occasional paper series

Prepared by:

Dr. Alias bin Rameli

Research and Development DivisionFEDERAL DEPARTMENT OF TOWN AND COUNTRY PLANNING

PENINSULAR MALAYSIA

1 December 2011

OCCASIONAL PAPER SERIES

LAND USE PLANNING SYSTEM Its Role In Housing Development Process

FDTCP 01/2011

OCCASIONAL PAPER SERIES – FDTCP 01/2011

Land Use Planning System : Its Role in Housing Development Process

Federal Department of Town and Country Planning, Peninsular Malaysia

TABLE OF CONTENTS Page

1.0 INTRODUCTION 1

2.0 LAND USE PLANNING SYSTEM AND DEVELOPMENT PROCESS 3

2.1 Background of the Land Use Planning System 4

2.1.1 The Land Use Planning System Framework 4

2.1.2 The Approach of Land Use Planning 6

2.2 Legislation and Mechanism of Land Use Planning 8

2.2.1 United Kingdom 8

2.2.2 The United States 10

2.2.3 Malaysia 11

2.4 The Implementation of Land Use Planning System in Malaysia 13

2.4.1 Preparation of Development Plans 13

2.4.2 Process and Procedures of Planning Control 17

2.5 Rationale for Land Use Planning to Intervene in the Development Process 19

3.0 LAND USE PLANNING SYSTEM AND HOUSING SUPPLY PROCESS 21

3.1 Relationship Between the Operations of Land Use Planning and Market System in Housing Supply Process 21

3.2 The Role of the Land Use Planning System in Housing Supply Process 24

3.3 Requirement to Fulfil Housing ‘Needs’ and ‘Demand’ in the Planning of Housing Supply 26

3.4 The Importance of Market Demand in the Planning of Housing Supply 28

4.0 HOUSING DEVELOPMENT PROCESS IN MALAYSIA 29

5.0 HOUSING PLANNING PROCESS IN MALAYSIA 32

5.1 The Planning of Housing Supply 32

5.1.1 The National Physical Plan: Outcomes, Strategy and Policies on Housing Supply 33

5.1.2 Structure Plan: The Activities and Aspects Related to the Planning of Housing Supply 37

5.1.3 Local Plan: The Activities and Aspects Related to the Planning of Housing Supply 41

5.2 The Controlling of Housing Supply 46

5.2.1 The Process and Procedure of Controlling Housing Supply 46

5.2.2 Factors to be Considered in Controlling Housing Supply 47

6.0 THE OBJECTIVES OF PLANNING AND CONTROLLING OF HOUSING SUPPLY 48

7.0 THE FRAMEWORK OF THE PLANNING AND CONTROLLING OF HOUSING SUPPLY 49

8.0 CONCLUSION 53

LIST OF TABLES

Table 1 Comparison between the total housing supply and the total housing need in Peninsular Malaysia, 2000 – 2005 34

Table 2: The aspects of existing housing conditions that need to be surveyed during the preparation of a local plan 43

LIST OF FIGURES

Figure 1 Land development systems 4

Figure 2 Framework of land use planning system 5

Figure 3 Hierarchy and function of development plans in Malaysia 14

Figure 4 Conceptual model of the political economy of housing development 23

Figure 5 The role of the planning system in housing supply process 25

Figure 6 Housing Development Process in Malaysia 31

Figure 7 The framework of the process of planning and controlling of housing supply 50



LAND USE PLANNING SYSTEM :

ITS ROLE IN HOUSING DEVELOPMENT PROCESS

ABSTRACT

The role of land use planning system in housing development is not only limited to

meeting of housing needs, but also encourages and ensures the efficiency of the

housing market system. Even in the failure of the housing market, planning system

is seen able to rectify the failure by properly governing the activities of housing

approval. The land use planning mechanism particularly through development plans

and development control are recognised as a tool in determining the current and

future housing needs, formulation of the housing policies, allocation the amount of

land and identification of suitable locations for housing development. The planning

mechanisms also play important roles to facilitate and control the housing production

process. Against this background, this paper will highlight the debates about the

capability and the way of land use planning operations in housing development;

discuss generally the background, legislation, mechanisms and the implementation

of land use planning system; and clarify the rationales of land use planning to

intervene in the development process. Special focus will be given to the points

related to the relationship between land use planning system and housing supply

process by underlining the requirement and the importance to fulfill housing need,

housing demand and market demands in the planning of housing supply. This paper

ends with the explanation about the housing planning and development processes in

Malaysia and developing the framework of the planning and controlling of housing

supply.

Keywords: Land Use Planning, Housing Development, Housing Planning

1.0 INTRODUCTION

Recognising housing as an important economic sector has not only raised a debate

about the extent of housing investment benefits to the economic development, but

also led to the discussion of how efficient and effective its delivery system operates

(von Einsiedel, 1997). There are numerous factors, such as economic performance,

fiscal policy, government intervention and policies and market system that arguably

influenced the efficiency of the process of housing development (Monk et al., 1996;

Hull, 1997; Chan, 1997b; Bramley, 2003; Ratcliffe et al., 2004). It is also equally

important to relate it with the operation of the land use planning system.

Previous studies, for example by Pearce (1992), Hull (1997), Asiah (1999), Adams

and Watkins (2002) and Carmona et al. (2003), had discussed extensively the role

and importance of land use planning activities in housing development. The



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significance of the system in housing development was also translated in the form of

relationship between planning process and development process. This can be seen

in various models of development process, such as the development-pipeline model

(Barrett et al., 1978), linear model of the land development process (Ratcliffe, 1978)

and model of development and the planning process (Bramley et al., 1995). In

relation to this, although it is generally accepted that the land use planning system

plays a pivotal role in achieving sustainability, efficiency and effectiveness of housing

development (Golland and Gillen, 2004; von Einsiedel, 1997; Chan, 1997), the

capability and the way it is operated still generate various debates.

The first debate is about the ability of the system to intervene and influence the

process of housing market. Von Einsiedel (1997) stresses that although most of the

housing activities are shaped by market forces, the planning system also has its own

role especially in governing its production process. According to Short et al. (1986),

the planning system can limit the powers of housing market because the housing

development process is bound by rules and policies set by the system. In another

perspective, Rydin (1993) clarifies that the planning system not only operates to

encourage the efficiency of housing market, but also plays a role to rectify failures of

the housing market. Bramley et al. (1995), on the other hand, observes that some of

the problems and failures in housing market were affected and exacerbated by the

unresponsiveness of activities in the planning system.

The second debate is about the nature of housing planning which focuses on

meeting housing needs. Nicol (2002) argues that meeting housing needs alone is

insufficient to achieve a more integrated and effective housing development. This

argument was supported by Golland and Gillen (2004), stressing that the housing

requirements are not only driven by population trend but also influenced by

affordability and effective demand of household. In order to ensure the local housing

requirement is adequately and successfully met, Nicol (2002) suggests the operation

of planning system should fulfil both objectives of meeting housing needs and

housing demand.

The third is on the extent to which the planning system considers the criteria of

market demand. Hull (1997) stresses that apart from playing a role in meeting

housing needs and household effective demand, the planning system should also

look at the importance of the market demand criteria. The significance of market

demand was also addressed by Bramley et al. (1995) by proposing the planning

process to formulate policies and procedures which are sensitive to the needs of the

market demand. In similar tone, Golland and Gillen (2004) emphasise the necessity

for the planning process to understand the consumer‟s `taste‟ in the housing market.

Stressing on the above arguments, Healey (1992) proposes three approaches in

achieving the housing planning goals by the planning system consisting of following

the market, managing the market and creating the market.

The subsequent argument is that the planning system constrained the efficiency of

housing development. According to Monk et al. (1996) and Asiah (1999), planning



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controls have often been considered as a constraint since they restrict the supply of

housing land, the location of housing development, the type and density of the

development as well as the timing the development could take place. Grigson (1986),

however, views that the planning system does not restrict the development of

housing. According to Grigson, the planning system operates orderly by allocating

sufficient land for future housing and ensuring it is calculated on the basis of actual

need, worked out in the light of demographic projections and household formation

statistics.

Next, is the extent to which the planning system plays its role in allocating the

quantity and locations of housing and controlling the production of new housings.

Rydin (1993) stresses that the planning system should operate to allocate sufficient

land for housing and response efficiently to the planning applications for such

development. According to Pearce (1992), the housing planning goals are

considered achieved if the planning decisions may assure an adequate and

continuous supply of land for housing and provide acceptable choices at the

available and preferable locations. The extent of its effectiveness, however, is

queried by Hull (1997). Hull perceives the process of forward planning and

regulations for housing planning still suffers from lack of reliable information on

market indicators and current flow between the housing markets and the levels of

production of housing stock. Hull (1997) thus propose that the process of forward

planning and planning control should seriously consider the importance of market

mechanisms in planning and making decisions for housing development.

The above debates, although try to argue the role and capability of planning system

in housing development in various perspectives, but if read between the lines, is

actually centred at the problems of managing housing supply. In this respect, the

operation of planning system is seen to have concentrated only on meeting the broad

housing needs by neglecting the aspects of household effective demand and market

demand in planning housing supply. Since there are a lot of arguments about the

capability of the planning system in managing housing supply, it is thus necessary to

explore this profoundly, particularly in the context of the Malaysian planning system.

2.0 LAND USE PLANNING SYSTEM AND DEVELOPMENT PROCESS

The land use planning system, through the mechanisms of development plan and

planning control, and the housing market system are among the systems that exist

and influence the efficiency and effectiveness of the process of housing development

(Bramley et al., 1995; Golland, 1998). Previous literatures had proven that there are

a close interaction between the activities of land use planning with the activities of

housing market, particularly with regard to the structure, operation and outcomes of

housing supply. Even in the situation of imperfection and housing market failure, it

becomes a function of the land use planning to rectify the failure by properly

governing the process of planning and controlling of housing development.



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2.1 Background of the Land Use Planning System

2.1.1 The Land Use Planning System Framework

Land use planning deals with several systems that influence the physical structure of

the city (Ibrahim, 1998; Foziah, 2002). According to Chapin and Kaiser (1979), urban

land use planning is influenced by three key systems, namely activity systems, land

development systems and environmental systems. Activity systems are concerned

with how man, through his institutions such as households, firms and governments,

organizes his affairs in the pursuit of human needs and how these institutions interact

with one another in time and space. Activity systems determine demands for various

urban spaces such as housing, recreation, commercial and infrastructure.

The land development systems focus on processes that convert space and adapt

them for use of the activity systems. The principal agents in the development

systems include pre-development landowners, developers, consumers, financial

intermediaries and public agencies. They relate to the supply side of the urban

development process (Figure 1).

The third system that influences the urban land use development is the

environmental systems. These environmental systems provide the niche for human

existence and the habitat and resources to sustain man. These include plants, animal

life system and the fundamental processes relating to water, air and matter.

Environmental systems function both to constrain and to enhance the functioning of

the other two systems.

