the land that can affect the development
project. Although there has been consultation made with the planning
authorities such as Town and Country Planning Department, Department of
Irrigation and Canal, and Public Works Department, these bodies will not
consider the physical suitability of the project, where in this case the
development was made on slime soil, thus affected the capability of the
developer to continue the project. Therefore, we can say that, settling the
legal issue alone would not be enough consideration in developing housing
areas.
There
are also other factors that should be attended with as much care as the legal
matter such as the physical conditions of the land. This is very important as
any problems on the land condition will directly affect the project and
sometimes, it may take place when the developer are least prepared for such
circumstances. Therefore, the multi-criteria evaluation and multi-criteria
decision making (MCDM) development plans are so vital that it should be made
compulsory for the developer to make such test and evaluation before starting a
project.
Plus,
section 108 of the NLC is undermining[27] the
role of the technical agencies when it says that any conflict arise with the
by- laws, in this case the technical agencies; the by-laws shall not be
applicable so far the inconsistency take place. In this matter, we should admit
that, the by-laws were made with consultations and discussions with the experts
of the areas concerned. On the other hand, the NLC itself were made by those
who are expert in legal fields, which mainly touches on the procedures that
should be complied with. Therefore, with all due respect, more weightage should
be given to the by- laws in certain matters as they were construed after the
advice from the expert of the very matter.
The
Housing Loan’s Issue in Malaysia aroused because of the many reasons relating
to our current economic condition such as the irrelevantly high housing price,
high rate of interest and the price inflation of living goods. It is a fact
that the skyrocketing price of housing nowadays had defer the purchaser from
buying house, or forced the buyer to make other option as a preference , or
leaving them suffering with the high housing loan, should he insist on getting
a house. The Malaysia Property News quoted that the current situation happened
when there has been excessive bank- lending and low borrowing leading to
investment. This resulted to the increase of property prices until it reach a
level where the pricing is no longer relative to the incomes of the buyers.
This is when the banks will suffered from insufficient capital, and the loan
borrower started to laidback in repaying the loan. Consequently, the banks will
react by lessen the credit offered. This will indirectly affect the economy as
it will influence the price of property as well.
Dato’
Abdul Rahman Dahlan, the Minister of Urban Wellbeing, Housing and Local
Government stated that, as of January 1, 2012, Bank Negara Malaysia had adopted
stricter lending guideline. This somehow indicates that, it will be harder to
home- buyers to secure a loan from the financier. In this new guideline, the
Mortgage eligibility assessment will be made via checking on net income,
statutory deductions for tax, Employees Provident Fund (EPF) contributions and
all other debt obligations. Additionally, Banks Negara Malaysia also set up a
new regulation which stated that property buyers shall no longer enjoy housing
loans of more than 35 years and personal loans will be limited to 10 years
only. These show that there will be tougher road for today’s generation to own
a house, which is the basic needs of human being, due to the strict process and
procedure.
According
to an interview conducted with the CEO of Smart Financing, Mr. Gary Chua, he
highlighted the issue of securing mortgage and loans from the banks would be a
serious matter for the house buyers and investors in 2016. With the current
economic condition in Malaysia where the Ringgit are weakening and the banks
itself are having trouble high asset to deposit ratio, financing will be
tougher. This means, it will be harder to get funding as the banks will apply
stricter conditions in financing any project so that they will have the safest
return to their investment.[28]
Meanwhile,
the Honorary Secretary General, National House Buyers Association (HBA) , Mr.
Chang Kim Loong also holds the same view
by saying that those financially- savvy buyers will take up the wait- and- see
attitude to get the best price by developers who will keep on decreasing their
price. Mr. Chang also estimated that the banks will only be more prudent in
giving financial assistance for any project via running more thorough
inspection on the prospective client financial background.
On
the other hand, Mr. Dennis Ng, the Executive Director of UM gives more positive
response on the issue of loan for housing development when he proposed the
various options of financing offered in Malaysia, ranging from conventional to
Islamic that had becomes more popular among the foreign investors. This,
however, in our personal opinion does not cast the doubt that such financiers
will still imposed stricter terms and conditions in giving financial
assistance.
Being
aware of those struggles faced by the people in getting a house nowadays, the
government resorts to set up the Housing Scheme’s Policy provide more
affordable and adequate housing for the low-income group. Thanks to this
policy, the situation is better today as many had enjoys a better living place.
