Malaysia is set to usher in a new era of housing governance with the implementation of five major Madani Housing Reforms beginning Jan 1 next year. These reforms are aimed at creating a more transparent, accountable and efficient housing ecosystem that prioritises homebuyer protection and targets zero abandoned projects by 2030.
Minister Of Housing And Local Government Nga Kor Ming said in November that the reforms will focus on strengthening buyer protection, enhancing system efficiency, closing regulatory gaps and establishing a world-class digital environment for housing transactions.
The Ministry of Housing and Local Government (KPKT) envisions that the Malaysia Madani Housing Reforms will create an efficient and trustworthy residential market — one where homebuyers can invest with confidence while enjoying protection against risks such as abandoned projects or financial mismanagement by property developers.
We talk to a range of industry stakeholders, including the Real Estate and Housing Developers’ Association (Rehda), the House Buyers Association (HBA) and property consultants, to get their comments and insights on the proposed reforms.
While broadly supportive of the ministry’s objectives to strengthen buyer protection and market transparency, these stakeholders also highlighted key implementation concerns, particularly around compliance costs, project timelines and the need for clearer transitional guidelines. Their feedback underscores the importance of balancing stronger regulatory safeguards with practical measures that ensure the continued viability and sustainability of the housing development sector.
Rehda: Positive step in raising industry standards
Applauding the announcement, Real Estate and Housing Developers’ Association (Rehda) Malaysia president Datuk Ho Hon Sang describes it as a positive step forward, as it will help modernise the regulatory ecosystem, reduce information gaps and enhance protection for Malaysians.
“Rehda supports the spirit and objectives of the Madani Housing Reforms. As responsible property developers, we welcome initiatives that enhance trust, improve governance and raise the overall industry standards. Rehda will continue to encourage our members to uphold our nation-building role of providing quality, affordable homes for the rakyat in a timely and sustainable manner,” Ho tells City & Country in an email interview.
He points out that the Housing Integrated Management System (HIMS) and electronic Sale & Purchase Agreement (eSPA) are digitalisation measures intended to streamline transactions and improve transparency. HIMS is already operational while eSPA — a component of HIMS — is scheduled to replace the current paper-based SPA from Jan 1.
Ho also lauds the initiative to strengthen the National Housing Data Bank (Teduh) system by expanding its data collection for the convenience of users, which are mainly the rakyat. However, Rehda has some worries over the New Property Development Bill, which will replace the current Act 118.
“Rehda has some concerns pertaining to the inclusion of commercial developments in the Act, as opposed to Act 118, which oversees solely residential developments, but we hope to gain further insights and understanding in future engagements with KPKT (Ministry of Housing and Local Government),” says Ho.
Too soon to tell the result
Ho also urges the government to provide additional support and incentives to property developers, particularly the small and medium outfits, during the transition period.
“While it is too soon to gauge the kind of financial impact these reforms will have on developers, we expect some increase due to the stricter compliance requirements as well as the digital integration required at the developer companies … The government should consider incentivising SMEs for this transition period as the cost of business is getting higher due to other factors like SST (sales and service tax), tariffs and global market forces,” he adds.
Despite the higher operational costs expected, Ho agrees that the changes are necessary to improve the housing development process, and that the benefits will most likely outweigh the increase in costs.
“We believe that [digital] transparency will definitely have a positive impact on the market as potential buyers have more information about the developers or projects to assist them in making their choice.
“However, whether it will impact sales performance in any major way is yet to be seen, as there are many factors influencing a potential buyer’s decision to purchase a home, transparency of data and availability of details being one of many.”
He foresees that it will take a few months to see the effects of the reforms in terms of supply, pricing and launches. Should there be negative impacts, particularly due to cost issues for SME developers, he is confident the market will recover in due time.
Ho also reaffirms Rehda’s view that the greater transparency required by these initiatives will help create a more stable and credible market, as the availability of accurate data and stronger governance are crucial in reducing project risks and abandoned housing developments.
The changes may, however, discourage new entrants due to higher regulatory scrutiny.
“SME developers may struggle to adapt due to limited resources, significantly higher regulatory thresholds and more stringent conditions. Some smaller or newer developers may find it challenging to meet these stricter requirements, especially if they lack the financial or technical capacity to transition quickly. This may discourage some property developers — even those with good track records — to re-enter the market if they perceive the compliance burden has become disproportionately heavy,” he says.
Nevertheless, Ho views the reforms as a catalyst for creating a healthier housing industry landscape and raising overall accountability. They will also serve as encouragement for responsible and well-capitalised property developers that are already implementing strong governance, compliance and ethical standards.
