“KPKT has blacklisted 109 housing developers in Malaysia, but the HBA warns stronger enforcement is needed. With no prosecutions under Section 18A of the Housing Act since 2015, calls are growing to protect buyers from project abandonment.“
Kuala Lumpur, 24th June 2025, 10.25am – The Ministry of Housing and Local Government (KPKT) has blacklisted 109 housing developers and their boards of directors for breaching regulatory compliance, most notably for failing to submit project updates and audit reports. However, industry observers warn that blacklisting alone may not be enough to curb repeat offenders or prevent abandoned housing projects.
Housing Minister Nga Kor Ming said the move is intended to deter developers from hiding behind newly formed entities to escape accountability. In 2024 alone, the National Housing Department issued 471 notices, collecting RM9.03 million in fines. In the first two months of 2025, another 56 compounds were issued, with RM1.25 million collected.
Despite these efforts, the National House Buyers Association (HBA) says the impact of compound fines remains limited and fails to create meaningful deterrence. Most violations are treated as civil offences, meaning they carry no criminal record and often result in minimal financial consequences for the developer.
Section 18A: No Convictions Nearly a Decade Later
Under Section 18A of the Housing Development (Control and Licensing) Act (HDA), any licensed developer who abandons a project may face up to three years’ jail, a fine between RM250,000 and RM500,000, or both. Yet, since its introduction in 2015, no developers have been prosecuted under this section.
“Laws are only as strong as their enforcement,” said Datuk Chang Kim Loong, HBA’s honorary secretary-general. “We urge the ministry to use the full extent of the law to protect homebuyers.”
173 Unlicensed Developers Remain Unpunished
As of March 31, 2025, KPKT’s website lists 173 unlicensed housing developers operating across Peninsular Malaysia. These entities are not only non-compliant but often cause irreparable financial harm to buyers.
The HBA questions why no legal action has been taken against these offenders—whose actions may go beyond regulatory violations into outright fraud. “Administrative penalties are insufficient when innocent Malaysians are left with unfinished homes and lifelong debt,” Chang added.
Developer Loopholes and Proxy Directors
Developers frequently operate through project-specific subsidiaries, a common legal strategy to limit liability. However, this structure can also be misused. Errant developers may set up new companies using proxy shareholders or directors, such as family members or unrelated associates, to bypass blacklist restrictions.
To close this loophole, HBA recommends that blacklisting should apply to all board members from the time a developer’s license is issued until the project is completed or declared abandoned. The current approach—targeting only directors at the time of abandonment—allows bad actors to escape accountability.
Legal Enforcement Under Section 22 Also Lacking
HBA also flagged Section 22 of the HDA, which holds directors, managers, and company officers personally liable for offences committed by the company. This clause also extends liability to those who act through proxies or have control behind the scenes. Despite its clarity, enforcement has been rare.
“Beyond public blacklists, legal action must be taken against individuals responsible—both publicly listed directors and shadow controllers,” Chang stressed.
Transparency & Accountability Urged
To enhance transparency, HBA proposes that names of major shareholders and beneficial owners be publicly disclosed where feasible. This would help prospective buyers perform better due diligence before purchasing property.
HBA was the first to propose a Public List of Abandoned Projects and Recalcitrant Developers two decades ago during the tenure of then Housing Minister Tan Sri Ong Ka Ting, a move later endorsed by the Attorney General’s Chambers. That list is now available on KPKT’s official portal, but enforcement, HBA says, must catch up.
For many Malaysians, homeownership represents a lifetime financial commitment. “To face an abandoned project while still repaying loans is not just financially devastating—it’s emotionally crippling,” said Chang. “We need to send a firm message that buyer protection is a national priority, not an afterthought.”