However, the matter at hand right now is, what about those who are in the
middle-income households (MIH)? This policy only offers solution to those who
are proven to be in the low income group only. But, in reality, those who are
in the MIH also need such assistance. The MIH group is those who are pinned in
the middle-income trap that they are not qualified to such assistance while
they cannot even afford to buy the medium cost house. This group represents 40%
of the population in Malaysia, which indicates the large number of people that
were left helplessly to deal with this matter themselves. This shows that,
Malaysia is still unable to fulfill its people needs on term of providing
affordable housing to its citizen. This term actually refers to the types of
housing such as “social housing”, “public housing” and “low-cost housing”
provided to the buyer in accordance with the buyer’s financial ability.[29]
5.2 The Silver Lining
As there are always two sides of the coin, the CEO of
Smart Financing, Mr. Gary Chua had added that, in today’s unhealthy market,
there are also good deals offered to the buyers where the developers tends to
be more lenient in naming their price by offering discounts to attract
customers. Even though financing are tough nowadays, it will be lucky times for
the savvy investors to accumulate bigger wealth. This is proven when the
professionals in the real estates and properties field also recommended the
developers to offer more appealing promotions to the buyers such as ‘freebies
and rebates’, if they cannot afford to reduce their selling price.
On
the other hand, the market for secondary property (sub- sales) is also expected
to be more interesting in 2016. While the economy does not seems to improvised,
the property speculators who wishes to double their profits had collected their
properties through housing projects when the Developer Interest Bearing Scheme
(DIBS) and so-called Zero Entry Cost (ZEC) systems were still applicable will
be badly affected. The bad economy had limited their ability to commit the
mortgage instalments after the completion of the said property. Some of them
have had their units sold off due to the inability to pay the installments.
These units may be sold off lower than its original purchase price to secure a
buyer.
This is
why the National House Buyers Association (HBA) had highly recommended the
buyers to take advantage of the secondary properties and auction properties
available in the market. These kinds of situation where good properties that
could be obtained at a bargain[30]
are not always happen. Therefore, the buyers must make an effort to hunt for
these ‘hidden gems’.
6.0
ANALYSIS
6.1
Scope of legal discussion
Throughout this assignment,
the impact on housing within the context of land laws in Malaysia is reviewed
by looking into three main areas of housing; on the government policy, the
dealings on land and lastly, the challenges faced.
The linkage between
government policies and the process for housing development can be clearly seen
from the discussion in the earlier part of the assignment. As stated in the
Journal of Engineering, Design and Technology, the Malaysian housing industry
is highly controlled by separate laws, policies and guidelines. Also, lots of
reference to be made in order to ensure the compliance of the laws which shall
include National Land Code (NLC) 1965, Government Act 1976 (Act 171),
Environmental Quality Act 1984 and many more. Hence, the creation of various
government policies has led to difficulties and hardship for developer to complete
the housing planning.
Secondly, the discussion is
directed on town planning which as far as we are concerned, this matter can be
considered as a basis or foundation towards housing development. Generally, it
involves sophisticated details of understanding the requirements of the towns
and its various divisions and utilizing the land to the best of benefit. In
broader terms, town planning can be separated up into two parts; strategic
planning and land use management[31].
Strategic planning is a long term plan while land use management is any
decision to be made upon each part of land such as building restrictions, water
systems, zoning, sewerage etc. In the context of housing development, the
planning system in Malaysia can be seen by the housing policies set-up by the
government in various five-year plans is incorporated into the long-term
planning.
Next is on dealing under NLC
with relations to housing development. This is the crucial part of the
discussion because by certain ways of dealing on the land, then only we can
identify the legal impact on Housing development in Malaysia. It is mentioned
beforehand that the most common dealing under NLC that related to housing
development are transfers and charges. Section 205(1) of the NLC provides that dealings
that capable of being effected under the Code with respect to alienated land
and interest shall be transfers, leases, charges and easements. Thus, there are
few methods in which land can be acquired for purpose of housing development.
Among them are the land may be owned by the developer itself; the developer
purchase from the interested land owner or through joint venture agreement
between them; or land also can be required through alienation of land by the
government.