Figure 1: Land development systems

Source: Chapin and Kaiser (1979:30)

Development Agents

Predevelopment landowners

Development Systems

Land marketing (assessment of utility of continuing land in present state vs. return from selling or leasing it)

LAND DEVELOPMENT SYSTEMS

Developers

Land conversion or re-conversion

Consumers

Purchasing or leasing locations and facilities

Financial intermediaries

Acquisition and development – financing transactions

Public agencies

Review and approval of land use and development



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GOALS OF LAND USE PLANNING

(Sustainability, Health and Safety, Convenience, Efficiency and Energy Conservation, Environmental Quality, Social Equity

and Amenity

Activity

Systems

KEY URBAN LAND USE SYSTEMS

Spatial

Environmental

Systems

Development

Systems

Economic and Population

Growth

Land Use Pattern

Aspatial

URBAN PLANNING AND GUIDANCE SYSTEM

(decision guides and action instruments)

Political

Activities

Planning

Activities

These key systems play an important role in the establishment of the land use

planning framework. According to Chapin and Kaiser (1979), the goals of urban

development that relate to public interest such as sustainability, health safety,

convenience, efficiency, energy conservation, environmental quality, social equity

and amenity are very much influenced by the interplay of the systems together with

economic and population growth and urban planning and guidance system (Figure

2).

Figure 2: Framework of land use planning system

Source: Adapted from Chapin and Kaiser (1979:65)

The urban planning and guidance system through planning activities and political

activities acted as decision guides and action instruments in the land use planning

system. According to Ibrahim (1998), planning activities refer to the preparation of

development plans and planning studies that are used as guides for the purpose of



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planning decisions. The decision to adopt a particular plan and approval of

development proposal is made by the state or local authority concerned. In ensuring

the proposed land use development complies with the planning guides, a proper

exercise of development control by planning authorities is required. This shows

planning activities as one of the components in the urban planning and guidance

system play a pivotal role to complement the land use planning system.

2.1.2 The Approach of Land Use Planning

The adoption of land use planning approach varies depending on the context,

experience and practice of the urban development process, in particular places and

time (Ibrahim, 1998). It began with the model of „blue print‟ physical planning or

master planning approach before shifted to the procedural planning approach. The

model of „blue print‟ planning is one of the earlier approaches which tries to solve the

urban problems through the medium of the plan or blue print. It was widely applied

before 1960s based on the public agreement on the value and policy direction in

managing the urban environment changes (Ibrahim, 1998; Foziah, 2002).

„Blue print‟ planning could be regarded as an exercise in physical, influenced by the

urban design tradition of planning (Taylor, 1998; 1999). It incorporates the elements

of urban design, architecture, engineering and consideration to the management of

public area (Healey, 1982; Foziah, 2002). The approach incorporates the principles

of urban management into the physical planning programs and attempts to influence

or direct all activities related to the physical environment for the benefit of public. It

employs land use map and zoning, density control, building control and planning

standards to regulate urban development process (Ibrahim, 1998).

The approach can be traced in urban development process in Britain until the 1960s

through the activities of producing comprehensive master plans, neighbourhood

design, garden cities and utopian ideals for cities (Healey, 1982; Goh, 1991, Hobbs,

1996). Similar approach was adopted in the Malaysian context through preparation of

general town plan as enacted in the Town Board Enactment (Cap 137) and previous

planning enactments (Goh, 1991). Due to its physical nature and rigidity, the „blue

print‟ planning was regarded as a failure as it is unable to deal with various social

issues such as urban poverty, unemployment and urban inequalities (Ibrahim, 1998).

The approach of land use planning was gradually substituted by procedural planning

in line with the development of urban planning profession and the influence of social

scientific methodology (Ibrahim, 1998) as well as due to increasing of awareness of

interrelationship between the factors of physical, social, economy and environment in

urban development (Foziah, 2002). Through the procedural planning approach, the

focus of land use planning was shifted from a prominently physical design exercise to

the rational procedure of producing plans and control over the development of urban

area (Ibrahim, 1998).



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The approach of procedural planning was conceived to become a fundamental

paradigm of planning (Healey et al., 1982). According to Ibrahim (1998), procedural

planning emphasises on solving urban problems based on rational procedures and

methods for decision making. The procedures and methods applied have led the

planning process to form the goal and objectives to be achieved, analyse urban

problems and conditions systematically, formulate and evaluate various policies and

proposals, monitor performance and achievement of urban development process

constantly and make an adjustment whenever necessary to the existing policies and

proposals (Chapin and Kaiser, 1979). This approach makes land use planning a

continuous process of managing urban change.

The approach was translated in the preparation of urban development plans. In the

UK, it was adopted in early 1970s through preparation of SP and LP, as legislated by

the 1968 Town and Country Planning Act (TCPA) (Healey, 1983). It was also

incorporated and institutionalized in the Malaysian land use planning system

immediately after the formulation of Act of 172 in 1976 (Goh, 1991). The Act requires

the preparation of SP and LP to follow the rationale procedures and methods through

systematic analysis of strategic sectors, identification of problems and issues and

derivation of proposals on the basis of the findings. The approach also provides an

opportunity to the public to comment on the findings and make suggestions to

streamline the proposals in development plans (Foziah, 2002).

The effectiveness of the procedural planning, particularly in Malaysian context,

however was argued from various angles. Ibrahim (1998) argues that although the

approach is ideal in fulfilling the requirement of rational model, effective application of

the approach is inhibited due to limited information available and political

circumstances. The preparation of development plans according to the approach

was also time consuming because of the numerous procedures that need to be

followed before the plan could be gazetted (Abdul Munit, 1996). The procedures not

only limit development plans to cope with the changes and growth of the economy

and urban development rate but also led the plans to focus on the process of

preparation, with less thought given to develop the proposals (Goh, 1991; Ibrahim,

1998). Consequently, poor quality plan have in some cases been produced which

eventually curbed the effective implementation of many policies and proposals in the

plans (Abdul Munit, 1996).

The procedural planning approach remains in the system of land use planning until

today. Nevertheless, it changes from time to time in terms of scope and practice. A

growing awareness on sustainability at the end of 1980s and early 1990s has

expanded the scope and practice of land use planning (Ratcliffe et al., 2004). The

introduction of sustainable development concept in 1987 by the World Commission

on Environment and Development (The Brundtland Commission) and the declaration

of the United Nation‟s Conference on Environment and Development (The Rio

Declaration) at Rio de Janeiro in 1992 which issued an Agenda 21 led land use

planning to accommodate a more environmentally aware agenda (Ibrahim, 1998;

Foziah, 2002; Ratcliffe et al., 2004).



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Certain principles from the Rio Declaration and Agenda 21 were incorporated in the

land use planning process. In Britain, the 1990 Town and Country Planning Act and

the 1991 Planning and Compensation Act provide a framework for plan-led

environmental planning. Through the acts and several planning policy guidance, a

greater emphasis was given to physical and environmental issues and sustainable

development aspects (Greed, 1996c).

An effort to incorporate the concept of sustainable development into the land use

planning practice was also done in Malaysia. The amendment to the Act of 172 in

1995 had stressed the need for better environmental protection through new

provisions on preservation of the natural topography, protection of trees,

conservation and rehabilitation of buildings of historical significance and architecture

merit and cultural heritage (Zainuddin, 1995). The amendment requires the

preparation of LP to provide measures for the preservation and enhancement of

natural features in the planned areas (Foziah, 2004). The amendment had also led

developers to prepare and submit development proposal report (DPR) when

submitting an application for planning approval. The report needs to underline

measures to preserve natural features and indicate the impact of the proposed

development on the surrounding areas (Zainuddin, 1996; Ibrahim, 1998).

The application of procedural planning approach has continually changed to suit the

new methods and thoughts in urban development. The technique of sequential

approach as has been in practice in the UK (Zainul, 2005; Khairiah, 2006; 2008), the

concepts of smart growth and new urbanism as adopted in the USA (Emily, 2005;

Berke et al., 2006), the idea of compact city (Ho, 2007) and the key principles of new

urban planning as declared in the Vancouver‟s World Planners Congress in 2006

(Vancouver Declaration) (Hague et al., 2006) are among the ingredients which shift

the scope and practice of urban land use planning throughout the world, including

Malaysia.

2.2 Legislation and Mechanism of Land Use Planning

Bramley (2003) describes land use planning as an administrative system which is

governed by a set of regulations and mechanisms. For comparison, this section

explores the legislations and mechanisms related to land use planning as formulated

and adopted in three different countries, namely United Kingdom (UK), United States

(US) and Malaysia.

2.2.1 United Kingdom

In the UK, the 1947 TCPA was considered as a revolutionary legislation that provides

a legal tool for the practice of land use planning and development control (Healey,

1983). This legislation introduces a comprehensive planning controls and required

local authorities to prepare land use plans (Prior, 2000; Hobbs, 1996). Land use

plans prepared under the 1947 Act indicate the broad patterns of land use for the

planned areas (Lambert, 1996; Hague, 2000).



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After 1947, the UK planning legislation went through several amendments to cope

with the new town planning practice and institutional arrangements (Hobbs, 1996).

Nevertheless, the formulation of the 1968 TCPA was seen as a landmark to the

evolution of UK‟s planning legislation. The 1968 Act introduces a significant reform

to the system of plan preparation by introducing the mechanisms of SP and LP

(Healey, 1983). The 1968 Act requires the county council or the Greater London

Council to prepare SP which among others need to outline the statement of strategic

and long-term planning objectives and policies covering various land use sectors.

The LP needs to be prepared by a city, district or borough councils, providing a more

detailed and short-term list of policies to be applied specifically to individual sites

(Jones and Watkins, 1999; O‟Sullivan, 2003). The 1968 Act also provides that the LP

policies and proposals need to be in conformity with the SP and central government

advices (Ratcliffe et al., 2004).

The 1968 Act has led the implementation of land use planning to be exercised under

two distinct but interconnected subject areas, dealing first with the production of

planning policies and then how those policies feed into the development control

system, whereby decisions are made on individual planning applications (Ratcliffe et

al., 2004). The reforms of 1968 Act are subsequently consolidated into the TCPA,

1971 which basically remained the principal of planning legislation provided by the

1968 Act (Ratcliffe et al., 2004; Hobbs, 1996).

The introduction of the new TCPA in 1990 (1990 Act) and the Planning and

Compensation Act in 1991 had changed the scope and practice of the UK‟s land use

planning. These Acts, as mentioned above, provided a framework which heralded a

return to plan-based planning, with greater emphasis on environmental issues.

According to Hobbs (1996), despite the return to plan-led planning, central

government still sought to restrict the form and content of statutory plans to land use

and development matters.

Significant changes involving the planning legislation and mechanism have also

existed in 1986 and 1995. In 1986, the unitary development plan was introduced in

line with the abolishment of Greater London Council and six metropolitan counties,

where their powers were passed on to the London boroughs and the metropolitan

district councils (Greed, 1996b; 1996d). The requirement and principles for preparing

the plan was legislated in the 1990 TCPA (Mohd. Anuar, 1991; Greed, 1996d). The

plan was subsequently produced by other district councils in England, Scotland and

Wales in 1995 and later years following the abolishment of some county and regional

councils (Ratcliffe et al., 2004).

The latest reform to the UK‟s planning legislation was made in 2004 through the

formulation of the Planning and Compulsory Act. The 2004 Act introduces the local

development framework (LDR) to replace the previous system of county level SPs

and district level LPs, and unitary development plans for Unitary authorities. The LDR

system is intended to suit the different needs of a particular area and can be easily

http://en.wikipedia.org/wiki/Metropolitan_and_non-metropolitan_counties_of_England

http://en.wikipedia.org/wiki/Local_Plans

http://en.wikipedia.org/wiki/Unitary_Development_Plan

http://en.wikipedia.org/wiki/Unitary_authority



10


updated, replacing previous development plan system which was perceived too

inflexible and difficult to change in a timely manner (Ratcliffe et al., 2004).

