The state government explained that any development projects approved by its local councils, such as the Petaling Jaya City Council or the Shah Alam City Council, are mandated to prioritise the construction of affordable housing units.

This means that the affordable units should be built during the first phase of development or concurrently with other housing units. Such condition was imposed on developers during the local government’s issuance of a development order.

“Failure to comply could result in punitive action by the respective local government, including the suspension of the development order, building plan approval and also the issuance of the certificate of fitness,” said the state government in an email response to questions from The Edge Financial Daily.

When asked if the punitive action was a new measure, the Selangor state government noted that while the option has always been available, it was considered as an action of last resort.

“If the developer is awaiting approval for a new project, we will hold their application until they have settled their [affordable housing] obligations for current property developments,” it said.

The state has a fixed ratio of 15% to 40% of each development to be comprised of affordable housing, depending on the size of development land and the locality, with each unit priced at below RM250,000.

Meanwhile, most property developers claim that they were unaware that the state could resort to such actions.

Rahim & Co International Sdn Bhd CEO Siva Shanker found it “peculiar” developers are unaware that such action has been an available option for the state all the while.

He noted that margins for affordable housing units are near non-existent, making it difficult for some developers to build them in the first phase of development.

“It is understandable that the bigger developers would be able to meet the affordable housing quota, but what about the small- to medium-sized developers? What about boutique developers?”

However, he believes it is fair for the state to take necessary actions against non-compliant developers if the affordable housing quota requirement had been clearly provided in the law.