Lastly, it has come to
realization that the challenges or legal issues aroused due to the fact of the
housing development. In the assignment, we highlighted the issues on the land
which relates to the process and procedure in reference to the NLC and also the
issue on the physical condition of the land such as the structure, location and
type of soil. Among the famous issues struggled by the developers and the
buyers in developing housing are matters concerning the land used for the
construction of house, loans issues and also the insanely high cost incurred in
building houses.
6.2
Suggestions for improvement
Malaysia today are lacking
in terms of unified policies and practices, be it in legal areas or the
administrative fields when discussing on housing development projects. We
observe that the absence of legal provision in the NLC compelling the state
authority to make reference to the technical agencies and the planning
authority before deciding on vital matters relating to land housing development
will leads to bigger problems to the developer and the buyer, later on. For
instances, are on alienation of land, subdivision of lands, and imposing the
conditions and restrictions in interest involving any housing development
project.
Therefore, we in the opinion
that in order for developers to remain nimble, structural adjustments and
flexible changes must be executed, especially during difficult times and when
there is a lack of government intervention. This is one way that will allow the
housing planning process to be finished in a short period of time and be
executed in the nearest date.
Besides, in regards to the
implementation of the housing policies outlined by the structured plans, the
problems may arise when it is being misinterpreted, or certain concerns may
have not been able to be addressed. As the structure plan preparation took a
long time to be adopted, this may resulted to economic effect due to changes in
the market. Thus, the affected people may have to suffer lost. For this reason,
we believe that Malaysia is highly in need of some professionals in the process
of formulating policies. It should be noted that the structure plan policies
should be reliable enough for it to serve at its best.
In addition to that, the
planning approval process also contributes to delays in housing development.
Recognizing on this dispute, planning authorities introduce a step to quicken
the approval process by using a non-statutory local plan. However, its
non-binding legal effect is still questionable. Further, with regards to
technical agencies supporting housing development, Section 108 of the NLC
provides that in any event whereby any conflict arise with the by- laws, the
by-laws shall not be applicable so far the inconsistency take place.
Our stand on this matter
will be it is better for priority be given to the by-laws instead making it as
a secondary option in dealing with housing development matters. This is because
regardless of its status as compared to NLC, the by-laws were made by those
whom are experts with the areas concerned. Therefore the substance covering any
issues or disputes will be more comprehensive. However, NLC will have its own
gravity as it touches on the procedures that should be complied with. So, if
possible, the local authority, or perhaps the government itself can give
consideration on this basis.
Besides that, through better
understanding of government policies, Malaysian housing developers can
realistically expect to enhance their competitiveness and simultaneously
provide products that are affordable and provide housing developments that are
more cost-effective whilst still attaining the required return on investment.
Also, a great initiative made by the government by giving its focus to the
Housing Loan’s Issue in Malaysia. The Housing Facilitation Fund had provided
monetary assistance amounting to RM500 million to finance the PR1MA project
that aims to build houses with the selling price ranging between RM 100,000 and
RM 400,000. This range of price is 20 per cent lower than the previous market
price under this programme. Besides that, income limit for individual loans
under My First House Scheme will be increases from RM 3,000 to RM 5,000. For
joint loans of married couples, the income limit is up to RM 10,000 per month.[32]
We find that there is the need for the government to consider on behalf of its
people on the housing price as well as the way to pay a loan while dealing with
rising cost of living. One of the way is the government should offer a lower
and flexible rate of the loan with lower monthly installment to mitigate their
burden in loan payment.
7.0 CONCLUSION
In
conclusion, the effect on housing development within context of land laws in
Malaysia can be seen into three main categories which are on the government
policy, dealings on land and also the challenges. For the government policies, as
mentioned earlier, the Malaysian housing industry is controlled by unintegrated
laws, policies and guidelines. These segregated policies have led to hardship
and difficulties for the developers to complete the housing planning. Secondly, the discussion is directed on town planning
which is considered as a foundation to housing development. Town planning can be
differentiated into two parts which are strategic planning and land use
management. In the context of housing development, the planning system in
Malaysia can be seen by the housing policies set-up by the government in
various five-year plans is incorporated into the long-term planning.