Besides development plans, the UK planning legislations, since 1947 TCPA, also

give an emphasis to the provisions related to development control activity. The gist of

the legislation with regard to the activity is that planning permission is required for

carrying out „development‟ (Ball, 1983; Mohd. Anuar, 1991; Ratcliffe, et al., 2004).

The definition of development under the legislations is “the carrying out of building,

engineering, mining or other operations in, on, over or under land, or the making of

any material change of use of any buildings or other land”. This definition remained

unchanged since 1947 (Mohd Anuar, 1991).

The broad definition, however, has been refined in the 1971 TCPA and later in the

1990 TCPA by bringing in certain types of activity within the definition (S. 55(3)) and

excluding from control other defined activities (S. 55(2)). In addition, the subordinate

legislations, i.e. General Development Order 1988 (GDO), Use Classes Order 1987

(UCO) and Special Development Orders (SDO) and the Secretary of State for the

Environment decisions through various administrative devices further strengthened

the process of development control in the UK (Mohd Anuar, 1991; Ratcliffe, et al.,

2004).

Another important aspect contained in the UK development control system is

regarding the method of decision making for new planning applications. In the UK,

plans (development plans) have always been advisory only and act as one of the

considerations taken into account in making development decisions (Bramley et al.,

1995; Lambert, 1996). It means that in making decisions on development planning,

authorities are also required to take account of „other material considerations‟. This

aspect has existed since the 1947 Act and incorporated in the 1971 Act (S. 29) and

1990 Act (S. 70(2)). The 1947, 1971 and 1990 Acts provided that, the decision

maker, in this context refers to LPA, “shall have regard to the provisions of the

development plan so far as material to the application and to any other material

consideration” (Foziah, 2002; Ratcliffe et al., 2004).

The provision of the aspect was slightly changed by the introduction of the Planning

and Compensation Act, 1991. This Act under Section 26, which was later carried

over into the Planning and Compulsory Act, 2004 provides that “where in making any

determination under the Planning Acts regard is to be had to the development plan,

the determination shall be in accordance with the plan unless material consideration

indicate otherwise” (Ratcliffe et al., 2004:44). Although the 1991 Act gives legislative

force to follow development plans, principally the discretionary system in approving

the applications for development still exist (Bramley et al. 1995).

2.2.2 The United States

The US land use planning system is quite different from what has been practised in

the UK (Asiah, 1999). In fact, its land use planning mechanism and legislation vary



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from one state to another (Ho, 2003). In general, its land use planning mechanism

consists of the General Plan and Area Plan. The General Plan is a comprehensive

long-term physical plan that details the planning and controlling of subdivision and

zoning for the local government areas. This plan contains planning elements, such as

land use zoning, traffic circulation, public facility and open space. The Area Plan is

prepared for specific areas within the General Plan. This plan is basically similar to

the mechanism of the British LP (Ho, 2003). Through the plans, suitable land use

zoning and conditions for the planned areas will be determined (Monk et al., 1991;

Foziah, 2002).

Both plans are prepared according to several regulations such as zoning ordinance,

subdivision ordinance, official maps and Building Code. The zoning ordinance

defines the specific zoning and regulates the height, setbacks, floor area ratio,

minimum lot size and density. The subdivision ordinance will set the subdivision

controls and standards for infrastructure development comprises of road alignment,

water supply, sewerage system and other development control parameters. The

official maps will control and restrict the property development in areas planned for

public facilities. For the Building Code, it contains standards on building to regulate

improvement of buildings in urban property developments (Ho, 2003).

In relation to development control, the US basically practises regulated planning

system (Foziah, 2002). The system will bind decision makers to follow land use

zones, conditions and other requirements stipulated in the general and area plans

when making consideration on each development proposal. According to Faludi

(1987), the system has an advantage because it gives certainty to land owner and

developer as well as to decision makers. In addition, the system also provides a right

to the third party to object to the planning decisions if any development approval

contradicts with the approved plans (Foziah, 2002).

2.2.3 Malaysia

Land use planning activities in Malaysia are governed by several planning

legislations. As a British colony, its legislations have tended to use British planning

legislations (Foziah, 1986). Its transition can be traced from the pre-British colonial,

during the British colonial and post-independence period until the formulation of Act

of 172 in 1976. The first piece of planning legislation in Malaysia can be traced back

to 1881 involving an environmental control and fire preventive measures. It was

introduced by the British‟s States Council after a large part of Kuala Lumpur was

destroyed by a fire (Quazi, 1986; JPBD Semenanjung Malaysia, 2002).

Later, in 1890, a Sanitary Board was set up to improve municipal and health

services. Through this Board, several by-laws related to planning activities such as

submission of plan for new building and amendment plan for old building were

introduced. These governmental steps can be viewed as the forerunners of planning

legislation in Malaysia. In fact, these were the only rules and regulations which were

available for the first time to control town environment.



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In 1917, Town Improvement Enactment was endorsed which gave a power to the

Sanitary Board to implement town development and redevelopment. The Enactment

was subsequently replaced by Town Planning Enactment 1923 and Town Planning

Enactment 1927. In 1929, the 1927 Town Planning Enactment has been abolished

and most parts of the enactment were incorporated in the Part IX of the Sanitary

Boards Enactment 1929 (JPBD Semenanjung Malaysia, 2002).

In 1935, Sanitary Boards Enactment 1929 was reviewed and combined with the

„Sanitary Boards Enactment, Cap 137‟ of the Laws of Federated Malay States, 1935

(F.M.S Cap 137) (JPBD Semenanjung Malaysia, 2002). This enactment for the first

time incorporated a section on town planning (Part IX of CAP 137) (Quazi, 1986). In

1947, the enforcement of the development control regulations has been strengthened

by the formulation of the Town Board Enactment, 1947 (Cap 137). Cap 137 which

provides planning legislation in Part IX, empowers every Town Board to prepare a

general town plan for the area under its jurisdiction to be used as the basis of land

use zoning (JPBD Semenanjung Malaysia, 2002).

The general town plan as prepared according to Cap 137 was found to be purely

physical in its scope and was only confined to ensuring that new development

conformed to the prescribed plan. The system was argued not capable of coping with

the changing circumstances and insensitive to other socio-economic needs (Bruton,

1982; Quazi, 1986). These weaknesses have led to the formulation of TCPA (Act

172) in 1976. The Act marked an important milestone in the evolution and progress

of urban and land use planning in Malaysia (Goh, 1991; Wan Mohamad Mukhtar,

2004), though it is labelled as a copy or imported version of the 1971 British TCPA

(Goh, 1991; Abdul Munit, 1996; Zainah, 2007).

The Act introduces a new system of development plan, comprise SP and LP and

development control replacing provisions in Cap 137 (Wan Mohamad Mukhtar,

1996). In addition, the 1976 Act also represents an effort on the part of the

government to introduce a uniform planning legislation and comprehensive planning

techniques to be implemented by the State and LPAs in Peninsular Malaysia (JPBD

Semenanjung Malaysia, 2002).

The 1976 TCPA provides the responsibility for each State Authority to formulate and

implement a general policy in respect to the planning of the development and use of

all lands and buildings within the jurisdiction of every local authority (S. 3, Act 172). It

also provides the power to every local authority to act as a LPA (S. 5(1), Act 172).

Among the responsibilities of the LPA are to regulate, control and plan the

development and use of all lands and building within its area. Since its inception, the

Act has been amended four times, including the two major amendments in 1995 and

2001, to keep abreast with new developments and requirements of the activity of

land use planning (Wan Mohamad Mukhtar, 2004).



13


The first amendment was in 1993 (through Act A866), aimed to conform to the

provisions of the Sewerage Services Act, 1993 (Act 508). In 1995, the second

amendment (Act A933) was done due to several environmental issues that occurred

in Malaysia at the particular period (Zainuddin, 1996). The third amendment in 2001

was cited as TCP (Amendment) 2001 (Act A1129). The amendment was in response

to the economic crisis that hit the country hard in 1997. The government felt that the

land use planning system through an integrated physical and resource planning

approach is best suited to assist in overcoming the economic crises through greater

control over the property development activity (Wan Mohamad Mukhtar, 2004). The

latest amendment (Act A1313) was in 2007, aimed to incorporate provisions of the

Solid Waste and Public Cleansing Management Act 2007 (Act 672).

The 1976 Act and its amendments were established and streamlined the system of

forward planning through a four-tier development plan, namely NPP, SSP, LP and

SAP. They also guided the activities of development control through the mechanisms

of planning control, development charge and appeal board. The planning

mechanisms provided by the legislations were continually used as tools to plan,

monitor and control the activities of land use and property development in Malaysia,

including for housing development (Alias, 2006).

2.4 The Implementation of Land Use Planning System in Malaysia

The implementation of the land use planning system is influenced by the provisions

of current planning legislations adopted by each country (Greed, 1996c). In

Malaysia, its implementation, as briefly discussed in the above section, is quite

similar as in the UK. It firstly deals with the activity of forward planning, through

preparation of development plans, followed by the activities of planning control.

Development plans become the basis for future development, while planning control

act as the control tool.

2.4.1 Preparation of Development Plans

The preparation of development plans begin at the National level through NPP,

followed by the SP prepared at the State level, and LP and SAP at the local level

(Figure 3). As a statutory mechanism, preparations of the plans, in terms of form,

content and procedure, are guided by the provisions of Act 172. It is important to

note that although the planning legislation in Malaysia is quite similar to the UK,

some of the practices in preparing development plans are more inclined towards the

US. The preparation of LPs, for instance, were frequently argued similar to the

concept of zoning plan as applied in the US (Asiah, 1999).



14


Figure 3: Hierarchy and function of development plans in Malaysia

Source: Adapted from Wan Mohamad Mukhtar (2004:73).

a. National Physical Plan

The NPP focuses on the formulation of planning strategies and policies for the

development and use of land in the country, particularly in Peninsular Malaysia. Its

main function is to strengthen the national planning framework by providing a spatial

dimension to the national socio-economic policies as formulated in the Five-Year

Malaysia Plan and other national plans (Wan Mohamad Mukhtar, 2004). The other

functions of NPP are to coordinate sectoral agencies by providing the spatial

expression to sectoral policies, form the framework for the regional, state and local

planning and provide physical planning policies (Government of Malaysia, 2005).

In the process of formulating planning strategies and polices, the NPP has to identify

and consider several macro strategic issues related to various sectors from physical,

economic, environment and social development which was faced in the country

(Government of Malaysia, 2005). In the context of land use planning, the NPP has

provided a national planning direction to be implemented and enforced at the State

and local levels.

State Structure Plan

(SSP)

Local Plan

(LP)

Special Area Plan

(SAP)

Formulate planning strategies and policies at the National level to guide the planning activities at State and local levels.

Formulate planning policies and general proposals related to development and use of land in the particular State.

Formulate comprehensive development plan in the form of future land use zoning and implementation measures in the LPA areas.

Special plan to carry out a detailed treatment for development, redevelopment, improvement, conservation or for the purpose of management of certain areas.

National Physical Plan

(NPP)

NATIONAL

LEVEL

STATE

LEVEL

LOCAL

LEVEL



15


b. Structure Plan

The national planning strategies and policies formulated by the NPP are

subsequently incorporated in the preparation of SSP which covers the entire area of

a respective State. The preparation of SSP enacted under the Act of A1129 basically

replaces the old version of SP which only covers the administrative areas of LPA.

