PETALING JAYA (Feb 6): Clear and legally defined compensation mechanisms must be embedded directly in the proposed Urban Renewal Act (URA), according to constitutional and property law advocate Hjh Adriana Abu.
Speaking at a recent forum examining the implications of the Urban Renewal Bill, Adriana emphasised that the draft legislation lacked a detailed compensation structure, instead indicating that such matters would be addressed later through regulations. Given the significant implications for property ownership rights, she argued that compensation terms should be explicitly written into the primary legislation rather than deferred to subsidiary rules.
The forum, organised by the National House Buyers Association (HBA), brought together legal professionals and property industry stakeholders to discuss areas of concern and potential improvements to the bill, which has recently been withdrawn for further review.
Adriana explained that although the proposal has evolved over time in both name and presentation, many of the underlying issues remain unresolved. While the bill is positioned as a tool to revitalise ageing buildings and address urban decay, she cautioned that its broader legal and economic consequences require careful scrutiny.
One area highlighted was the scope of exemptions. The draft legislation specifically excluded properties protected under the National Heritage Act 2005 but did not clearly address other categories of land safeguarded under constitutional or state laws, raising uncertainty among stakeholders.
Another key concern involved the definition of “interested persons”. The draft wording extended this definition beyond property owners to include developers, trustees, liquidators, administrators, and other parties. Adriana noted that this approach could dilute the rights of owners, even though they carry the financial responsibilities and long-term risks associated with property ownership. The provisions were also broadly applicable across residential, commercial, strata, and landed properties.
She further pointed out that the bill did not clearly prioritise less intrusive measures such as refurbishment or rehabilitation before permitting demolition and redevelopment. Without such a hierarchy, redevelopment could proceed directly once an area was designated under the proposed framework.
Governance structures were another point of debate. Under the draft bill, decision-making authority would be centralised in a federal-level committee chaired by a minister, while state-level committees would need federal approval for major decisions, including developer appointments. Critics argued that this arrangement could weaken state authority over land matters, which traditionally fall under state jurisdiction.
Consent thresholds also drew strong criticism. Although voluntary participation was mentioned, the draft bill introduced approval thresholds ranging from 51% to 80% of “interested persons”, rather than requiring unanimous consent from property owners. Observers warned that this could potentially allow redevelopment to proceed even when a significant minority of owners objected, and that buildings of any age could theoretically fall under the Act.
Another contentious provision involved the use of the Land Acquisition Act to acquire minority interests once consent thresholds were met. Legal experts argued that applying different legal frameworks to owners within the same development could create inconsistencies and undermine established safeguards.
Speakers at the forum called for broader public consultation rather than minor amendments, warning that the proposed legislation could permanently reshape property ownership rights in Malaysia if enacted without substantial revision.
Additional concerns were raised about compatibility with existing laws, including provisions in the National Land Code that safeguard registered ownership. Some participants argued that redevelopment should only be considered after maintenance and repair options have been fully explored, and that compensation policies must be transparent and sufficient to prevent displacement.
Industry observers note that urban renewal policies have significant implications not only for residential neighbourhoods but also for commercial and industrial districts. In growth corridors across the Klang Valley, including areas where demand remains strong for commercial property in KL, office space in Bukit Jalil, industrial land in Selangor, factory space in Puchong, and industrial property in the Subang area, clarity in redevelopment laws is essential to maintain investor confidence and ensure fair outcomes for owners, tenants, and businesses.
Among the alternatives discussed at the forum was a model allowing property owners to retain land titles while forming special-purpose vehicles to manage redevelopment projects, with developers acting as contractors rather than acquiring ownership. Proponents suggested this approach could better protect ownership rights while still enabling urban regeneration.
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