HBA: The government intention to adopt a profit-based valuation methodology should be scrutinised
KUALA LUMPUR: Homeowners should not be expected to surrender properties they already own in exchange for promises of replacement homes under redevelopment schemes without adequate legal and financial safeguards.
Datuk Chang Kim Loong, Honorary Secretary-General of the National House Buyers Association (HBA), has cautioned that homeowners should not be compelled to relinquish their existing properties in exchange for promises of new homes during redevelopment schemes without proper legal and financial protections. He expressed concerns over the proposed Urban Renewal Bill (URA), questioning the need for new legislation, the fairness of its valuation framework, and protection for homeowners whose properties might be targeted for redevelopment.
Housing and Local Government Minister Nga Kor Ming stated that the URA would complement existing laws for dilapidated strata buildings, with developers' projected profits factored into determining replacement property values. However, Chang challenged the viability of using projected profits as a basis for valuation, citing uncertainties in property development.
He argued that Malaysia already possesses a comprehensive legal framework covering land ownership, strata management, building safety, planning, and compulsory land acquisition. Chang suggested that the government should identify specific deficiencies in current legislation and amend the relevant laws instead of enacting a new comprehensive law.
He questioned how developers' projected profits would be calculated, who would verify the assumptions, and what safeguards would be in place if actual financial outcomes significantly deviated from projections. Chang emphasized that projected profits are not financial guarantees, and a promise of a replacement home is not equivalent to receiving one.
He urged the government to publish the valuation formula, disclose assumptions, and establish independent verification procedures. Homeowners should also have a clear means to challenge valuations and seek independent legal advice when objecting to proposed redevelopments. Chang advocated for legally enforceable safeguards, including financial security, provisions for temporary accommodation, binding completion requirements, and mechanisms to ensure project completion if developers default.
He urged caution against assuming that a new comprehensive law is necessary, urging the government to first identify and address specific deficiencies in existing laws and enforcement mechanisms.
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