The SSP focuses on the formulation of policies and general proposals related to the

improvement of the physical living environment, management of traffic and socio-

economic well-being, promotion of economic growth and facilitating sustainable

development (S. 8(3), Act 172). Its objective is to encourage integrated development

between the aspects of social, economy and physical in accordance with the national

development strategies and policies (Wan Mohamad Mukhtar, 1996).

There are seven closely related functions performed by the preparation of SP as

follows (JPBD Semenanjung Malaysia, 1981; Wan Mohamad Mukhtar, 1996):

(i) Interpreting national, state and regional policies;

(ii) Establishing aims, policies and general proposals;

(iii) Providing framework for local plans;

(iv) Indicating special area plans;

(v) Providing guidance for development control;

(vi) Providing basis for coordinating decisions; and

(vii) Highlighting main planning issues.

The preparation of SP either covers the LPA areas or the whole State were

perceived as a comprehensive planning tool to outline the physical and land use

development policies and strategies (Wan Mohamad Mukhtar, 2004). In other

perspective, Bruton (1982) assumes that SP was established as the strategic

planning vehicle which translates national social, economic and physical objectives

into a physical development strategy and provides a framework for the production of

more detailed local land use plans to guide the implementation of land use

development.

c. Local Plan

The implementation of land use planning is continued through preparation of LP and

SAP at the local level by LPAs. LP is prepared to translate and detail out the

strategies and policies set out by the SP (Hunud Abia and Ainul Jaria, 2004; Wan

Mohamad Mukhtar, 1996; 2004). It is specified in the Act 172, under Section 12(8)

that the LP‟s proposals must conform to the approved SP. Currently, in line with the

provision of the Section of 12(2) of Act 172, i.e. where a SP for the State has come

into effect, the LPA has to prepare the LP for the whole of its area.

The 2001 amendment Act has changed the approach of preparing the LP from urban

based to the LPA based. Nevertheless, in practice the LPA based LP has been

prepared simultaneously covering more than one LPA area in each district. Its



16


rationales are to speed up the process of preparation, reduce the cost of study as

well as to enable the development information and proposals be coordinated for the

whole district. This new version of LP is known as the district LP (DLP) (Wan

Mohamad Mukhtar, 2004).

The principal aim of the LP as clarified by Hunud Abia and Ainul Jaria (2004) is to

prepare a comprehensive development plan in the form of future land use zoning and

implementation measures. Proposal of land use zoning, similar to the concept of

zoning plan as contained in the US‟s General Plan and Area Plan, exists in the

Malaysia‟s LP though its preparation originated from the UK‟s LP. Legislatively, the

LP should consist of a map and a written statement to formulate in detail proposals

for development and use of land, protection and improvement of the physical

environment, preservation of the natural topography, improvement of the landscape,

preservation and enhancement of character and appearance of buildings,

improvement of communication and management of traffic system (S. 12(3) of Act

172).

The scope and content of LP, besides guided by the provisions in Act 172, also need

to refer to the Development Plans (Structure and Local Plans) Rules 1985 and

several manuals, such as DP Manual 1981, Manual of Local Plan Preparation 1993

(LP Manual 1993) and its amended versions of 1999, 2001 and 2002. The common

functions of LP as stated in the DP Manual 1981 are as follows (JPBD Semenanjung

Malaysia, 1981):

(i) To apply the SP‟s development strategies and policies – LPs must conform to

the approved SP and develop the proposals and implementation measures;

(ii) To refine the SP‟s development control policies – LPs will refine the broad

guidance on development control as prescribed in the SP by allocating land

for specific development purposes, defining the areas to which particular

development control conditions will be applied and explaining conditions in

terms of standard and other criteria to enable the public and private sector

developers and property owners be equipped with a precise and clear

information;

(iii) To coordinate the land use and property development - Proposals in the LPs

can be used as a basis for coordinating and estimating public and private

development and expenditure; and

(iv) To highlight the local and detailed planning issues for public attention – LPs

will draw attention to more detailed planning issues in the planned areas.

Thus, it enables developers and property owners to be aware of how their

interests will be affected and where opportunities lie. This is done through the

consultation stage during the initial study and public objection stage after

finishing the draft of LP.



17


d. Special Area Plan

The preparation of the SAP, which is the fourth tier of the development plan, is

enacted in Section 16B of Act 172. This provision provides responsibility for the State

Director of TCP or the particular LPA to prepare a plan for special area to carry out a

special or detailed treatment through development, redevelopment, improvement,

conservation or management practice. The understanding on SAP was further

elaborated in the Guideline of Special Area Plan, 2004 prepared by Federal TCPD.

The guideline defines SAP as a short-term development plan for implementation

purposes. The guideline also specifies that the main outcome of SAP is a

development action plan comprising of the layout plans and management plan for

development programmes, which include proposals for development phase, cost,

implementer agency and implementation approaches.

The SAP can be prepared during the preparation or upon the coming into effect of a

SP or LP. In terms of the preparation process, as stated in Section 16B(3), the SAP

should be prepared in the same manner as the preparation of a LP. In addition, it is

also stated in the provision that the SAP has the same effect like a LP. In general,

the SAP can act as a useful planning mechanism for LPAs to plan and manage

particular areas which need special development programmes (Wan Mohamad

Mukhtar, 1996).

2.4.2 Process and Procedures of Planning Control

Act 172 has introduced a mechanism of planning control to be enforced by the LPAs

to ensure the land use development is in line with the policy and proposals

formulated by development plans. Prior to 1976, planning control activities were

implemented according to Part IX (S. 145) of the Town Board Enactment. This

Enactment empowered the Board to refuse submission of plan for any new building

or any new private street, unless such plan is in conformity with the general town

plan (Ismail, 2003).

Act 172 empowers each LPA to control land use development within their areas

through the procedure of planning permission. In order to guide and enforce the

procedure, the Act firstly explained the definition of carrying out „development‟ that

requires planning permission. Under the Section 2(1), „development‟ was defined as

“carrying out of any building, engineering, mining, industrial or other similar operation

in, on, over, or under land, the making of any material change in the use of any land

or building or part thereof, or the subdivision or amalgamation of land”. The definition

is basically quite similar to the one legislated in the UK planning legislations.

In line with the definition, all development applications, including housing

development, need to go through the procedure of planning permission and must first

obtain approval from the LPA before it is permitted to be developed (Alias, 2006).

This requirement is also in accordance with the provision of Section 19(1) which

stated that “no person, other than a local authority shall commence, undertake, or



18


carry out any development unless planning permission in respect of the development

has been granted to him”. The provision explains that all development activities are

prohibited except after the planning permission to carry out development is obtained

from the approving authority.

In enforcing planning control, reference need to be made to the proposals and

implementation measures, including proposal for future land use zone, stipulated in

the LP (Alias, 2006). This requirement was legislated under Section 18(1) which

states that “no person shall use or be permitted to use any land or building otherwise

than in conformity with the local plan”. Besides LP, Act 172 under Section 22(2) also

provides other matters that the LPA should take into consideration when dealing with

any application for planning permission. This includes:

(i) Provisions of structure plan;

(ii) Directions given by the SPC (including guidelines, standards and other

planning requirements approved by the SPC);

(iii) Provisions that the LPA thinks are likely to be made in any development plan

under preparation or to be prepared;

(iv) Development proposal report (DPR); and

(vi) Objections by the neighbouring land owners (Section 21, Act 172).

In relation to the approval of planning permission, it is stipulated in Act 172 that the

LPA, after taking into consideration all matters under Section 22(2), may grant

planning permission either absolutely or subject to conditions as LPA thinks fit to

impose, or refuse to grant planning permission (S. 22(3)).

With regard to the process and procedures for the planning application, it is specified

in the Act that such application need to be submitted to the LPA together with the

documents, plans and fees as stipulated in the Planning Control (General) Rules

(PCGR) enacted by each State. The DPR, in addition to the documents and plans

required, also needs to be submitted by the applicants.

Similar to the preparation of development plans, the implementation of planning

control in Malaysia was also debated, particularly in terms of considerations for

decision making, efficiency and its effectiveness. Asiah (1999) highlights that

discretionary practice by the decision makers exist in making decision for planning

permission, though legislatively decisions should be made in accordance with the LP

and other requirements stipulated in Act 172.

Asiah (1999), however, does not see the practice as negative on the reason that

discretion and opinions of the approving authority in considering planning

applications may contribute to a better decision, compared to referring only to the

proposals of development plans. Similar view is shared by Foziah (2002) by arguing

that as the outcomes of LP are still not fully achieved as expected by the planning



19


legislation, it is rational for the approving authority to practise discretionary in

deciding planning decisions. In relation to the efficiency and effectiveness of the

planning control procedures, Mohd Anuar (1991) who studied the development

control system in Johor Bahru, revealed that there are many aspects, such as

certainty, time factor, procedure, administration, accountability and coordination

which are still inefficient and ineffective.

2.5 Rationale for Land Use Planning to Intervene in the Development

Process

As a form of government intervention, land use planning has a specific function to

intervene in the development process albeit most of the activities in the process are

dominated by the private sector (Solesbury, 1974; Ball, 1983; Adams, 1994; Lambert,

1996). This is in line with the view by Pearce (1992) who describes that the goals of

development will be effectively achieved through an intervention by land use planning

system. Through such intervention, resources in the development process can be

distributed more fairly (Healey, 1983). The intervention also helps to produce a better

urban environment and facilitate economic growth than that which could be

generated by the market alone (Adams, 1994; Greed, 1996c).

Although there are many reasons for land use planning to intervene in the

development process, the central rationale basically focuses on the failure and

imperfection of the market system in operating the process. Solesbury (1974),

Healey (1983) and Adam and Watkins (2002) note that the market alone fails to

allocate resources effectively. In particular, the market fails to provide public goods

such as public amenities, control the impact of externalities or provide services

unattractive to private enterprise (Solesbury, 1974). Yitachel (1989) similarly

expresses that land use planning intervention will helps in shaping market behaviour,

enhance equity, efficiency and sustainability in the built environment that would

otherwise be generated by the market.

In relation to this, Adams (1994) contends that urban land use development should

be plan-led rather than market-led. According to Adams (1994), plan-led does not

mean that land use planning should replace the market but work through it. This

argument is supported by Self (1998) and Ractliffe and Stubbs (1998) who pose that

land use planning should not only follow market trends but play a role to justify and

assist the market to become more efficient. Even, Frieden (1989) and Campbell and

Fainstein (1996) see land use planning as helping the market along.

The capability of land use planning to intervene effectively in the development

process, however, was argued in many angles. Adams (1994) and Greed (1996d)

argue that although land use planning intervention is needed to overcome the market

imperfections and failure, there is still not enough evidence to indicate that land use

planning produces better outcomes than market operation. Pearce (1992)

addresses that the failures in the market process have not been properly tackled by



20


the land use planning system. Even, according to Healey (1993) the operation of

markets is given little attention in the operation of land use planning.

In another perspective, Campbell and Fainstein (1996) elaborate that although land

use planning intervention is substantial in replacing the chaos of the market, there

were also views which hold the reverse belief that the market should replace the

chaos left by the planning. The argument arises due to assumption that land use

planning system itself creates inequalities and inefficiencies in the development

process (Pearce, 1992).

