‘George Town a ghost town if rent control takes off’


GEORGE TOWN: The return of colonial era rent control to the heritage precinct here will do more damage than good. It might drive out more traditional traders from Penang’s capital, a properties interest group warned today.

K Gopal, of the newly-formed George Town Heritage Property Owners’ Group, said the state government’s proposed rent control to save traditional trades such as kopitiams and other Penang native stores, would only serve to turn it into a “ghost town”.

He said rent control was grossly unfair to property owners as they had to contend with expensive repairs to buildings dating back to World War 1.

“To those who are proposing rent control, do you know how much it takes to maintain and upkeep heritage buildings?

“If one kopitiam (coffee shop) closes down, does this mean that the whole city is to be blamed?

“If rent control is introduced, it is very likely George Town will become a ghost town as no one would want to rent out their properties. It is best that rent prices are determined by market forces, like everywhere else.

“Rent control would only benefit the tenants, not the owners like us. That is why more consultation is needed before steamrolling the rent control idea in George Town,” Gopal told FMT.

Last month, Chief Minister Lim Guan Eng announced rent control may be reintroduced in the heritage site to reduce the exit of traditional traders from the 150ha site on the northeast cape of Penang Island.

He said laws similar to the repealed 1966 Rent Control Act may be reintroduced as state law or a private members bill in Parliament.

The law, if enacted, would be limited to buildings built before World War 2 or before 1948 in the heritage site.

Lim had also said a rental hike cap of 25% every five years would also be introduced, as part of the new law.

The rent control premises were then known as “controlled premises” with a “fair rent” agreed upon between the landlord and tenant. The rent would be determined by a Rent Tribunal if both parties could not decide on a fair rental amount.

During the rent control days, rent was between RM50 and RM200. After the Rent Control Act ended in 1999, rent soared to RM500 to RM1,000.

Currently, rentals for heritage shophouses are in the range of RM2,500 to RM6,000, or higher, depending on the size. The rentals increased after George Town was bestowed the World Heritage Site status in 2008.

Gopal said property owners in the heritage district had been suffering in silence to maintain heritage buildings.

He said the city council mandated timber flooring for the first floor of all heritage buildings. This had, among others, significantly bumped up maintenance costs.

To make things worse, George Town has a massive termite infestation problem, which makes replacement of timber material more frequent.

“The city council does not allow us to change wooden beams or flooring to metal or concrete ones. So we are left with no choice but to buy timber wood flooring, which is very expensive.”

Gopal added the restoration and maintenance cost for heritage buildings typically cost at least RM500,000 a year.

Under city council by-laws, heritage building owners must comply with stringent set maintenance guidelines to ensure the upkeep of the colonial-era buildings.

“The burden of maintaining the buildings, paying bank loan interest and other miscellaneous fees are the responsibility of the owners, not tenants.

“After bearing all these additional costs, can the state compensate us for the increased costs?” Gopal asked.

Gopal and a group of heritage property owners have started a steering committee to air their disapproval of the rent control plan to the Penang Government.

Gopal has started the George Town Heritage Property Owners’ page on Facebook to gather feedback, which would be later brought to the attention of the state government.

Related stories:

Bringing back Rent Control, but at whose expense?

Rent control regulations right step, says heritage group

Penang considering rent control for George Town