KPKT mulls OTP clause to reduce abandoned projects

The Housing and Local Government Ministry (KPKT) is exploring the introduction of an Option to Purchase (OTP) clause under the proposed Real Property Development Bill, in a move aimed at reducing sick, delayed and abandoned housing projects.

Minister Nga Kor Ming said the proposed OTP mechanism would allow both homebuyers and developers to withdraw before signing the Sale and Purchase Agreement (SPA), offering greater flexibility and lowering early financial and legal commitments.

The proposal is part of the broader “Reformasi Perumahan Madani” agenda, which seeks to modernise Malaysia’s housing framework while supporting sustainable industry growth.

According to Nga, the OTP clause could help developers better assess genuine market demand before proceeding further into project execution. This would enable more informed decision-making and reduce the risk of financial strain caused by weak sales.

“By having a clearer picture of actual demand, developers can avoid overcommitting and prevent projects from running into difficulties midway,” he said.

The initiative is expected to minimise the likelihood of projects becoming abandoned or unsold, a long-standing issue in the local property market.

Nga also highlighted the strength of Malaysia’s property sector, noting that transactions exceeded RM240 billion in 2025 — the highest in a decade — driven by improved investor confidence and stable economic conditions.

Efforts to address legacy issues are ongoing. Since December 2022, KPKT’s taskforce has revived over 1,500 sick and abandoned projects nationwide, with a combined gross development value exceeding RM140 billion, benefiting more than 176,000 homebuyers.

In parallel, the ministry is accelerating digitalisation through platforms such as e-SPA, TEDUH and the Housing Integrated Management System (HIMS) to improve transparency and efficiency.

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