In view of the arguments, Adams (1994) suggest the planners as one of the actors in

development process to facilitate the renewed search for better land use planning

intervention by grasping the values and behaviours of the market operations. In other

words, land use planning should be more responsive to the market fundamentals by

understanding the market demand factors in the property development process

(Hague et al., 2006).

In practice, there are many ways where land use planning can intervene in the

development process. It is not only limited to the development control activity to

monitor and approve the planning permission as indicated in most models of event

sequence development process, but also involved other planning instruments, such

as development plans and development promotion. In brief, development plans

provide a context for control decisions by stating the strategies and principles that the

planning authority should adopt in seeking to manage land use change. A

development plan also indicates where an authority wishes to encourage

development by allocating land for specific uses. Such guidance provides a

framework for the land market by helping the developers to know in advance, what is

likely to be acceptable on their own land as well as on neighbouring land (Adams,

1994).

As for development control, as a main activity in the development process, it provides

an administrative mechanism for the planning authority to exercise discretion on

specific development proposals by deciding in each case whether to uphold the

development plan or depart from it. Development control thus enables landowners,

developers or investors to challenge the development plan, after it adoption. The

planning authority may try to control the form of a development process as well as its

location, specifying requirements for matters such as access, design, development

time-frame, quantity required and external appearance (Adams, 1994).

The development promotion which is accepted as one of the land use planning

activities, particularly in the UK‟s planning framework also plays a significant role to

enable land use planning interacts with the development process (Adams, 1994).

Through the activity, it helps authorities to seek opportunities and potentials to

stimulate development and investment within their areas by promoting and marketing

locations, making land available to developers and providing grants and subsidies.



21


The significance of land use planning system in development process will be further

elaborated in the next section by exploring its relationship and roles in the context of

housing development, particularly in relation to the process of planning and

controlling of housing supply.

3.0 LAND USE PLANNING SYSTEM AND HOUSING SUPPLY PROCESS

This section emphasises on the relation between the land use planning system and

the aspect of housing supply. Attention is given to understand the relationship of land

use planning operation and market system operation, the roles of land use planning,

requirement to fulfil housing needs and housing demand and the importance of

market demand criteria in the process of housing supply.

3.1 Relationship Between the Operations of Land Use Planning and Market

System in Housing Supply Process

The land use planning system through the mechanisms of development plan and

planning control and the market system as operated in the housing production

process are among the systems which exist and influenced the structure, process

and outcomes of housing supply (Bramley et al., 1995; Golland, 1998). According to

Maclennan (1991), Healey (1992) and Adams and Watkins (2002), the operation of

the systems, in relation to the production of housing supply, are not separated but

interrelated and complement each other. The argument is supported by Rydin

(1993), von Einsiedel (1997) and Bramley (2003). Rydin (1993) stresses that the

housing development goals can only be achieved through a good interaction

between the operation of land and housing markets by house-builders with the

activities of land use planning administered by local authorities.

Von Einsiedel (1997) argues that although most of the activities in housing

production process are shaped by the market forces, the planning system also has a

specific role especially in governing the approval of housing supply. Indeed, von

Einsiedel (1997) perceives that both the demand and supply in housing market are

affected by the regulatory, institutional process and policies set by the land use

planning system.

Bramley (2003), on another perspective, clarifies that the approval of housing supply

as determined at the planning stage becomes a basis for the successfulness of the

operation of housing market system. Bramley‟s argument meant that if the housing

supply is properly planned, controlled and approved by the land use planning

mechanisms, it will help the housing market system to operate efficiently. That is, it

is difficult for the housing market system to operate efficiently without the proper

planning of housing supply.



22


With regard to the role of the market system, theoretically in laisser-faire economy,

the system should be operated to achieve equilibrium between demand and supply

(Maclennan, 1982; Harvey 1993; Adams, 1994; Bramley 1996; Nicol, 2002).

However, in the actual operation of housing market, it often fails to provide a

balanced situation between demand and supply (Bramley, 2004). Imperfection of the

housing market system which is distorted by external influences, such as speculation

activity by housing developers, vagueness and incomprehensiveness of housing

policies set by the authority, changes in finance policy and interest regulation as well

as volatility in macro and micro economic performance had contributed to the market

failure (Adams, 1994). Moreover, inadequate information about needs and demands

for future housing development supplied by land use planning activities was also

argued to have contributed to housing market failure (Bramley et al., 1995).

As the result of imperfection and failure, the housing market will be in a perpetual

state of disequilibrium, where a balance between supply and demand is difficult to

achieve. Even, Adams (1994) argues that it is never achieved. According to Adams,

the housing market has always moved from shortage to overprovision and back to

shortage. In the situation of imperfection and failure of the housing market, Rydin

(1993) and von Einsiedel (1997) stress that it is justified for the land use planning to

rectify the failure by properly governing the process of planning and controlling of

housing supply.

According to Healey (1983), the land use planning system can play a role to

overcome the housing market failure by providing a development framework within

which market can operate, removing the uncertainties of the unfettered market. In

addition, Rydin (1993) suggests that land use planning should play its role to gather

information about future trends and regulating the supply of housing land to prevent

such speculative swings in new housing supply.

The relationship between land use planning, as a government intervention tool and

the housing market system may also be reviewed in a broader perspective,

particularly in the context of institutional and political economy of housing

development. In the institutional context, the relations between government and

market, within which planning system operates, have faced criticism. Planning is

often criticised for being insufficiently aware of the impact of its policies on the market

(Healey 1992; Adams and Watkins, 2002) and relatively unresponsive to market

demand in the way that it supplies new housing (Bramley et al., 1995).

In the light of this, Moor (1983), von Einsiedel (1997) and Satsangi (2000) highlight

that to improve housing delivery system and to ensure its development goals are

achieved, planning should be more concerned on how the housing market works as

well as the results of its operation. Through understanding how the housing market

works and how it fails, it gives land use planning a powerful set of lever to improve

the performance of the housing sector (von Einsiedel, 1997).



23


The market

The Government Equity

Quantity

Space

(Location)

Choice

In the context of political economy of housing development, the government through

land use planning system is seen as a solution to the housing development problems

and the market as a way of meeting housing development objectives. This can be

understood through examining the conceptual model developed by Golland and

Gillen (2004) as in Figure 4 below.

Figure 4: Conceptual model of the political economy of housing development

Source: Adapted from Golland and Gillen (2004:67)

The model shows that the pressures on quantity, choice, space or location and equity

in housing development can be absorbed through the interrelationship of the

„government‟ and „market‟ mechanisms. In the model, Golland and Gillen (2004)

clarify that the close relationship between both mechanisms or „government-market

mix‟ are integral to enable housing developments be managed properly.

Furthermore, both mechanisms also need to play their roles effectively because any

mistake will give an effect to the operation of the other mechanism. For example,

new policy decisions related to housing land use zoning formulated either by the

state or local governments may affect the market for housing lands. The uncontrolled

market in releasing housing land, similarly give an effect and restrict the government

to enforce its housing policies effectively (Rydin, 1993).

The discussion above indicates that a close relationship between the operation of

land use planning and the operation of market system are necessary to ensure the

process of housing development, particularly in relation to the aspect of supply, is

carried out efficiently and effectively. The significance of housing market system will

be detailed out in section 3.4 by exploring the criteria of market demand that need to

be considered in planning housing supply.



24


3.2 The Role of the Land Use Planning System in Housing Supply Process

The system, activity and mechanisms of land use planning play a pivotal role in

housing development to ensure development is carried out in a sustainable manner

and its process is operated effectively (Ball, 1983; Golland and Gillen, 2004). The

land use planning‟s role in relation to the aspect of housing supply is not only limited

to fulfilling the goal of meeting housing needs but also to encourage and ensure

efficiency in the system and operation of housing market (Greed, 1996c; Chan, 1997;

von Einsiedel, 1997).

As mentioned in previous discussions, there are two main activities, other than

implementation or promotion that adhered to the land use planning system, namely

forward planning and development control (Bramley et al., 1995; Greed, 1996;

Ratcliffe et al., 2004). For housing development, it also has to go through similar

process, from conducting housing planning activities to controlling of new housing

development applications. It ends with the development of the housing schemes,

either by the government bodies or by private developers (Alias, 2006).

In relation to the role of land use planning in the housing supply process, Short et al.

(1986) views it as a system of negotiation which results in a set of rules governing

access to land and to housing before it is surrendered to the market operation.

According to Rydin (1993), the land use planning system should allocate sufficient

land for future housing supply requirement and then responds accordingly to each

housing planning applications.

In practice, the housing planning process begins with the forward planning activities

through preparation of development plans. The development plans will formulate

housing policies and determine future housing requirements. This is subsequently

followed by the process of development and planning control which become an

important stage in the overall housing production process. At this stage, housing

development applications will be assessed by the planning authorities before

development is permitted (Figure 5).

In broad, it becomes a key function of land use planning to allocate adequate land for

new development according to planned assessment of the housing needs and to

coordinate these land allocations with supporting infrastructure (Lambert, 1996;

Carmona et al., 2003; Blake and Collins, 2004). With regard to this, within the

regulatory ambit of the land use planning system, there are two dominant discourses

wrapped around the decisions regarding allocation of land for housing. The first is the

amount or quantity of new-build required and the intensity to which land should be

developed. The second concerns the marketability of the land supply released by

local authorities in their housing land availability schedule (Hull, 1997).



25


Housing Planning

Control Process

Housing Market Operations by

Developer

Preparation of Development

Plans

Site Appraisal and

Feasibility Study

Building Design and Approval

Contract and

Construction

Monitor, control and approve new

housing supplies

Formulate housing policies

HOUSING PLANNING PROCESS

FORWARD

PLANNING HOUSING PRODUCTION PROCESS

DEVELOPMENT CONTROL

Determine future housing requirement

(land allocation, quantity and

location)

Figure 5: The role of the planning system in housing supply process

Sources: Adapted from Ractliffe et al. (2004) and Alias (2006)

The concern about marketability basically relates to where the housing lands should

be allocated (Satsangi, 2000). This requires consideration as to where and how to

allocate suitable locations for current and future housing development. Ball (1983)

and Adams and Watkins (2002) perceive that the land use planning system can play

a significant role in this aspect by determining potential areas and specific localities

for future housing and considering the expected future market demands. This

argument is supported by Blake and Collins (2004) by stating that the professional

planning decisions will help in shifting systematically the „floating‟ demand for homes

into a specific geographical spaces and marketable locations.

The matters of land allocation, quantity and location for housing has attracted

Carmona et al. (2003) to debate further. According to Carmona et al. (2003), the

philosophy of „predict and provide‟ as previously adopted by the UK‟s housing

planning had forced local authorities to comply to the housing numbers predicted at

the national and regional levels, to deliver their allocation in advance of demand. This

system arguably contributed to the provision of housing in the wrong type and

quantity and caused the locational mismatches between the supply of and demand

for housing. The introduction of the „plan, monitor and manage‟ system in the UK was

perceived as a responsive approach to planning for housing in the right type and

quantity and in the right locations (Carmona et al., 2003). This new system has led

LPAs to endeavour to meet the best housing requirement for local population (Adams

and Watkins, 2002).

