FEBRUARY 26 — Malaysia’s proposed Urban Renewal Act (URA) has sparked debate over its implications for property rights, community stability, and equitable development.
While urban renewal is seen as essential for modernisation, concerns remain about its impact on minority landowners and vulnerable groups.
Achieving sustainable urban development requires a framework that not only drives economic growth but also ensures fairness and social responsibility.
Legal foundations and the URA’s impact on property rights
The government justifies the URA under its authority to regulate land and promote public welfare, as provided by the National Land Code 1965 and Article 13 of the Federal Constitution, which safeguards property rights.
Traditionally, compulsory land acquisition must meet a public purpose requirement under Article 13(2), entitling landowners to adequate compensation.
However, the URA introduces a majority consent model, allowing redevelopment to proceed with:
80 per cent consent for buildings under 30 years old,
75 per cent for those over 30 years old,
51 per cent for unsafe structures.
This lowers the threshold for redevelopment approvals, raising concerns that minority property owners could be forced to sell without full consent or adequate safeguards.
Critics argue that compulsory acquisition should only occur when the public interest is clearly demonstrated, not for private development projects that primarily benefit commercial interests.
Consent, legal challenges, and equity concerns
One of the most contentious aspects of the URA is its majority consent provision.
The National House Buyers Association (HBA) has warned that the act could unfairly pressure dissenting property owners to sell, particularly if compensation is inadequate.
This could lead to legal challenges on the grounds of disproportionate interference with property rights, potentially violating Article 8 of the Constitution, which guarantees equality before the law.
Unlike traditional compulsory acquisition laws requiring government intervention and clear public interest justifications, the URA allows private developers to initiate redevelopment under lower consent thresholds.
This shifts power away from homeowners, potentially leading to disputes over compensation and fairness.
The absence of clear statutory compensation benchmarks has exacerbated fears of inequitable treatment.
Risks of gentrification and displacement
Urban renewal, while beneficial for infrastructure development, has historically led to gentrification, where existing residents are priced out of redeveloped areas. Without legal guarantees for affordable housing, displaced communities may struggle to return post-redevelopment.
Comparative legal frameworks highlight potential pitfalls:
Singapore’s Land Acquisition Act provides compensation based on market value but does not explicitly require public consultation.
Hong Kong’s Urban Renewal Authority has faced criticism for favouring developers over long-term housing stability, leading to excessive speculation and displacement.
Malaysia must learn from these examples and integrate legal safeguards to prevent similar outcomes. The URA must include binding commitments for displaced homeowners, such as priority resettlement rights and government-led rather than developer-driven oversight.
Socioeconomic consequences: affordable housing and community stability
Urban renewal affects not just infrastructure but also social cohesion.
A major concern is whether affected public housing tenants will receive equivalent housing post-redevelopment.
The government has yet to clarify how existing public housing schemes, such as Projek Perumahan Rakyat (PPR), will integrate with the URA.
Without safeguards, urban renewal could push lower-income families into unaffordable private rental markets.
Long-established neighbourhoods also serve as crucial support networks, particularly for elderly and low-income residents.
Disruptions caused by forced relocation could weaken these social ties, leading to economic instability and reduced community well-being.
Government’s stance and Anwar Ibrahim’s position
Prime Minister Datuk Seri Anwar Ibrahim has acknowledged the importance of urban renewal while stressing that no citizen should be unfairly displaced.
He emphasised that redevelopment must prioritise public benefit over private profit and called for greater transparency in compensation and resettlement policies.
Anwar’s position suggests a push for stronger legal safeguards, urging that redevelopment efforts must be government-led rather than developer-driven.
His emphasis on protecting homeowners’ rights reinforces the call for clear compensation benchmarks and independent oversight mechanisms to prevent unchecked commercialisation.
Key legal and policy recommendations
For the URA to succeed while protecting the rights of affected communities, several measures should be implemented:
Stronger protection for minority owners – The URA should establish clear legal avenues for dissenting property owners to challenge unfair acquisitions.
Affordable housing commitments – Legally binding requirements for a portion of redeveloped properties to be designated for affordable housing must be included.
Transparent compensation mechanisms – Statutory guidelines should define compensation calculations, appeal rights, and dispute resolution procedures.
Mandatory public consultation – The URA should require legally enforceable public engagement processes before redevelopment approvals.
Independent oversight body – A tribunal or independent commission should oversee redevelopment projects and adjudicate disputes.
Rent control measures – Post-redevelopment rent caps should be considered to prevent excessive profiteering by developers.
Government-led redevelopment models – Shifting towards state-driven urban renewal, rather than market-driven redevelopment, will ensure that projects align with national social and economic objectives.
Urban renewal is essential for Malaysia’s growth, but it must be pursued without undermining constitutional protections or worsening social inequalities.
If implemented fairly, the URA can modernise cities while preserving property rights and community stability.
The success of Malaysia’s urban renewal strategy depends on its ability to strike a fair balance between economic progress, legal accountability, and social responsibility.
A progressive URA should not only focus on modernisation but also ensure no Malaysian is left behind in the process of development.
