Issues in housing development. These issues are mainly about the abandonment of such project, loan issues and also the unreasonable high price of the house itself. Analysis on how to overcome such problems. How Bank Negara reacts to such problems. 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.

1. 1
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 website1. 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
1 Retrieved on 2nd June 2016 from http://countrymeters.info/en/Malaysia

2. 2
main concern2. 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 project3. 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 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 housingdevelopment projects in Malaysia:A casestudy of abandoned housingprojects. 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.

3. 3
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 infrastructures5. In general, developers are classified as entrepreneurs
who embark on and implement land development projects6. 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
land7 and the types of land input8.
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 elaborations9. 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.
5 African Journal of Business Management, 5(16): 6891–6900.
6 Characteristics of developers and their relations to open spaceconservation. Land Use Policy, 28(4): 887–897
7 Kok, Monkkonen and Quigley, 2011.
8 Planningpolicy,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.

4. 4
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 Technology10, 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 demands11. 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
10 Pp 4(1): 71–80.
11 Abandoned housingdevelopment: The Malaysian experience.PhD diss.Heriot-WattUniversity.

5. 5
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 stages12. 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) project13.
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 application14;
(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
12 The role of housingplanningpractices in contributingtowards housingoversupply. World Academy of
Science, Engineering and Technology, 59: 767–775.
13 HDA, 2010,DTCP, 2007
14Subsection 21[1], Act 172
15Section 9, Act 133
16Section 70A, Act 133.

6. 6
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.

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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 Act17. 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.
17 1976.(Act 172).

8. 8
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 Watkins19 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.
18 2006.
19 2002.

9. 9
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
Code20. 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 Harvey21, 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
20 1965.
21 2000.

10. 10
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 IV22. 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 sum23. 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
22 Section 5 of National Land Code 1965.
23 Section 241(1) of National Land Code

11. 11
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.
24 Section 221 of National Land Code 1965.

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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.
25 Section 76(a)(i),(ii),(iii) of the National Land Code 1965.

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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 Harmoni26, 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.
26 Taman Harmoni,Lot 82,Mukim of Cheras,Districtof Hulu Langat, Selangor

14. 14
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 undermining27 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
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 MalaysiaSdn Bhd.

15. 15
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.
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

16. 16
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.
29 Alias M,Abdul. (2013). "Housingthe Nation. Policies,Issues and Prospects."Luxury and Affordable Housing
II.PR1MA: Catalyst in Affordable Housing.

17. 17
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
bargain30 are not always happen. Therefore, the buyers must make an effort to hunt for these
‘hidden gems’.
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

18. 18
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
management31. 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,
31 n.a. (2012). Importance of Town Planning.Retrieved on June 1, 2016 from Just another WordPress.comsite
https://townplanningjobslondon914.wordpress.com/

19. 19
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

20. 20
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.
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/

21. 21
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

22. 22
the development. Housing development is one of them and hence, it is very crucial to give
serious consideration to land law whenever disputes arise.

23. 23
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

24. 24
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
from http://www.slideshare.net/ainulj/land-administration-ainul
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
https://townplanningjobslondon914.wordpress.com/
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
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malaysia