The fundamental of the system of „plan, monitor and manage‟ was incorporated in

the revised version of Planning Policy Guidance (PPG) No. 3 (Housing). The PPG



26


outlines a range of clear objectives for the land use planning system to manage

housing development, requiring LPAs to (DETR, 2000):

(i) Plan to meet the housing requirements for the whole community, including

those in need of affordable and special needs housing;

(ii) Provide wider housing opportunity and choice and better mix in the size, type

and location of housing;

(iii) Provide sufficient housing land but give priority to reusing previously

developed land within urban areas, bringing empty homes back into use and

converting existing buildings, in preference to the development of greenfield

sites; and

(iv) Make more efficient use of housing land by reviewing planning policies and

standards.

The PPG was translated into practice by concentrating on housing developments

within urban areas, making more efficient use of land by maximizing the reuse of

previously developed land, adopting a sequential approach in allocating land for new

housing development, managing the release of housing land and reviewing existing

allocations of housing land in development plans and planning permissions when

they come up for renewal (Carmona et al., 2003).

An effort to allocate adequate land and quantity for housing in the right type and at

the right place, other than to meet housing needs was also given attention in

Malaysia. Various plans at the Federal level such as the Five-Year Malaysia Plan,

National Housing Policy, National Urbanisation Policy and NPP are found to have

touched these aspects. The SP and LP prepared at the State and local levels also

addressed the aspects substantially through formulation of policies, strategies and

measures to ensure land and quantity of housing supply is allocated adequately in

the suitable locations (Asiah, 1999; Ibrahim, 2008).

3.3 Requirement to Fulfil Housing ‘Needs’ and ‘Demand’ in the Planning of

Housing Supply

In conducting the housing planning activities, either during the preparation of

development plans or at the stage of planning control, it becomes a nature of land

use planning to fulfil the objective of meeting housing needs (Ratcliffe, 1981; Golland

and Gillen, 2004; Ibrahim, 2008). Housing needs, according to Chander (1976),

Ratcliffe (1981), Noraini (1993) and Golland and Gillen (2004) means the quantity of

housing that is required to provide an adequate housing to the population without

taking into consideration an individual household‟s ability to pay.

Housing needs is associated with adopting „global‟ housing provision, into a

prediction of a number of households that will require housing in future. It is based

upon population projection which are employed through specific population modelling

method (Nicol 2002). According to Pearce (1992), the housing planning goal is



27


considered achieved if the planning decision ensures an adequate and continuous

supply of housing needs.

The nature of housing planning which focuses on meeting housing needs, however,

had raised several arguments. Nicol (2002) argues that meeting housing needs alone

is insufficient to achieve a more integrated and responsive housing supply. Nicol

(2002) suggests the housing planning process to take into consideration as well the

aspects of housing demand. The term housing demand is usually associated with

the requirement of individual households over and above the basic or minimum level

of provision or „needs‟ (Golland and Gillen, 2004), supported by the household

willingness to pay for housing (Noraini, 1993). By considering the ability to pay which

is actually backed up by the purchasing power of each household, it reflects the

situation of actual demand for housing which is technically defined as effective

demand (Adams and Watkins, 2002; Golland and Gillen, 2004).

Determination of housing demand is also associated with the housing choice

required by the households (Golland and Gillen, 2004). As explained by Golland and

Gillen, demand for choice can be distinguished by housing tenure (e.g. social-rented

sector or private-rented sector), type of housing (e.g. detached, semi-detached,

terraced or flat), form of housing (e.g. material used and the way in which housing is

constructed, whether in the traditional or in the pre-cast concrete way) and the

method of development of new homes.

Choices for housing demand also takes account of market conditions reflected in

terms of selection by price and location preferences (Ratcliffe, 1981; Thrall, 2002).

Thus, income and ability to pay are the critical factors and it can easily be argued that

those households with the highest incomes have the greatest housing „choice‟

(Golland and Gillen, 2004). In this context, housing demand is ultimately an issue

which tells us more about the choices which households make in moving house or in

gaining access to a new dwelling.

In the light of the above and in order to ensure the local housing requirement is

adequately met, the housing planning process should recognise that the housing

requirements are not only driven by population trend but also by the affordability

and choices of each household. With regard to this, Golland and Gillen (2004)

suggest that in estimating the actual requirement for housing, it is necessary to take

account of household‟s income, their ability to pay, their preference in terms of price

and location and their choice in terms of tenure, types, form and method of housing

to be developed.

The suggestion is concurred by Nicol (2002) who suggests that the concept of

housing requirement should be viewed at two separate levels. The first is in terms of

overall housing requirements so called broad housing needs. The second level is the

determination of the degree to which the households require certain house types,

prices, locations and tenures.



28


The significance of those aspects has been recognised in the housing planning

process in the UK and other European countries. Boelhouwer and van der Heijden

(1992) and Golland and Oxley (2004) clarify that formulation of housing policy in

European countries has been increasingly directed towards improving housing

choice rather than quantity by trying to meet the aspirations of households wanting

to own homes. In the UK, since early 1980s, the formulation of housing policies has

changed from previously focussing on meeting broad housing needs to one which is

focusing on and addressing the specific demands of households (Golland and Gillen,

2004).

3.4 The Importance of Market Demand in the Planning of Housing Supply

Besides factors related to the effective demand and housing choice, the criteria of

market demand should also be considered as a significant factor in the planning of

housing supply. As discussed by Bramley et al. (1995), the housing market demand

criteria consist of several elements, such as local housing market conditions and the

expected house buyer preferences in terms of price, location and type of housing.

The importance of these criteria has attracted support from Hull (1997) who argues

that the process of forward planning and production of housing still suffers from lack

of reliable information on the market indicators and current flow between the housing

market and the levels of investment in the housing stock.

Hull (1997) also stresses that apart from playing a role in meeting housing needs and

housing demand, the forward planning and development control process should also

look at the importance of the market demand criteria, especially on the aspect of

marketable location. This statement is in line with the view by Pearce (1992), who

clarifies that although the planning goal in meeting adequate housing needs is

considered as has been fulfilled, any planning decision in supplying new houses also

has to respond to the situation of current market demand.

The importance of incorporating the market demand criteria in housing planning

process is also addressed by Ball (1983) and Bramley (1995). Ball and Bramley

suggest the land use planning system should have a greater degree of awareness of

the housing market by incorporating policies and procedures in a way sensitive to the

need of the market. Pearce (1992) and Nicol (2002) also highlight that it is a

responsibility of the planning authorities to have an adequate understanding of

housing market before making any decision in releasing new housing supply. Similar

point is addressed by Golland and Gillen (2004) by clarifying that it is necessary for

the housing planning process to understand the consumer‟s „taste‟ of the housing

market. Stressing on the above arguments, Healey (1992) proposes three

approaches in achieving the housing planning goals by the planning system

consisting of following the market, managing the market and creating the market.

According to Adams (1994) and Lambert (1996), the market demand criteria need to

be monitored right up to the start of housing planning process in the development

plans. In relation to this, Moor (1983) suggests the need for planners, as the main



29


actor in the development process, to be more aware of the market conditions and

trends and put forward some changes in practice, especially in the preparation of

development plans and planning control process. The preparation of LP and planning

control, in particular need to be more sensitive to the nature and pressures of market

demand by understanding the boundaries of local and neighbouring housing

markets, the structure of sub-market as well as the trend of current and future

markets (Adams and Watkins, 2002; O‟Sullivan, 2003).

4.0 HOUSING DEVELOPMENT PROCESS IN MALAYSIA

Housing development in Malaysia is carried out by both the public and the private

sector through the concepts of `sell and build‟ and `build then sell‟. The public sector

(through National Housing Department, Syarikat Perumahan Negara Berhad and

other government agencies) concentrates mainly on low-cost and affordable housing

while the private sector (private housing developers), apart from complying with the

30 percent low-cost housing provision, concentrates on medium-cost and high-cost

housing developments. The Malaysian government has also formulated a housing

policy which aims to strengthen the involvement of private sector in housing

production and delivery (Asiah, 1999; Ibrahim, 2008).

The development of housing is given an emphasis in various plans at the federal,

state and local levels. At the federal level, the current and future housing requirement

are planned and targeted through the five-year Malaysia plans, NPP and NUP.

Various housing policies have also been formulated in the plans to guide the process

of housing development at the state and local levels. One of the prominent policies in

the plans is to ensure all Malaysians have an access to adequate shelter and related

housing facilities (Ahmad Zakki, 1997; Chan, 1997a; Goh, 1997b; Asiah, 1999). At

the state and local levels, the development of housing is planned through the

preparation of SP, LP and SAP. It is also guided by various housing policies and

guidelines formulated by the State Authority and planning authorities (Alias, 2006).

The process of housing development in Malaysia is very complex and highly

regulated (Chan, 1997b; Asiah, 1999). As shown in Figure 6, after acquiring the land,

there are many stages of approvals regulated by various laws and rules of different

agencies which need to be obtained by housing developers (Tan, 1996; KPKT, 2002;

Alias (2006); Ibrahim, 2008). Among them are:

(i) The approval of land development applications (conversion, sub-division and

amalgamation) by the State Authority (enacted under the NLC, 1965);

(ii) The approval of planning permission by LPA (under the Act 172);

(iii) The approval of building plan by local authority (under the Street, Drainage

and Building Act, 1974);



30


(iv) The approvals of earthwork plan (under the Street, Drainage and Building Act,

1974) and landscape plan by local authority;

(v) The approval of developer‟s license by the MHLG (under the Housing

Developers (Control and Licensing) Act, 1966);

(vi) The approval of advertisement and sales permit by the MHLG (under the

Housing Developers (Control and Licensing) Rules, 1989); and

(vii) The approval of certificate of fitness for occupation (CFO) by local authority

(under the Street, Drainage and Building Act, 1974) or the issuance of

certificate of completion and compliance (CCC) by qualified professionals.

Previously, all the approvals have to be applied separately (step-by-step), but with

the formation of one stop centre (OSC) at every local authority beginning June 2007,

the applications for the planning permission and other plans can be submitted

simultaneously through the centre. This initiative formed by the government is aimed

to speed up the process of getting an approval and to enhance the delivery system in

housing development process (Tan, 2007).

The applications will involve the appointment of various consultants, such as land

surveyor, town planner, architect, engineer and landscape architect to prepare a

survey, layout, building, earthwork, drainage and sewerage and landscape plans. It is

important to note that although the applications are submitted concurrently to the

OSC, their approvals are still granted separately, except for small-scaled projects

(particularly flatted housing projects) of which the lands have already been granted

conversion and sub-division approvals. Before the decision is made to each

application by the OSC Committee, various technical agencies will be referred for

comments and advice to ensure the housing development proposals are in line and

comply with the technical requirements of each agency.

After getting an approval of planning permission, the developer has to submit the

application for conversion and sub-division (or surrender and re-alienation) to the

State Land and Mines Office (through the District Land Office) for the consideration

of the State Executive Council (EXCO).

The decision for building plan and earthwork plan applications will only be made by

the OSC Committee after the application for conversion and sub-division is approved

by the State EXCO. The approval of building plan will help the developer to apply the

housing developer‟s license and the advertising and sales permit from the MHLG.

Simultaneously, the developer (through land surveyor) may conduct a detailed

survey and prepare a pre-computation plan for the approval of the District Land

Office or the State Land and Mines Office.



