PETALING JAYA: The proposed Urban Renewal Act, positioned as a crucial step towards revitalising aging urban areas, has sparked a heated debate on whether it prioritises developers at the expense of homeowners.

The current draft proposes that buildings over the 30-year mark are eligible for redevelopment, a threshold some deem premature.

Tan Booi Charn, chairman of the Kuala Lumpur Residents Action for Sustainable Development Association, said premature redevelopment could displace homeowners unnecessarily and disrupt communities.

“Houses that qualify for redevelopment should be older than 40 or 50 years, depending on structural integrity,” she told FMT.

Tham Kuen Wei, a senior assistant professor from Tunku Abdul Rahman University of Management and Technology, advocated for an even higher age threshold of 60 years and older.

“Not all older buildings decline in value over time. Certain historical buildings or those constructed with classic materials and designs may, in fact, appreciate in value,” he said.

Tham said setting a lower age threshold could destabilise the real estate market, leading to an oversupply of new properties and unsustainable price hikes.

Getting owners’ consent
The draft also proposes lowering the consent threshold for en-bloc redevelopment to 75% for buildings under 30 years old and 80% for those older.

“Why not make the consent threshold 95% or 97% to reflect the intention to get almost 100% consent from owners?” said Tan.

She said this greatly increased consent threshold would ensure that nearly all affected homeowners are in agreement, thereby respecting Article 13 of the Federal Constitution.

Article 13, which pertains to property rights, stipulates that “no person shall be deprived of property save in accordance with the law”.

Tham proposed a tiered approach to consent thresholds – 100% for buildings under 60 years old, 75%/80% for buildings exceeding 60 years old and 51% for abandoned housing projects.

“The focus of urban renewal should be on buildings aged 60 years and above, rather than those that are merely 30 years old.

“Additionally, buildings over 30 years old can often be refurbished and renovated, making redevelopment unnecessary in many cases,” he said.

Unclear compensation
Tan also raised concern about the lack of clarity on compensation for displaced homeowners, as it outlines compensation mechanisms but does not specify how it will be calculated.

“The draft does not properly spell out the house owners’ rights and benefits, particularly in how the compensation is derived. The calculation must be transparent and fair to both owners and developers, and not just be in favour of developers,” said Tan.

Tham said compensation should not be based solely on the building’s current value, and homeowners should also receive a share of the redevelopment profits.

“Should the owners reject in-kind compensation, then monetary compensation must be truly equitable to ensure fairness,” he said.

Tham also said homeowners should have the right to appoint independent valuers and legal advisers, rather than developer-appointed professionals.

“This is to ensure that gross development values and costs are measured accurately and fairly for both developers and original owners,” he said.