Urban renewal law, but what about minority home owners?

The National House Buyers Association (HBA) read with consternation the article “Putrajaya mulling urban renewal law, says FT minister”, which seems to have ignored the unconstitutional impact which a proposed urban redevelopment renewal law will have on house owners everywhere in Malaysia, whether within or outside of the Federal Territories.

Does the FT minister not realise the implications and far-reaching damage such a proposed redevelopment law will have on Article 13 of the Federal Constitution and the principles of indefeasibility of title as enshrined in the National Land Code which the Federal Territories are bound by?

We hope the FT minister is not being swayed by the whispers of commercial-minded developers.

En bloc strata (forced) sale

We can certainly mull over enacting a law for the greater good of the public but the government must ensure they understand that this purported “redevelopment or renewal” law is another name for the impugned “en bloc strata (forced) sale” proposal was put forth by commercial developers 10 years ago, at the very least, for the primary aim of “confiscating” land from its owners for profit and not for any higher purpose of rejuvenation or renewal or beneficial interests of the owners.

En bloc strata sale is where land with buildings erected on it is identified for acquisition by commercial developers. These developers do not have any pristine objective to contribute to the comfort of the owners. It is a purely commercial decision.

The developers will then approach the owners and persuade them to part with their property in consideration for perhaps the market rate of the said property.

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 buildings which are priced high above the original rate of the demolished buildings.

The excuse that the original buildings are dilapidated or unsafe is subjective and not based on any authoritative findings and conclusions. It is only a smokescreen to justify the forceful acquisition. The issue of certification by the local council as “condemned building” follows.

The aim as perceived by HBA is forceful acquisition of suitable commercial land, for example the Desa Kudalari apartments. Why forceful? Because en bloc sale does not respect the opinions of the minority owners. En bloc sale/redevelopment/renewal law only upholds the might of the majority and profit margin per se. It ignores the objections of those who do not want to dispose of their property as it operates based on the majority rule.

Cry of outrage and disharmony

The concern is where there are certain owners, let’s say they are the minority, who do not wish to dispose of their property even with considerable compensation because they have lived there their entire lives – raising families, losing their spouses, being infirm, etc. Is the FT minister saying that these considerations are nothing compared to the amount of money the private companies make under the pretext of redevelopment/renewal? Does the FT minister actually care?

How does the proposed law guarantee the rights of the minority owners as enshrined under Article 13 of the Federal Constitution and the owners’ indefeasible title over their property? HBA’s view is that there are no guarantees.

The FT minister took Singapore as an example to justify the enactment of this law but the minister perhaps is in the dark as to the effect en bloc sale as practised in Singapore had on the home owners who objected.

HBA has explained numerous times that, in Singapore and Hong Kong, there is only leasehold land for existing buildings, and new developments are scarce on the islands.

Not so in Malaysia and especially in Kuala Lumpur (Putrajaya is not dilapidated yet and Labuan is not even fully developed). There is plenty of development land within the greater KL vicinity, without having to congest inner KL with more high-end expensive condominiums (currently existing ones are mostly unoccupied) and commercial buildings (existing ones are also mostly untenanted).

We have to avoid over-building within the city. We have to deter urban migration by building outside the greater Klang Valley. We do not have to worsen the urban condition of inner KL.

Less ‘pros’ and more ‘cons’

In the Singapore example, the minority owners are given replacement units on the renewed and redeveloped land itself and not in some far-off tertiary location. However, the success stories do not highlight the plight of the minority owners who are often old folks and the infirm who have stayed in the same area for decades.

These old folks and infirm face hardships in adapting to new surroundings. Is money more important? Old folks and those who are impaired do not matter? In Malaysia, we have both freehold and leasehold land but what is most glaring is that we have significantly more land compared to Singapore and Hong Kong.

The discussion of the viability of en bloc sale in Malaysia using Singapore and Hong Kong as examples has turned a blind eye to the fact that Singapore and Hong Kong are ranked as the world’s third and fourth most densely populated countries respectively while
Malaysia is ranked far behind at 112th based on the projections of the United Nations in 2015.