31


Figure 6 : Housing Development Process in Malaysia

Sources: Adapted from Tan (1996), Chan (1997a), KPKT (2002; 2007) and Alias (2006)

Application for Foreign Investment

Committee (FIC) Approval

Feasibility Study Acquisition of Land

Appointment of Consultants

Land Surveyor (Survey Plan)

Simultaneous Submission to the One Stop Centre (Local Authority)

State TCPD Economic Planning

Unit Dept. of Irrigation Health Dept. Public Works Dept. Waterworks Dept. Telecom Malaysia Tenaga Nasional

Berhad Water Supply Dept. District Land Office Labour Dept. Dept. of Environment Fire Brigade Dept. Internal Divisions of LA

District Land Office / State Land & Mines Office

State Executive Council (EXCO)

Project Planning Contract Administration Finance and Control

Sales Administration

Issuing of CFO or CCC

Town Planner (Layout Plan)

Architect (Building Plan)

Engineer (Earthwork Plan)

Landscape Arch.

(Landscape Plan)

Application for Conversion and Sub-division (or Surrender and Re-alienation) Approval

Conversion and Sub-division Approval

Application of Planning Permission Application of Building Plan

Application of Earthwork Plan Application of Drainage & Sewerage Plan

Application of Landscape Plan

Land Surveyor (Detailed survey and Prepare

Pre-com. Plan)

District Land Office / State Land & Mines Office

Approval of Pre-comp. Plan and Issuing of Qualified Titles (Q.T.)

Application of Developers License (from MHLG)

Application of Advertising and Sales Permit (from MHLG)

Delivery of Vacant Possession

Planning Permission Approval (OSC Committee) Endorsement by

the LA‟s Full Council Meeting

Sales and Construction

Building and Earthwork Plans Approval (by OSC

Committee)



32


After all the approvals are granted, the next step is to start the sales and

construction. The sales activity requires the developer to decide the selling price for

all types of houses, make a continuous marketing and advertising to promote and to

attract buyers, and administer matters related to finance (facilitating buyers to get

end financing from financial institutions), sales agreement and transferring of land

title from the developer to individual titles for each housing buyer.

The construction stage is the most crucial stage in the process of housing

development. This stage requires the developer to manage the project planning

(scheduling, budgeting and progress monitoring), contract administration (tender

documentation, selection and contract) and finance control (bridging and end

financing) systematically (Dani, 2009). Consultants and contractors involved in the

housing project also need to be mobilised efficiently to ensure it is completed within

the determined period. According to the Housing Developers (Control and Licensing)

Rules 1989, the developer has to deliver the vacant possession of the landed

housing within 24 months of the signing of the agreement. This means developers

could not go beyond 2 years of the construction period. After the completion, all the

housing units need to be handed over to the purchasers. However, no occupation of

a dwelling is allowed until and unless a CFO or CCC is issued.

There are many issues in the process of housing development in Malaysia that can

be explored. The problems of delay, bureaucracy and lack of co-ordination in the

approval process are among the issues that are frequently related to the process.

This paper however, will not touch the issues in detail. The concern is more on the

aspect of planning and controlling of housing supply, which is also one of the

important components in the whole process of housing development.

5.0 HOUSING PLANNING PROCESS IN MALAYSIA

The preparation of development plan and implementation of planning control in

Malaysia have an equal role in the planning and controlling of housing supply. The

planning for housing supply begins at the national level through the preparation of

NPP, followed by SP at the state level. The process of planning of housing supply

continued at the local level through the preparation of LP and SAP. The outcomes of

the plans will be used as guidance by the LPAs to control and approve the

applications of housing development.

5.1 The Planning of Housing Supply

As mentioned in the previous sections, the development plan plays an important role

in planning the development of urban land uses. In the planning of housing land use,

there are five main purposes that should be performed by development plan (Prior,

2000):



33


(i) To coordinate the provision of major housing development with other land use

activities;

(ii) To provide a clear framework for development control decisions and guidance

to those proposing development;

(iii) To provide some certainty to those seeking planning permission;

(iv) To act as promotional documents indicating locations of development

opportunities; and

(v) To steer development onto land most suited for it.

These points will be discussed in this section by exploring the process and activities

carried out by the development plans in Malaysia in relation with housing supply

planning. It covers the outcomes, strategy and policies as contained in the NPP,

followed by the process and activities of housing planning in both structure and local

plans. The role of SAP in this aspect is intentionally excluded considering its

preparation process and procedure are similar to the preparation of LP.

5.1.1 The National Physical Plan: Outcomes, Strategy and Policies on

Housing Supply

Housing represents one of the main sectors in the preparation of NPP. In this plan,

the activities of housing sector include the following aspects (JPBD Semenanjung

Malaysia, 2003b):

(i) To identify the existing stocks and distribution of housing units by categories

and states in Peninsular Malaysia;

(ii) To identify the current issues and problems of housing development faced by

the nation;

(iii) To project the total national housing units and land requirement for housing

development up to year 2020 by state; and

(iv) To recommend the necessary strategies, policies and implementation

measures to be adopted to accommodate for the issues and problems

identified.

In line with the above scope, the NPP‟s housing study, similar to other development

plans, emphasises on analysing the existing housing conditions, examining

committed housing developments, projecting future housing requirement and

formulating strategy and policies to streamline and strengthen the housing

development. There are several strategies and policies that touched on matters

relating to the planning and controlling of housing supply.



34


a. The Outcomes on Housing Conditions, Committed Development and

Projection

The NPP reveals that, in 2000, all states in Peninsular Malaysia faced the issues of

surplus of existing housing supply and high rate of committed development. This can

be seen in Table 1 where the total housing supply (existing and committed units) has

amounted to 5,338,000 units compared to the total housing need in the same period

which is only 3,941,200 units.

Table 1: Comparison between the total housing supply and the total housing need

in Peninsular Malaysia, 2000 – 2005

STATE / REGION

HOUSING SUPPLY HOUSING NEED Total Surplus (2000)

Total Surplus / Shortfall (2005)*

Existing Units (2000)

Committed Units (2000)

Total Supply (2000)

2000 2005

Perlis 44,900 4,700 49,600 43,500 47,400 6,100 2,200

Kedah 365,100 45,800 410,900 351,000 398,100 59,900 11,900

Pulau Pinang 334,300 21,700 355,900 279,500 322,700 76,400 33,200

Perak 520,700 136,200 656,900 436,400 484,900 220,500 172,000

Northern Region

1,265,000 208,400 1,473,300 1,110,400 1,253,100 362,900 219,300

Selangor 882,700 303,200 1,186,000 891,200 1,126,400 294,800 59,600

Kuala Lumpur 323,100 54,900 378,000 293,500 351,300 84,500 26,700

N. Sembilan 230,300 122,200 352,500 183,000 201,700 169,500 150,800

Melaka 164,700 26,900 191,700 135,300 151,300 56,400 40,400

Central Region 1,600,000 507,200 2,108,200 1,503,000 1,830,700 605,200 277,500

Johor 652,600 304,000 956,600 583,100 671,000 373,500 285,600

Southern Region

652,600 304,000 956,600 583,100 671,000 373,500 285,600

Pahang 276,400 43,100 319,600 274,100 303,400 45,500 16,200

Terengganu 176,700 20,000 196,700 191,200 225,100 5,500 (28,400)

Kelantan 257,800 25,800 283,600 279,400 299,600 4,200 (16,000)

Eastern Region

710,900 88,900 799,900 744,700 828,100 55,200 (28,200)

Peninsular Malaysia

4,229,300 1,108,500 5,338,000 3,941,200 4,583,000 1,396,800 755,000

Note *: The figure for total surplus/shortfall of housing supply for 2005 is based on

comparison with the total supply in 2000 without considering of any new committed units from 2001 – 2005. The figures, which were presented in the NPP report, are intentionally highlighted to describe the scenario of housing oversupply faced in Peninsular Malaysia.

Source: Adapted from JPBD Semenanjung Malaysia (2003b)



35


These figures indicate that around 1,396,800 units are actually an oversupply. Similar

situation existed in 2005 in which some 755,000 housing units are identified as

oversupply in the Peninsular Malaysia. The State of Johor, Selangor, Perak and

Negeri Sembilan are among the states experiencing high oversupply rate in both

periods. For the State of Johor, the housing oversupply in 2000 was calculated at

373,500 units which is a surplus of 64.0 percent from the total housing need.

In addition, it is also highlighted in the NPP that the housing oversupply occurred due

to over commitment of housing approval by LPAs. With regard to this, the NPP

assumes the weakness of the present housing approval system together with the

failure of property market operations as the main contributing factors to the issue.

Simultaneously, it is also addressed in the NPP that if the oversupply situation

continue to exist, it will not only increase the rate of property overhang and

abandoned housing projects, but also contribute to the uneconomic use of public

funds, inefficient use of existing network of infrastructure and utility services and

ultimately may affect the performance of the national economic (Government of

Malaysia, 2005).

In relation to the housing projection, the NPP study does not only project the total

housing number needed but also the land area required for future housing

development. The following assumptions were adopted in projecting future housing

requirement for the Peninsular Malaysia (JPBD Semenanjung Malaysia, 2003b):

(i) Every single household needs a housing unit;

(ii) Housing unit must be at the minimum standard that is on a par with the

accepted low-cost housing quality; and

(iii) 1 household constitutes 4.7 persons in 2000, 4.5 persons in 2005, 4.3

persons for 2010 and 2015 and 4.2 persons in 2020. These household

numbers represent the total housing supply needed or the total housing

needs.

Based on the above assumptions, the total housing projection for Peninsular

Malaysia was produced at a 5-year interval between 2000 and 2020. The way this

housing projection is conducted indicates that NPP only focuses on projecting the

future housing supply in the form of broad housing requirement without considering

the aspect of household housing demands. In relation to the projection of future

housing land requirement, it is stated in the NPP‟s technical report that the projection

for 2020 is only based on the broad estimation with a purpose to know the general

magnitude of land space required for the whole Peninsular Malaysia. It is also

mentioned that the projection is not intended to give an exact and accurate details,

neither on location and housing types nor the distribution by region and state.

The NPP study has considered the issue of oversupply which occurred throughout

Peninsular Malaysia as a threat to the development of housing sector. In the light of



36


the issue, special recommendations to control and lessen the housing oversupply

were underlined in the NPP. The cautious and effective preparation of SSP and LP

as well as the tightening up of the approval of new housing applications by the

planning authorities are among the recommendations proposed in the NPP (JPBD

Semenanjung Malaysia, 2003b).

b. Formulation of Strategy and Policies on Housing Supply

The formulation of the strategy to optimise the use of land in urban area and for

housing development, that is the third strategy out of five NPP‟s strategies, has

implicitly touched the aspect of housing supply control. The strategy underlines that

to assess the land required for urban purposes, two factors should be considered.

Firstly, the demand for land generated by the increase in urban population and

secondly, an assessment of land that could be made available for urban uses without

jeopardizing the integrity of other land uses, particularly agricultural production area

and environmental sensitive areas (Government of Malaysia, 2005).

The strategy, after considering the 2000‟s housing supply assessment, housing

needs for 2000 and 2005 (Table 1) and projected housing needs up to 2020, also

outlines that the future housing requirement for Peninsular Malaysia can be

accommodated within the designated urban centres without the need for conversion

of forest lands to housing or use of the environmentally sensitive lands.

In addition, the strategy also addressed the present mind-set which perceives all

lands adjacent to urban areas are `ripe‟ for housing development need to be

changed. The NPP, through the strategy, has recognised that considerable waste of

resource can (and has) occurred when housing land has been prepared either

through conversion and layout plan approval without a thorough assessment of the

demand. In relation to the formulation of policy, only three policies, out of the 36

NPP policies (Government of Malaysia, 2005), are identified as applicable to plan

and control the housing development in Peninsular Malaysia.