Next is on dealing under NLC
with relations to housing development. Section 205(1) of the NLC provides that dealings
that are capable of being effected under the Code with respect to alienated
land and interest shall be transfers, leases, charges and easements. Also,
there are few methods in which land can be acquired for purpose of housing
development includes, may be owned by the developer itself, the developer
purchase from the interested land owner or through joint venture agreement
between them, or land also can be required through alienation of land by the
government.
Lastly, the challenges confronted
in carrying out housing development project. Basically, among the prominent
issues encountered by the many parties involve in housing development process
are matters concerning the land used for the construction of house, loans
issues and also the impossibly high cost incurred in building houses.
In
responding to the issues faced, we are recommending some improvements to
Malaysia’s current stands on the land and housing development which include
more flexible approaches in dealing with housing matter by the authorities, the
increase in numbers of experts in construing a new policy and giving more
weightage on the by- laws instead of treating it as a secondary option while dealing with housing
development matters.
All in all, it is no doubt
that land matters are very important for every nation. Therefore, every angle
of land issues that had already aroused or is expected to arise should be given
due attention and analysis in order to find the best solution for the best
interest of every party. As such, access to land and its management has its
significant implications for the development. Housing development is one of
them and hence, it is very crucial to give serious consideration to land law
whenever disputes arise.
8.0
REFERENCES
Books:-
Ainul Jaria Maidin.
(2008). Land law in Malaysia.
Singapore: LexisNexis Sdn Bhd.
Journals:-
Abdul
Aziz, A.R., Ho, S.Y. & Jaafar, M. (2006). Competitive resources of private
housing
developers:
The Malaysian perspective. Journal of
Engineering, Design and Technology, 4(1): 71–80.
Abdullah,
A.A., Harun, Z. and Abdul Rahman, H. (2011). Planning process of development
project
in the Malaysian context: A crucial brief overview. International Journal of Applied Science and Technology, 1(2):
74–81.
Alias M, Abdul.
"Housing the Nation. Policies, Issues and Prospects." Luxury and
Affordable Housing II. PR1MA: Catalyst in Affordable Housing (2013).
Lee Lik Meng., Abdul Mutalip
Abdullah., & Alip Rahim. (1990). Town Planning in
Malaysia-
History and Legislation (Monograph,
Universiti Sains Malaysia).
KV Padmanabha Rau. (1986). Federal Constitution of Malaysia – A
Commentary, Kuala
Lumpur,
Malaysian. Current Law Journal Sdn Bhd.
p 567 –575.
Maruani,
T., & Amit-Cohen, I. (2011). Characteristics of developers and their
relations to
open space conservation. Land Use Policy, 28(4): 887–897.
Nuarrual Hilal Md
Dahlan. (2012). Legal issues in the alienation of lands for housing development projects in Malaysia. Malayan Law Journal Articles. Vol xli,
from Lexisnexis Malaysia Sdn Bhd.
Nuarrual
Hilal Md Dahlan. (2016). Issues
in the statutory housing sale agreements in
Peninsular Malaysia: A case study of abandoned
housing projects. The Law Review. pp. 377-397.
White,
M., & Allmendinger, P. (2003). Land-use planning and the housing market: A
comparative review of the UK and the
USA. Urban Studies, 40(5–6): 953– 972
Websites:-
Ainul
Jaria Maidin. (2013). Land administration
in Malaysia. Retrieved on 2nd June 2016
Board
of Architect Malaysia (2007). Certificate
of Completion and Compliance.
General
Circular No. 1/2008 Retrieved on 19th April 2016 from http://www.lam.gov.my/download/1_2008.pdf
(n.
a). (2015, Dec 29). Malaysia’s property
market in 2016: What to expect & predictions.
Retrieved
on 28 May 2016, from http://focus.iproperty.com.my/buying/566/malaysia%E2%80%99s-property-market-
in- 2016-what-to-expect--predictions#I96sZ2FrOj0UxQGL.97
(n.
a). (2015, Dec 29). Malaysia’s property
market in 2016: What to expect & predictions.
Retrieved
on 28 May 2016, from http://focus.iproperty.com.my/buying/566/malaysia%E2%80%99s-property-market-in-2016-what-to-expect--predictions#I96sZ2FrOj0UxQGL.97
n.a.
(March 4, 2012). Importance of Town
Planning. Retrieved on June 1, 2016 from
n.a.