While en bloc sale is arguably a necessary evil in Singapore and Hong Kong due to the pressing need for urban redevelopment, this argument is not relevant for Malaysia. Proceeding with en bloc sale/redevelopment/renewal with a simple majority or any number of majority vote to deprive a home owner of his property is contrary to the constitutional right to own property.

This urban redevelopment or renewal is not what it says it is – it is a mere draconian and unconstitutional law to take the rightful property of home owners, who are living in older strata buildings, and sell to avaricious developers to be redeveloped into high-end commercial and residential developments as most of these strata buildings (and this is apparent in the Federal Territories, especially in KL) are older developments surrounded by modern high-end buildings. A good example, as HBA has pointed out above, are the Desa Kudalari apartments, which are one of the main targets of this so-called proposed law.

The question is whether the government is facilitating the private entities vis-à-vis property developers. Will any aggrieved owners whose property is “forcefully acquired” be given money only or both money and a replacement house in an obscure location in the fringes of the city? Where are they supposed to live during the period of so-called redevelopment for urban renewal, and who will bear their expenses? Is this the current PH government’s vision of a new, better and caring Malaysia? Business as usual irrespective of the changes the ordinary Malaysian voted for in 2018?

Land Acquisition Act

The FT minister is saying that currently, there is no such law to enable this forceful acquisition in Malaysia. In fact, we do. The law is called the Land Acquisition Act. There are prescribed reasons provided, including procedures in place to ensure no forceful acquisition is undertaken without considering the interests and opinions of all the owners and not a mere majority.

The reasons prescribed are also confined to those for the “benefit of the public” and not for commercial interests. Even with these prescriptions in place, abuse has been known to occur. Owners have been hoodwinked by unscrupulous developers with the “assistance” of the authorities.

Why then are we furthering the potential of abuse of innocent owners to be “shortchanged” into giving up their homes and property with this proposed redevelopment/renewal law?

We also have the Strata Management Act 2013 (SMA) that provides for contributions by the owners to the Maintenance Account and the Sinking Fund Account in strata schemes so that strata buildings can be properly maintained, refurbished and upgraded without falling into disrepair.

It is justified to redevelop strata development areas for urban renewal using either the current Land Acquisition Act or the SMA, which is in line with Article 13 of the Federal Constitution and Section 340 of the National Land Code, to protect the right of the home owners rather than apply an irrelevant practice and law such as the one in Singapore and Hong Kong.

Being old is not a crime

Home owners whether of strata or landed schemes (the potential redevelopment/renewal law could also be extended to cover landed non-strata schemes if we are not careful) should have the freedom to decide how to go about any redevelopment of their housing schemes without the need for an unconstitutional law that allows the “might and greed” of the majority and third parties to override the constitutional right of the minority home owners.

These minority home owners may have to succumb to pressure from the majority home owners who decided to trade their respective property for a handsome profit. The younger owners may have the means to easily relocate and adapt to new surroundings but the older owners often have difficulty doing so.

Does this proposed draconian law envision the right of the minority should the minority want to be compensated by being given a replacement home on the same site after redevelopment without having to pay for the said unit, including all expenses for temporary accommodation to be borne by the developers?

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 which do not garner the consent of the minority shareholders, provided it is done for the benefit of the company. The minority shareholders in such cases are still handsomely rewarded.

Not so for home owners who fall into the minority segment should such a draconian law be allowed.

Enacting this new law for en bloc sale albeit under the disguise of urban redevelopment/renewal without obtaining the genuine consent of all the owners will pave the way for disharmony in any development strata or landed property and potentially lead to social unrest. There is no valid justification to support this proposal.

HBA’s stand is that any redevelopment/rejuvenation/renewal must be consented to by all owners. There are sufficient laws in place to push for “prettying up” dilapidated buildings without sacrificing the interests of the owners. If the FT minister is
genuine in his intentions, perhaps he should have a 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. If he really cares, that is.

Chang Kim Loong is honorary secretary-general of the National House Buyers Association.

The views expressed are those of the writer and do not necessarily reflect those of FMT.