Tackling Abandoned Housing: Rehda Institute Pushes for Tiered Licensing and Developer Ratings

Marcus Liew
May 10
3 min read

In an effort to curb Malaysia’s long-standing issue of abandoned housing projects, the Rehda Institute is urging the government to introduce a Tiered Developer Classification System. The idea? Treat seasoned developers differently from newcomers — and protect homebuyers in the process.

“Established developers with over 20 years of experience and a proven track record pose a much lower risk. They should benefit from faster approvals,” said Datuk Jeffrey Ng Tiong Lip, chairman of Rehda Institute, in an exclusive interview with EdgeProp Malaysia.

What Is Rehda Proposing?

Rehda’s plan revolves around creating a “credit rating” for developers, evaluating them based on:

Experience
Track record
Financial stability

This would ensure:

Faster approvals for reputable developers
Stricter oversight for newer or less-established players

Ng explained that too often, public frustration over abandoned projects is directed broadly at “developers” — but most of the failed projects are from non-Rehda members.

New Report Highlights Root Causes

The proposal comes as Rehda Institute launched a new report titled “Abandoned Housing — Challenges, Insights & Solutions”, in conjunction with its International Strata Symposium 2025. The report, officiated by Housing Minister Nga Kor Ming, digs deep into:

Causes of project abandonment
Systemic weaknesses in affordable housing allocation
Policy reforms to protect buyers

One key takeaway: abandoned projects are often tied to price-controlled housing in areas where demand doesn’t match supply.

Did You Know? Most Abandoned Homes Cost RM200,000 or Less

According to the report:

Over 30,371 licensed housing units have been abandoned since the pre-1990s.
A staggering 66% of these were priced RM200,000 and below, meant to be “affordable”.

But there’s a catch: developers are mandated to include affordable units in their projects, regardless of actual market demand.

“In affluent areas like Petaling Jaya, there may be low interest in affordable units — not because people don’t want homes, but because buyer eligibility requirements and location mismatches make them unviable,” said Ng.

Broken Buyer Lists and Unqualified Demand

In many states, buyers must apply for affordable housing through government portals, and developers are handed a list of eligible buyers.

The issue? These lists are often:

Outdated
Include buyers who no longer qualify
Don’t match genuine demand in the project location

“There are cases where high-income individuals, due to outdated records, still qualify — and buy homes they don’t need, just to rent them out,” Ng revealed.

Selangor Tops the Abandonment Chart

Unsurprisingly, Selangor leads with 16,770 abandoned units, highlighting a major supply-demand mismatch.

“Blanket affordable housing quotas in places like Petaling Jaya may not make sense. They need to be based on actual market data,” said Malathi Thevendran, Rehda’s Director of Research and Education.

Cash Flow Crises and Surprise Requirements

Rehda’s report also highlights how unexpected local authority demands can derail entire projects.

In one case, a developer was asked mid-project to build a RM1 million water tank for surrounding neighbourhoods — something not budgeted for. Without the extra funds, the project was abandoned.

“Even financially healthy developers can falter if unexpected infrastructure costs are imposed,” said Malathi.

A Safety Net for Buyers? Rehda Wants It Now

Rehda is also pushing for a Housing Completion Guarantee System (HCGS) — similar to South Korea’s highly successful Housing and Urban Guarantee Corporation (HUG).

Launched in 1993, South Korea’s system has since grown into a government-backed body that protects homebuyers and ensures project completion, even if a developer fails.

“Malaysia needs to implement a similar system — managed by the public sector — to shield homebuyers from financial loss and guarantee housing completion,” Ng said.

Interestingly, this isn’t a new idea. Rehda proposed the HCGS over a decade ago, with funding suggested from government, banks, insurers, and developers — but it never materialised.

Final Thoughts: Reform Now, Not Later

With Malaysia’s housing sector evolving rapidly, Rehda Institute believes the time for reform is now. Tiered licensing, smarter data systems, and a government-backed guarantee fund could finally help eliminate the heartbreak of abandoned homes.

“If South Korea can do it, so can Malaysia,” said Ng. “We need bold, practical systems to protect our people.”