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PETALING JAYA (Feb 6): Clear compensation provisions must be stipulated in the Urban Renewal Act, says a legal expert.
Advocate and solicitor of constitutional and property law Hjh Adriana Abu stressed this during a forum on Repercussions and Ramification of the Urban Renewal Bill held here recently.
Organised by the National House Buyers Association (HBA), the forum delineated a number of shortcomings that the government should refer to for improvements to the Urban Renewal Act (URA), whose tabling has been retracted recently.
Read more: HBA welcomes retraction of Urban Redevelopment Bill
Adriana noted that the parent act did not contain a clear compensation framework, but only with assurances given that compensation would be addressed through regulations at a later stage. Given the impact on property rights, she argued that compensation provisions should be clearly set out in the primary legislation rather than deferred to subsidiary regulations.
Adriana outlined the evolution of the proposal, noting that the terminology had shifted over the years, but the substance of the proposal continued to raise serious concerns.
According to her, the legislation was framed as a mechanism to accelerate redevelopment, and address ageing buildings and urban decay, but its broader implications warrant closer scrutiny.
She stressed that the concerns raised were grounded in the wording of the draft law itself, rather than mere speculation.
Adriana drew attention to Section 2, which exempted properties protected under the National Heritage Act 2005, but was silent on other categories of land protected under the Federal Constitution or state administration. She noted that this absence of equivalent exemptions had generated concern among stakeholders.
Section 4, which defined “interested persons”, was described as particularly significant as the definition was perceived to extend beyond owners, and proprietors to include developers, trustees, liquidators, legal representatives, and administrators. As a result, she argued, owners were not uniquely protected under the proposed framework, even though they bore the financial and legal responsibilities of property ownership.
The definition also applied broadly across residential, commercial, strata, landed, and non-strata properties.
She further noted that while the authorities had stated that the URA was not solely on demolition and rebuilding, the bill did not establish a clear hierarchy between rejuvenation, refurbishment, and redevelopment. Instead, an area designated under the previously-proposed Act could proceed directly to demolition and redevelopment without prioritising less intrusive measures.
Governance provisions under Sections 5 to 15 were also criticised, as under the draft bill, overall authority would rest with a federal committee chaired by the minister, with state committees required to seek federal approval for key decisions, including the appointment of developers. Adriana argued that this structure centralised power at the federal level, potentially undermining state authority over land matters.
According to her, Section 19 was described as one of the most contentious provisions—while voluntary participation by owners was mentioned, the bill did not define “unanimous consent”. Instead, it introduced consent thresholds based on building conditions and age, with approval percentages ranging from 51% to 80% of “interested persons”, rather than owners alone. She emphasised that thus, buildings of any age could fall under the URA, raising questions about whether relatively new properties could be subject to compulsory redevelopment.
Section 21, which allowed the use of the Land Acquisition Act to acquire minority interests once consent thresholds were met, was criticised as discriminatory. Adriana argued that applying two different legal regimes to the same group of owners created inconsistency and undermined established safeguards for compulsory acquisition.
More public engagement needed
The forum underscored opposition to making only limited or cosmetic amendments, such as adjusting consent thresholds, with speakers urging broader and more meaningful public engagement. They warned that without substantial revision, the proposed URA could fundamentally and permanently alter the landscape of property rights in Malaysia.
Other speakers included HBA honorary secretary general Datuk Chang Kim Loong, Porch & Core Property Management Sdn Bhd managing director (MD) Ayden Mok, Burgess Rawson Management Sdn Bhd MD Wong Kok Soo, Ridge Property Management Sdn Bhd chartered accountant and MD Mohd Azri Mohd Azmi, and HBA legal advisors—advocate and strata law specialist Koh Kean Kang, and advocate and solicitor of public interest and land law T Vicknaraj.
Vicknaraj raised concerns about inconsistency with Section 34 of the National Land Code, which upholds the indefeasibility of registered titles. Under the URA, they argued, a registered owner’s rights could be overridden by majority consent, even where the owner objected.
Redevelopment, Vicknaraj said, should be a last resort, preceded by maintenance and repair measures already provided for under existing laws. Any compensation framework, they added, should be clear, fair and designed to prevent economic displacement.
HBA’s Chang further warned that the URA could create social divisions by institutionalising majority rule over minority rights, potentially leading to displacement, pressure buy-outs and fractured communities, citing that redevelopment was driven primarily by commercial interests, thus risking gentrification without adequate safeguards for existing residents.
Concerns were also raised about federal-state relations as land matters fall under state jurisdiction, yet the proposed framework centralised decision-making at the federal level. This, he said, could weaken federalism safeguards and invite constitutional challenges.
Several alternatives were proposed. Among them was a model where owners retain the title and remain principal project owners through special-purpose vehicles, with developers acting as contractors rather than landholders.
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