HBA: The gap between rules and reality
Responding to the implementation of the Madani Housing Reforms, National House Buyers Association (HBA) honorary secretary-general Datuk Chang Kim Loong says that strong and transparent implementation is key, particularly in ensuring greater accountability from property developers to reduce abandoned projects to zero within the next five years.
“The problem of abandoned housing projects is not because of the lack of laws … there is no solution to abandonment. We just have to prevent it from happening. As the saying goes, prevention is better than cure, because it is too late to close the stable doors after the horses have bolted,” says Chang in an email interview with City & Country.
He also highlights that Malaysia does not lack legislation governing the housing sector. Instead, enforcement is lacking. He raises the question of whether another amendment of the Housing Development (Control & Licensing) Act 1966 (HDA) is necessary as the current regulations already offer adequate protection.
For context, HDA was revamped in 2015 to plug loopholes, rectify inadequacies and tighten requirements so that non-bona fide developers would be marginalised. Yet, despite these improvements, cases of abandoned projects continue to surface, according to Chang.
“There is nothing wrong with the current laws. The million-dollar question is — how many delinquent housing developers have been punished and prosecuted in the courts of law with so many abandoned housing projects littered in Malaysia?”
Enforcement the missing link
The most significant change in the 2015 amendment was the introduction of Section 18A, which criminalises housing project abandonment. It carries fines of between RM250,000 and RM500,000, or imprisonment of up to three years, or both (See Table 1).
Chang notes, however, that since its enactment, there have not been reports of developers being prosecuted under this new section, despite the number of abandoned projects increasing.
“Enforcement is still the key to determining whether the law can protect property buyers effectively. Abandoned housing projects are the biggest nightmares for house buyers, yet new cases keep recurring. It is not that the ministry does not have the laws; it’s the sheer lack and lax in enforcement,” he stresses.
Chang raises concerns over whether the authorities have adequately utilised the powers available under Sections 7A and 7C, including maintaining and freezing the Housing Development Account (HD Account) to prevent diversion of funds, as well as measures such as auditing and financial tracking.
Section 7 requires regular reporting to the Controller of Housing, which means the ministry should be able to detect and address issues early if monitoring is conducted effectively, according to Chang.
He wonders if Section 10A, which grants powers of entry, search and seizure, has ever been used to instil fear in errant developers.
Chang reiterates that no legislation can guarantee the success of a business or housing project. However, he says the government should institute a system that insulates buyers from risks and uncertainties as much as possible.
He says abandoned projects are often the result of bad operations and funds mismanagement, and stresses that every sen paid by buyers must be used to complete their homes.
“Historically, one of the biggest drivers of abandoned projects was mismanagement or diversion of funds — developers using money from one project to fund another, leaving some projects underfunded and stalled. Without funds, even a developer with good intentions may fail, but if money is properly ring-fenced and traceable, the risk of project collapse reduces drastically.”
Transparency key to digitalisation success
On digital reforms such as Housing Integrated Management System (HIMS), National Housing Data Bank (Teduh) and electronic Sale & Purchase Agreement (eSPA), Chang cautions that they could remain “paper tigers” without firm and transparent implementation.
“HBA is sceptical [and] warns that the eSPA could become a developer-controlled system unless strict safeguards exist. Developers may control the standardisation of eSPAs, embed terms favourable to themselves or exploit buyers who may not fully understand digital contracts. Without third-party oversight, eSPA risks becoming a high-tech trap,” Chang says.
He also highlights the appointment of liquidators when developers are wound up, noting that while the HDA extends the definition of housing developers to include liquidators so they can assume developers’ duties, many impose unreasonable administration and vetting fees on purchasers. He adds that he has been assured that a new set of regulations will be formulated to govern their conduct, roles and remuneration, and to curb irregular practices.
Chang concludes that prevention remains the only practical approach along with greater enforcement.
“Structural weaknesses, understaffing, fragmented authority, rare prosecutions, poor financial oversight and lack of deterrence continue to expose homebuyers to unacceptable risks. Strengthening enforcement is not optional; it is the cornerstone of restoring public trust and preventing future housing crises.”
Property consultants: Costly but necessary
Property consultants acknowledge that the Madani Housing Reforms will add compliance and system costs that can push house prices up and burden homebuyers, particularly in the short term and for smaller projects. However, they agree that the long-term benefits — better protection, fewer abandoned projects and greater transparency — are substantial, and that fundamental cost and demand factors remain the main drivers of property prices.
“From a buyer’s perspective, the reforms are a clear signal that the government is trying to move Malaysia’s housing ecosystem away from manual processes towards a more transparent, digitally traceable one,” says Knight Frank Malaysia group managing director Keith Ooi.
