Housing Ministry Proposes Stricter Penalties and Travel Bans for Developers Behind Abandoned Projects

KUALA LUMPUR, Oct 27 — The Ministry of Housing and Local Government (KPKT) is tightening its stance against developers responsible for abandoned housing projects, with plans to introduce travel bans and stronger legal penalties under a review of the Housing Development (Control and Licensing) Act 1966.

According to Deputy Housing and Local Government Minister Datuk Aiman Athirah Sabu, the move is aimed at holding irresponsible developers accountable while safeguarding homebuyers affected by stalled developments.

“This proposal seeks to strengthen the ministry’s ability to take firm action against those who neglect their obligations, ensuring that homebuyers’ welfare and investments are protected,” she said during a Dewan Rakyat session on Monday.

Stricter Enforcement for Blacklisted Developers

Under Section 11(1)(ca) of the Housing Development Act, the minister has the authority to declare a project abandoned if it remains incomplete within the agreed timeframe and no significant construction activity occurs for six consecutive months.

Once a project is officially declared abandoned, both the developer and its board members are blacklisted. This action prohibits them from applying for new development licences, and their Housing Development Accounts (HDA) are immediately frozen.

Aiman explained that the reviewed Act would further empower the ministry by potentially restricting the overseas travel of blacklisted developers—a move meant to prevent them from evading accountability.

Alarming Number of Abandoned Projects

As of September 30, 2025, Malaysia recorded 107 abandoned private housing projects, involving 29,587 housing units and 15,553 affected buyers, according to ministry data.

Selangor topped the list with 41 abandoned projects, followed by Kelantan (16) and Terengganu (13).

Given that Selangor remains one of the country’s most active property development zones, these figures highlight the importance of better regulation and investor confidence — particularly for segments such as industrial land in Selangor, commercial property in KL, and industrial property in the Subang area, where large-scale mixed-use and township projects are expanding rapidly.

Relief Measures for Affected Buyers

To assist homebuyers impacted by stalled projects, the ministry is facilitating recovery discussions between developers, rescue developers, liquidators, and financial institutions to help buyers reclaim their payments and resume project completion.

KPKT also issues official confirmation letters for abandoned projects, enabling buyers to:

• Restructure their housing loans

• Obtain interest waivers or cancellations from financing banks

• Apply for a second withdrawal from the Employees Provident Fund (EPF)

• Seek new financing through the Public Sector Home Financing Board (LPPSA)

These measures aim to reduce the financial strain faced by affected families while paving the way for project recovery under qualified new developers.

Implications for the Wider Property Market

Industry observers note that the ministry’s proactive approach could restore public trust and stabilize Malaysia’s property sector — particularly in high-growth regions like Kuala Lumpur and Selangor, where steady demand continues for office space in Bukit Jalil, factories in Puchong, and commercial developments in KL.

By tightening developer accountability and improving buyer protection mechanisms, the new policy framework could help sustain long-term confidence in Malaysia’s industrial and residential real estate markets.