MADANI Government Offers New Hope For Sick, Abandoned Housing Projects

He wondered if the promise would be kept, yet deep down he held on to the belief that it would.

The 43-year-old father of two, including a special-needs child, has every reason to be hopeful as he is making monthly installment payments on the housing loan he took to buy a house in the Federal Territory Affordable Housing (RUMAWIP) Residensi Hektar Gombak project in Kuala Lumpur. 

He purchased his unit in 2018, but the project was declared “sick” by the National Housing Department (JPN), under the Ministry of Housing and Local Government (KPKT), in April 2023.

A project is considered sick if construction work has been delayed by more than 30 percent compared to its scheduled progress, or if the sale and purchase agreement (SPA) has already expired.

 

Since 2020, Mohd Sharrel Fahmi, a government employee, has been paying nearly RM1,600 a month on his housing loan through salary deductions.

“Imagine paying that amount every month for almost five years now … and I have yet to even hold my house keys.

“It’s frustrating for me as the project was delayed several times. My hope is that this time the promise will be fulfilled and the project completed as scheduled. We buyers are exhausted and disappointed… previously, there was an announcement that work would resume in February 2025, but nothing happened.

“My challenges may not be as tough as those faced by other buyers who bear the double burden of paying rent as well as (housing loan payments) for an unfinished home. For now, (I don’t pay rent as) I live in my wife’s family home. Some of the buyers have even received late payment notices because they can no longer afford to pay the rent as well as the loan installments,” he told Bernama.

Another buyer Mohd Adnan Othman, 34, said he had to postpone his plans to get married since he is still renting a house with several friends.

“My late mother always reminded me to secure a home first so that it would be easier to marry. My mother passed away in May before she could even see my house completed.

“If I move to another rental property, I would have to pay a higher rent, plus the deposit and other commitments. It’s really hard, but I have to endure it. It’s painful to bear this financial burden that shouldn’t even exist,” he said.

 

On July 30, Housing and Local Government Minister Nga Kor Ming announced that work on the Residensi Hektar Gombak project had officially resumed that day and was expected to be completed in 2027.

He said the project, involving 2,400 residential units, was among the largest housing developments that had stalled since construction work began in 2018 due to various problems.

“After months of hard work, JPN and KPKT, in line with the Malaysia MADANI aspirations, managed to secure a new capital injection of RM125 million to rescue this project,” he said at a press conference after a working visit to the project site last month.

He added that saving this project was among the aggressive initiatives taken by the MADANI government since its formation, including establishing a special task force to tackle abandoned private housing projects.

Nga also issued a stern warning that if the Residensi Hektar Gombak developer failed to complete the project on schedule and hand over the keys by 2027, he would not hesitate to blacklist the developer, including its board members, to ensure they no longer operate in the industry.

Nearly a month after the announcement, buyers reported feeling a sense of relief seeing lorries moving in and out of the site, delivering materials for construction work.

Work on the Residensi Hektar Gombak project, which has a gross development value of RM700 million, began in 2017. The project consists of five blocks built on 7.85 hectares of Malay Reserve land, and all 2,400 units have been sold. The units are priced at RM266,000 (800 square feet) and RM299,900 (850 sq ft).

 

Commenting on the matter, property analyst Prof Dr Noor Rosly Hanif of Universiti Malaya-Wales and University of Technology Sarawak said the revival of Residensi Hektar Gombak is a positive sign for buyers, but its completion depends entirely on the appointed developer and strict monitoring by JPN and KPKT.

“Past records show that the developer failed to complete the project as agreed. Many factors contributed to the failure, including poor cash flow management, weak risk management and little or no experience in property development, particularly in handling large-scale housing projects. Nevertheless, this cannot be used as an excuse for the developer to shirk responsibility.

“To rescue Residensi Hektar Gombak, the government injected RM125 million (into the project) or RM52,000 per unit.

“This is an affordable housing project backed by the government, so when it becomes a sick or abandoned project, the government is also tainted by its failure,” he said.

He also suggested that JPN and KPKT monitor the management of the RM125 million to prevent misuse, with project cash flow audited every three months.

“Suppliers and contractors involved must be screened to ensure credibility and quality. The project work charts must be reviewed constantly to ensure work progress matches the scheduled timeline.  There must also be an adequate number of skilled workers to do the construction work.

“On-site monitoring by JPN and KPKT must continue until the project is completed. Any non-compliance with the construction schedule or flaw or delay identified must be immediately rectified by the developer,” he said.

 

Noor Rosly also said one of the main challenges in reviving a sick or abandoned project is addressing safety issues, given that the buildings on the site have remained idle for so long.

He said there is a possibility of the structures shifting due to underground water movement.

“The building foundation could be affected if there is decay or deterioration. Changes in floor load and columns may occur due to rainwater absorption, air moisture, as well as chemical and weather reactions. Theft of building parts and finishes must also be assessed.

“From a technical standpoint, when reviving an abandoned project, the first step is to determine whether the building structure is still safe to resume the suspended works.

“If a building pathology assessment shows the structure is in good and safe condition, then construction work can proceed. On the other hand, if there are damages, vandalism, deterioration, decay, corrosion or structural disruption – whether to the foundation or load-bearing columns, or to the water, electrical and mechanical systems – these must be repaired before resuming construction,” he explained.

