THE EDGE. 27TH OCTOBER: Local Government Development Minister Nga Kor Ming announced on Friday that the ministry is looking to introduce incentives for the build-then-sell concept for local residential developments, as an effort to reduce Malaysia’s abandoned and sick projects.
Next month, the ministry will meet the Real Estate and Housing Developers’ Association (Rehda) Institute to discuss what incentives the government should provide to developers to encourage them to practise the build-then-sell concept, Nga said in his welcome speech at the opening ceremony of the Malaysia Property Expo (MAPEX) 2023 at the Mid Valley Exhibition Centre on Friday.
“The planning and implementation of the build-then-sell concept will not be carried out in a rushed manner. We will work closely with private developers for a win-win formula. We hope we can start providing the incentives [for the build-then-sell concept] to developers early next year,” Nga said.
He added that the concept is in line with his ministry’s aim to reduce sick and abandoned private housing projects. “As of today, we have saved 256 abandoned projects valued at RM23.37 billion, involving over 28,000 buyers.”
Representing Rehda, its president Datuk NK Tong said the association welcomes the build-then-sell concept.
“In the situation of abandoned and sick projects, the government found that the best way to go forward would be with the build-then-sell approach. We welcome it.
“Buyers and developers can either go for sell-then-build or build-then-sell. In fact, buyers already have that choice, which are homes in the secondary market,” Tong added.
For the concept to work, Tong said financial institutions should also provide adequate funding, as developers would need help to finance costs that are not present for sell-then-build properties.
Besides the newly announced concept, Nga said the recently launched Urban Renewal Implementation Guidelines are a prelude to the enactment of a new urban renewal law, the draft of which will be tabled next year.
“With this, we hope the aim to promote and expedite the redevelopment of aged or dilapidated projects for urban renewal and city regeneration in Malaysia will come to fruition. In Kuala Lumpur alone, the Kuala Lumpur City Hall (DBKL) has identified 139 redevelopment areas totalling 1,297 hectares. The new legislation will be a game changer for redevelopment, regeneration, revitalisation and conservation throughout Malaysia.”
For the consent threshold of strata scheme redevelopment in Malaysia, Nga said the ministry will finalise the requirements by next year. “The government will study this proposed requirement based on the best international practices like those in Singapore, Hong Kong, South Korea and Japan.”
Meanwhile, Tong in his speech said that affordability for those in the bottom 40% and middle 40% income groups is still beyond reach and needs to be addressed. “While we at Rehda understand that it is a complex issue with many different contributing factors, it is also timely for real action to be taken, so real change can be made.”
To further aid first-time homebuyers and property developers, Tong proposed a few initiatives for the government to consider, namely tax deductions on the interest incurred during the construction period for first-time homebuyers or personal tax relief to eligible first-time homebuyers; reintroduce the one-off first-time homebuyers’ grant; lower interest rates for first-time homebuyers of affordable housing units via innovative financing packages by financial institutions; similar schemes like the Simen Rahmah scheme should be introduced for high-consumption construction materials that have a wider eligibility scope not limited to affordable housing; and government intervention to tackle high compliance costs that need to be paid to local councils.
Tong said, “Ultimately, we believe that government intervention is necessary to combat the increasing house prices, whether in terms of easing house purchases among the rakyat or lowering development costs. We understand that land is a state matter, but reform may be required when uniformity and consistency across all authorities should be the goal.”
Organised by Rehda, MAPEX 2023 will run from Oct 27 to Oct 29, featuring exhibitions from developers, financial institutions and government agencies, among others. MAPEX 2023 will also offer property and financial talks throughout the exhibition.
In a bid to encourage potential homebuyers and to further propel Malaysia’s property market, Nga announced that next year, his ministry will collaborate with Rehda to organise MAPEX 2024.