(2012 ). Budget 2013: Tax breaks,
affordable housing and cash for the
needy.
Retrieved on June 1, 2016 from http://www.thestar.com.my/news/nation/2012/09/28/budget--2013-tax-breaks-affordable-housing-and-cash-for-the-needy/
Salfarina,
A. G., Nor Malina M., Azrina, H. (2011). Trends,
Problems and Needs of Urban
Housing
in Malaysia. Retrieved on 2nd June 2016,
from http://waset.org/publications/7521/trends-problems-and-needs-of-urban-housing-in-malaysia
[2] Salfarina,
A.G., Nor Malina M., Azrina, H. (2011). Trends,
Problems and Needs of Urban Housing in Malaysia. Retrieved on 2nd
June 2016, from http://waset.org/publications/7521/trends-problems-and-needs-of-urban-housing-in-malaysia
[3] Md
Dahlan, Nuarrual Hilal. (2014). Extent of liability and responsibility of the
state authority in the alienation of lands for housing development projects in
Malaysia: A case study of abandoned housing projects. Malayan Law Journal, 2. pp.
[4]
Nuarrual Hilal Md Dahlan. (2016). Issues in the
statutory housing sale agreements in Peninsular Malaysia: A case study of
abandoned housing projects. The Law Review. pp. 377-397.
[5] African
Journal of Business Management, 5(16): 6891–6900.
[6] Characteristics
of developers and their relations to open space conservation. Land Use Policy, 28(4): 887–897
[7] Kok,
Monkkonen and Quigley, 2011.
[8] Planning
policy, sustainability and housebuilder practices: The move into (and out of?)
the redevelopment of
previously developed
land. Progress in Planning, 82: 1–41.
[9] Journal of Design and Built Environment,
8: 21–38.
[10]
Pp 4(1): 71–80.
[11] Abandoned
housing development: The Malaysian experience. PhD diss. Heriot-Watt University.
[12] The
role of housing planning practices in contributing towards housing oversupply. World Academy of Science, Engineering and
Technology, 59: 767–775.
[13] HDA,
2010, DTCP, 2007
[14]Subsection
21[1], Act 172
[15]Section
9, Act 133
[16]Section
70A, Act 133.
[17]
1976. (Act 172).
[18]
2006.
[19]
2002.
[20]
1965.
[21]
2000.
[22] Section
5 of National Land Code 1965.
[23] Section
241(1) of National Land Code
[24]
Section 221 of National Land Code 1965.
[25]
Section 76(a)(i), (ii), (iii) of the National Land Code 1965.
[26] Taman
Harmoni, Lot 82, Mukim of Cheras, District of Hulu Langat, Selangor
[27] Nuarrual
Hilal Md Dahlan. (2012). Legal issues in the alienation of lands for
housing development projects in
Malaysia. Malayan Law Journal Articles.
Vol xli, from Lexisnexis
Malaysia Sdn Bhd.
[28]
(n. a). (2015). Malaysia’s property
market in 2016: What to expect & predictions. Retrieved on 28 May 2016,
from http://focus.iproperty.com.my/buying/566/malaysia%E2%80%99s-property-market-in-2016-what-to-expect--predictions#I96sZ2FrOj0UxQGL.97
[29] Alias
M, Abdul. (2013). "Housing the Nation. Policies, Issues and Prospects."
Luxury and Affordable Housing II. PR1MA:
Catalyst in Affordable Housing.
[30] (n.
a). (2015, Dec 29). Malaysia’s property
market in 2016: What to expect & predictions. Retrieved on 28 May 2016,
from http://focus.iproperty.com.my/buying/566/malaysia%E2%80%99s-property-market-in-2016-what-to-expect--predictions#I96sZ2FrOj0UxQGL.97
[31]
n.a. (2012). Importance of Town Planning.
Retrieved on June 1, 2016 from Just another WordPress.com site https://townplanningjobslondon914.wordpress.com/
[32] (n.a.). (2012 ). Budget 2013: Tax breaks, affordable housing and cash for the needy.
Retrieved on June 1, 2016 from http://www.thestar.com.my/news/nation/2012/09/28/budget--2013-tax-breaks-affordable-housing-and-cash-for-the-needy/
No comments:
Post a Comment