In extreme cases, if expert assessment finds severe damage or deterioration to the foundation and building structure, the entire abandoned structure must be demolished and rebuilt. Such cases, however, are very rare, he added.

On the impact of revived abandoned housing projects on the secondary market, Noor Rosly said those abandoned in the early stages of construction with shorter suspension periods are usually still acceptable to the market as their property values are not affected.

“This is because when work resumes, the latest construction materials and finishing available in the market are used. The market perception is that it is a product that follows current trends, making it acceptable.

“For projects that were already over 50 percent completed before being abandoned, and left idle for more than 10 years, market reception tends to be more cautious. The original concept and theme may already be outdated, as well as the design, structure and finishing,” he said.

 

Believing that blacklisting errant developers and board members alone will not have much impact, Noor Rosly said authorities should also pursue bankruptcy proceedings while seizing and liquidating developers’ assets to fund the completion of their abandoned projects.

“Buyers should not be made to suffer mentally and financially due to the repeated failures of developers,” he said, stressing that the relevant laws must be more consumer-friendly and safeguard homebuyers’ rights.

He said as a long-term measure, the government should mandate that all housing projects adopt the build-then-sell concept instead of the (current) sell-then-build approach.

“Under this concept, developers can only sell housing units that are fully built and possess a certificate of fitness issued by the local authority and permanent land or strata titles. The risks of development must be borne by the developer since they are in the business and profit from it.

“Buyers, who are end users and not investors, should not have to shoulder development risks. If buyers are investors or speculators, then they should be imposed a levy through the real property gains tax under the Real Property Gains Tax Act 1976. (Ordinary) buyers should not be burdened with the risks in order to purchase a home,” he said.

 

Noor Rosly also stressed that revived abandoned projects must not only be completed but must also uphold the standards of quality, safety and liveability originally promised to buyers.

This, he said, requires proper planning and the support of all stakeholders, where the project manager – usually a certified architect – must work closely with representatives from the local authorities concerned, KPKT and JPN.

“Ensure that no changes are required in terms of the planning and building approvals obtained prior to the abandonment. However, if the project has been idle for a long time and the local authority has since introduced new structure or local plans for the areas concerned, then amendments to the original building plans may be necessary to maintain up-to-date building standards.

“The same applies to safety and liveability factors, which may require reviewing the building plans and aligning them with current laws, and planning and building standards. When such measures are taken by developers, the required standards of quality and liveability can be achieved,” he said, adding that this was done for a revived abandoned project in Pinggiran Taman Tun Dr Ismail in Kuala Lumpur.

 

On the matter of compensation claims that buyers may seek from developers, Noor Rosly said this is provided for under Section 8A of the Housing Development (Control and Licensing) Act 1966 (Act 118).

Under the law, a buyer may terminate the SPA if the developer has delayed, suspended or stopped construction work continuously for six months or more; the buyer has applied for and received written approval from the financing bank; and the housing controller appointed by KPKT certifies that the developer has refused to carry out works and has halted construction for six consecutive months.

The developer, upon receiving notification to terminate the SPA, must, within 30 days from the termination date, refund all monies paid by the buyer without interest.

Meanwhile, the Consumer Claims Tribunal under the Consumer Protection Act 1999 has jurisdiction to hear claims for refunds involving goods and services within its mandate, for claims not exceeding RM50,000, and claims accrued within three years from the date of claim.

Noor Rosly also proposed that large-scale affordable housing projects involving more than 100 units be fully managed by government agencies such as Syarikat Perumahan Negara Bhd, UDA and TH Properties, or government-linked companies like Sime Darby Property. He said these entities have strong financial capacity and extensive experience in large-scale construction.

“Unknown developers should not be entrusted with building affordable homes. If an affordable housing component is included in a private development, it should be handed over to the government through the local council or KPKT to be developed by government agencies under the build-then-sell concept,” he said, citing Singapore’s Housing & Development Board (HDB) as an example.

 

Meanwhile, according to KPKT, to date, a total of 1,127 abandoned housing projects involving 135,211 buyers have been successfully revived, with a combined development value of RM106.48 billion.

Among the abandoned projects revived by the government are Rumah Ladang Estet in Selangor (abandoned for 27 years), Bestari Jaya project in Selangor (20 years) and Putera Kiansom People’s Housing Project in Kota Kinabalu, Sabah, which dates back to the Eighth Malaysia Plan.

Nga said the successful revival of these projects demonstrates the MADANI government’s determination and commitment to improving the people’s welfare through a proactive approach and collaboration with all stakeholders, including the civil service.

Meanwhile, one million affordable housing units will be built by the federal and state governments, together with private developers, between 2026 and 2035 to provide as many Malaysians as possible with safe and comfortable housing.

Prime Minister Datuk Seri Anwar Ibrahim, when tabling the 13th Malaysia Plan in the Dewan Rakyat on July 31, said the provision of affordable housing would be carried out through various initiatives, including the ‘MADANI Residensi’ Programme.

Anwar, who is also Finance Minister, said affordable housing will also be provided through the Public Employees Housing Programme, New Home Construction Assistance Programme, Affordable Housing Programme and ‘Rumah Bakat MADANI’.

He added that to date, 180,000 housing units have been completed, while another 235,000 are under construction by the government.