“The combination of a Real Property Development Bill, eSPA (electronic Sale & Purchase Agreement), HIMS (Housing Integrated Management System), Teduh (National Housing Data Bank) and mandatory audits of HDA (Housing Development Account) goes directly to the issues buyers worry about most — whether this project is licensed, whether the money is safe or whether the project will be completed — among other concerns.”
He expects sentiment to be a bit cautious as property developers, lawyers and lenders adapt to new workflows and digital platforms. But once the market sees that projects are still being launched, progress data is flowing into Teduh, and the authorities are acting on non-compliance, the reforms should ultimately be net positive for buyer confidence.
Agreeing with Ooi, Nawawi Tie Leung Property Consultants Sdn Bhd (NTL) executive director and regional head of research and consulting Saleha Yusoff says with tighter HDA audits, the rollout of HIMS and mandatory eSPAs, buyers will face significantly lower exposure to cash-flow mismanagement and delivery risks.
“This reduces perceived project risk, an important reassurance for first-time and risk-averse buyers. For developers, stricter monitoring and compliance requirements should translate into better build quality, more predictable timelines and stronger overall project execution, ultimately enhancing the credibility of new launches.
“However, transparency and delivery risk reduction help confidence but do not directly reduce property prices, which is a big issue for the majority of first home buyers. For buyers at lower income levels, price and financing affordability remain critical,” she notes.
Savills Malaysia group managing director Datuk Paul Khong shares the same concerns.
“With the additional costs of audit and compliance, we note that it will be a cost-push impact, which will be passed on directly to homebuyers via higher entry pricing. However, the long-term effects will be positive to homebuyers, with tighter regulations covering risks of abandoned projects and also speculative spikes,” he explains.
A good start
One of the key objectives of the Madani Housing Reforms is to align Malaysia’s property market with the global standards by integrating strict governance, digital transparency and protection for homebuyers. The question is, how will this new regulatory framework compare with regional benchmarks in Singapore, Australia or South Korea?
Khong believes that while there will be many challenges in implementation, it is a good start.
“This framework represents an important step forward in aligning with international best practices in establishing reliability and enhancing confidence in the local housing sectors,” he shares.
One concern is that the reforms, which were announced by KPKT in November, will be implemented on a short-term basis from Jan 1.
“It will be challenging for mid-tier emerging property developers, though all will be affected. They face the steepest learning curve in navigating the new digital compliance and stricter capital controls. This will also prolong pre-construction timelines, drive up operational costs and tighten access to home financing. Banks too are likely to adopt more stringent lending criteria. Combined, these may delay new housing launches and extend general development timelines,” Khong notes.
Knight Frank Malaysia’s Ooi also expects to see a temporary moderation in project launches during the adjustment period, but believes that once market practices stabilise, the supply pipeline is likely to become cleaner, with fewer high-risk or weakly structured projects reaching the launch stage.
“The new legislative framework and digital infrastructure address several historical weaknesses: fragmented data, inconsistent enforcement and a lack of early-warning tools to spot stressed projects. By combining these five housing reforms, the government is trying to move from reactive intervention to proactive monitoring and most importantly, to reduce abandoned projects,” he notes.
That said, Ooi highlights that abandoned projects and chronic delays are usually the symptoms of deeper issues, such as poor initial feasibility, aggressive land pricing, weak project financing structures and, in some cases, weak governance or misalignment between state-level approvals and market reality. He does not believe that digital systems alone can fix these problems.
“They [the reforms] are a significant step, but they are not a silver bullet, so I would describe the reforms as necessary and overdue, but only one component of a broader structural solution.”
NTL’s Saleha concurs with Ooi that the proposed Madani Housing Reforms provide tools that could help, but may not by themselves be sufficient to resolve longstanding structural problems.
“[The reduction of abandoned projects] will depend on enforcement, market behaviour and structural incentives. Structural risk may persist because, while financial- and governance-flow risks are being mitigated, other root causes of abandonment remain, such as weak demand, mispricing, oversupply, sub-par project location or poor pre-sales. Regulatory reforms do not automatically solve market fundamentals,” she says.
Saleha adds that the shift away from a purely “sell-then-build” model towards a “build-then-sell” model is helpful, but the government appears only to be promoting it rather than making it mandatory. This leaves room for weaker developers to continue with high-risk practices under the STB model.
“Even with HIMS/HDA auditing, cash-flow transparency does not guarantee project execution. For example, issues like contractor failure, labour or material shortages, cost inflation or broader macroeconomic stress may still derail timelines,” she says.
Source: The Edge Malaysia (31 December 2025)