Urban Renewal in Malaysia: A Deep Dive into the Urban Renewal Act and its Impact on the Klang Valley

The Urban Renewal Act (URA) in Malaysia aims to address urban decay and modernise cities, but it has also raised concerns about property rights and community stability, potentially impacting new projects and subsale houses in the Klang Valley.

What is the Urban Renewal Act?

The Urban Renewal Act is a proposed law in Malaysia that aims to redevelop dilapidated urban areas without requiring the consent of all landowners, unlike the Strata Titles Act 1985.

Building Age	Consent Threshold
Under 30 years old	80%
Over 30 years old	75%
Abandoned buildings	51%

This provision has been met with resistance, as it raises concerns about the potential for minority property owners to be compelled to sell their properties even if they disagree with the redevelopment plan.

The URA covers three main types of urban renewal

Redevelopment: Involves significant changes to the physical condition of existing sites, including demolition, clearing of sites, constructing new buildings, and upgrading infrastructure and utility facilities.
Regeneration: Focuses on repairing or upgrading neglected, dilapidated, or abandoned buildings.
Revitalisation: Involves improvements through upgrading, beautifying, or landscaping to enhance the overall environment.

History of the Urban Renewal Act

Urban renewal has existed for centuries, beginning in 19th-century England. Malaysia started exploring urban renewal in 2015, and in 2020, the government announced a policy to redevelop public housing over 30 years old. The current Urban Renewal Act is set to be tabled in Parliament.

Goals of the Urban Renewal Act

The URA aims to modernise Malaysian cities by revitalising dilapidated areas; streamlining redevelopment; improving living conditions; enhancing public facilities; balancing development with property rights; and preserving national heritage.

Criticisms of the Urban Renewal Act

Despite the stated goals, the URA has faced criticism from various quarters:

Concerns about the URA include potential violations of property rights, gentrification and displacement of residents, lack of transparency, abuse of power, strain on infrastructure, erosion of community bonds, and ethical considerations surrounding the balance between progress and individual rights.

Comparative Legal Frameworks

Examining urban renewal laws in other countries provides valuable context for understanding the potential implications of the URA in Malaysia.

Singapore’s Land Acquisition Act allows for compulsory acquisition based on market value but does not explicitly require public consultation. The practice has raised concerns about the potential for displacement and inadequate compensation for affected residents.

Hong Kong’s Urban Renewal Authority has faced criticism for favouring developers over long-term housing stability, which leads to excessive speculation and displacement.

These examples highlight the need for Malaysia to incorporate legal safeguards in the URA to protect the rights of property owners and ensure equitable development.

Impact of the Urban Renewal Act

The URA has the potential to significantly impact the urban landscape of Malaysia, particularly in the Klang Valley.

Impact on New Projects

The URA is expected to encourage new development projects in the Klang Valley by making it easier for developers to acquire land for redevelopment. This could lead to:

Increased supply of housing: Redevelopment projects could contribute to an increased supply of housing units in the Klang Valley, potentially improving affordability. For example, the redevelopment of Razak Mansion in Kuala Lumpur resulted in the construction of RC Residences, which added 5,748 new housing units to the market.
Modernisation of urban areas: The URA could facilitate the modernisation of older parts of the Klang Valley by replacing dilapidated buildings with newer, more modern structures. Such an effort could involve redeveloping areas like Taman Ikan Emas in Cheras, Pudu, Chow Kit, and parts of Sentul, which have been identified as requiring substantial redevelopment.
Improved infrastructure and public facilities: Redevelopment projects could include upgrades to existing infrastructure and the provision of better public facilities.
Economic benefits: Urban renewal projects can generate economic benefits, such as increased tax revenue and job creation. The redevelopment projects in Kuala Lumpur alone are expected to generate an estimated gross development value of RM332.5 billion.

Impact on Subsale Houses

The impact of the URA on subsale houses in the Klang Valley is less clear-cut and could depend on various factors, including the location and condition of the property. Some potential effects include:

Increased property values: In areas undergoing redevelopment, the value of existing properties could increase due to improved infrastructure and amenities.
Potential for en bloc sales: The lower consent threshold could make it easier for older buildings to be sold en bloc for redevelopment, potentially benefiting existing owners.
Uncertainty and potential for displacement: The URA could create uncertainty for some homeowners, particularly those in older buildings, as they may face pressure to sell their properties even if they do not wish to.

Current Status of the Urban Renewal Act

The Urban Renewal Act will be tabled in Parliament on 10 March 2025. It has caused concerns about property rights and community stability, but the Prime Minister has assured that there will be no forced evictions or changes to the ethnic composition of any area. There is a growing need for public engagement and awareness campaigns to inform homeowners about the act and its implications.

Conclusion

The Urban Renewal Act of Malaysia aims to modernise urban areas and address urban decay. While it may lead to increased housing supply and improved infrastructure, it also raises concerns about property rights, community stability, and equitable development. A balanced approach to urban renewal is needed to ensure progress while protecting individual rights and community well-being.

[Image source: Photo by Zahid Izzani/The Edge]