(i) NPP Policy No. 1 – “The NPP shall serve as the framework to achieve

integrated and sustainable land use planning in the country”. This policy

provides a general direction of physical development for the nation and

becomes a basis for the preparation of the lower tier development plans. This

means that the process of housing planning at the state and local levels as

done through SP, LP and SAP also need to conform to the provisions of the

NPP.

(ii) NPP Policy No. 9 – “The concentration of urban growth in the conurbations

shall be anticipated and accommodated”. This policy, besides emphasizing

on the need for urban development to follow the stipulated conurbation

hierarchy, also addressed the management of change for urban human

settlement (urban housing). This policy encourages the use of vacant land

within the urban area for the development of housing. This policy suggests



37


the property market operation and development approval process to consider

the realistic population and housing projections and ensure the approval of

housing land conversion is not at a rate faster than five years ahead of the

projected needs.

(iii) NPP Policy No. 17 – “A designated central authority shall be charged with

the responsibility to publish on regular basis information on land use

development”. This policy provides a measure which requires all

development plans to include a programme designating when land is `ripe‟ for

development and conversion to urban use. It is stated that the approval for

the conversion of land from agriculture to urban use shall adhere to such

programme and if the conversion is well ahead of development, there should

be a moratorium to the conversion.

The above discussion signifies that the aspect of housing supply, particularly relating

to the phenomenon of oversupply has become a concern of planning mechanism at

the federal level. This outcome has led the NPP to plan the country‟s housing supply

not only to meet the population housing needs but also to ensure the demands of

household and market are fulfilled. The formulation of the strategy and policies are

expected to guide the planning of housing supply at the state and local level.

However, as the NPP has only come into effect in 2005, whereas the SP and LP

were already prepared since the 1980s, its provisions could not be translated in the

lower tier plans, except for plans prepared after 2005.

5.1.2 Structure Plan: The Activities and Aspects Related to the Planning of

Housing Supply

Similar to the NPP, housing became the main sector in the preparation of SP either

in the old version SP or in the version of SSP. Both the SP manuals, Manual on

Function, Form and Content of Development Plans 1981 (DP Manual 1981) and

Manual of State Structure Plan 2001 (SSP Manual 2001) stipulated several activities,

scope and aspects that need to be considered in carrying out the housing study

(JPBD Semenanjung Malaysia, 1981; 2001). The main activities or stages of

housing study are as follows:

(i) Survey of existing housing situation;

(ii) Estimation of future housing requirement;

(iii) Preparation of general proposals to overcome and improve the process of

housing planning and development; and

(iv) Formulation of housing planning policies.

The written statement on housing planning policies together with the implementation

measures are documented in the SP final report, while the outcomes of the other

activities are documented in the housing technical report as well as in the report of



38


survey. The main activities of housing study in the preparation of SP will each be

explained in the following sections.

a. The Survey of Existing Housing Condition

The survey of existing housing condition covers various aspects. The DP Manual

1981 and SSP Manual 2001 outline several aspects that need to be surveyed (JPBD

Semenanjung Malaysia, 1981):

(i) Existing stock of housing supply in terms of quantity, type, size, condition,

density and distribution;

(ii) Current housing needs and housing demand;

(iii) Recent trends for the building rates, private housing and public housing; and

(iv) Information about new housing approvals (committed housing) and lists of

housing redevelopment and improvement;

(v) Examination and analysis of the pattern, distribution, density and type of

existing housing stock by district and settlement area;

(vi) Examination of the provision and requirement for low-cost housing;

(vii) Analysis of the total housing supply and need for each district;

(viii) Analysis of the trend of housing market demand for each district; and

(ix) Collection of information on committed housing development by housing

category for the whole state and each district.

The above explanation indicates that there was already a guidance that required the

preparation of SP to assess the household housing demands as well as the trend of

housing market demand, other than the existing housing stocks and housing needs.

b. Forecasting of Future Housing Requirement

The forecasting of future housing requirement is one of the important activities in the

process of preparing development plans aimed to identify the total number of houses

needed by households in the future. It is also useful to know the types and

preferences of houses to be in demand to satisfy different types of households in

particular areas (Blake and Nicol, 2004).

In the context of the SP‟s housing forecast, both SP manuals only provide a simple

guidance to estimate the future housing requirement. The manuals stipulate that the

outcomes of future housing forecasts should be in two forms, which are in the form of

total housing quantity (housing needs) and in the form of housing demands. For the

forecast of future housing needs, both manuals have stipulated that it must be

produced in two time-frames, which is by the overall planning period as well as a

break-down by certain planning periods. Both manuals suggest that the estimation



39


should be divided according to a 5-year interval. For future housing demand, both

manuals suggest forecasts according to housing category and type.

It should also be noted that both manuals did not specify clear guidance on the

forecasting techniques and aspects that need to be applied and considered in

conducting housing forecasts. The absence of the guidance has left the SPs applying

independently different housing forecasting techniques, from an integrated technique

to a common and simple one. The integrated version of forecasting technique, as

based on the view by Mark (1995), requires the housing forecasts to incorporate the

figures of expected future household income (effective demand) and housing choices

together with the figures of population growth, additional household, existing housing

stock and housing deficit or surplus.

The application of this technique could be considered as the most effective way to

forecast future housing requirement for the planned areas (Blake and Nicol, 2004).

Through this technique, the future housing forecast does not only produce a figure

on the total housing needs (total quantity of future housing supply) required but also

presents figures in the form of house categories, types and prices range preferred

and afforded by the future households. In the context of development plans in

Malaysia, only the first batch of SPs, namely Seremban SP, MBJB, Mukim Plentong

and Pasir Gudang SP and Kuala Lumpur SP are identified to have attempted to

apply the technique. Those SPs have considered the figures of expected future

household income in the forecasting of future housing requirement for the areas.

The common version of housing forecasting technique is found frequently applied in

the development plans in Malaysia, including in the preparation of SP. This version

only considers the figures of future population growth, housing aspects, such as

existing stock, backlog, vacancy and surplus, immediate and normal replacement

and additional new household for certain forecast periods. Considering the view by

Mark (1995) and Blake and Nicol (2004), the application of this technique can be

considered as less perfect compared to the previous technique. This is because it

only indicates future housing requirement in the form of total quantity (total housing

needs).

Further, it is also found that there are several SPs, particularly the old version SPs

which only used a simple technique to estimate future housing requirement. This

technique usually only considers the aspect of future household growth. Through this

technique, the total future housing requirement for certain areas is treated as equal to

the total future household numbers (existing plus additional new household). The

application of this technique could be considered weak and incomplete because it

disregards many important aspects and figures, such as housing backlog (current

shortage), vacancy and surplus of existing stock as well as the data on immediate

and normal housing replacement as outlined by Field and MacGregor (1987) and

Nooraini (1988).



40


c. Preparation of the General Proposals to Improve the Process of

Housing Planning and Development

The written statement of the general proposals becomes one of the main contents of

the SP. The proposals are underlined in the report of survey as guidance to the

formulation of planning strategies and policies. For the housing study, both manuals

do not specify the aspects that need to be emphasized in outlining the general

proposals to overcome and streamline the process of housing development.

Nevertheless, it is understood that any general proposal that was or will be outlined is

based on the issues and problems identified during the analysis of existing housing

conditions. It means that each SP will outline different general proposals for housing

development.

Based on the examination of several SPs, namely Seremban SP, Melaka Bandaraya

Bersejarah SP, Majlis Daerah Muar Selatan SP, Negeri Sembilan SSP and Melaka

SSP, a number of common proposals on housing supply can be identified:

(i) An emphasis should be given to the development of low-cost houses to

ensure the supply fulfils the requirement for low income groups;

(ii) The supply of high and medium costs housing needs to be monitored and

controlled to avoid the occurrence of oversupply;

(iii) The process of housing approval by LPA should consider the amount of

vacant housing stocks before the releasing of new supply; and

(iv) The LPA should make an effort to ensure the house types planned and built

by developers are in line with the actual demand and income affordability of

the local population.

These statements indicate that there are efforts by these SPs to outline the proposals

for improving the process of planning of housing supply. The extent to which the

proposals can be implemented, however depends on how and to what extent they

are incorporated in the formulation of housing policies in those SPs.

d. Formulation of Housing Planning Policy

The definition of SP as written statements of policies in respect of the development

and use of land, has attracted both SP manuals to give an emphasis on the

formulation of housing planning and development policies. Detailed guidance in

terms of the aspects that need to be considered in formulating housing policies were

underlined in the DP Manual 1981 as follows:

(i) Requirement to formulate general policies to strengthen the role and the

activity of housing development in urban and rural areas;



41


(ii) Requirement to distribute future housing stocks by certain periods, by

selected and potential settlement area (housing scheme and village

settlement) and by housing category (low, medium and high costs);

(iii) Requirement to consider the criteria for location suitability, accessibility and

distance from employment centres in planning housing development; and

(iv) Requirement to decide the priority areas and development phases for new

housing developments.

The SSP Manual 2001 proposes that the housing planning policy needs to be divided

into three categories, namely general policy, policy by subject and policy for specific

area. Guidance for the aspects that need to be incorporated in formulating housing

policies as in the DP Manual 1981, however are not mentioned in this manual. SSP

Manual 2001 only provides a simple statement which requires the SP‟s housing

study to formulate the spatial strategy and policies for housing development.

It is important to note that both manuals only provide a basic guidance to lead the

process of formulating housing policies in the SPs. Formulation of the actual housing

policy for each SP depends on the findings at the stage of survey of existing housing

conditions and at the stage of estimation of future housing requirement. It is also

guided by the general proposals related to the improvement of housing development

process as documented in the report of survey.

With regard to the policy on housing supply, it is normally formulated in two ways.

The first is concerned with a specific policy that explicitly outlines the aspects of

planning and controlling of housing supply. Secondly, the aspect of housing supply is

inserted or incorporated in other housing policies, such as the policy on affordable

and low-cost housing, encouragement of sustainability in housing development and

land use planning control for housing development.

The explanation above clarifies that the SP has a significant role to play in planning

housing supply. In the light of this, it is important for the preparation of SP to conduct

the activities of housing planning comprehensively and accurately to guide other

plans and facilitate the process of planning control. Thus, the objectives of housing

planning and development for the planned areas can be attained exhaustively.

5.1.3 Local Plan: The Activities and Aspects Related to the Planning of

Housing Supply

Similar to the NPP and SP, housing is one of the main sectors in the preparation of

LP either for the urban based LP or district LP. The scope and aspects that need to

be covered by the LP‟s housing study were guided by the DP Manual 1981 and

Manual of Local Plan Preparation 1993 (LP Manual 1993). The amended versions of

the LP Manual 1993 as formulated in 1999 (LP Manual 1999), 2001 (LP Manual



42


2001) and 2002 (LP Manual 2002) also need to be referred in carrying out the LP‟s

housing study.

With regard to the activities or stages of housing study, the LP also has to carry out a

survey on existing housing conditions and calculate the future housing requirements

as done by the NPP and SP. Based on the figures on future housing requirement,

the LP has to determine the total land area and locate suitable locations for future

housing development for each LP area. The outcomes of these two activities must

conform to the provisions of housing planning policies as formulated in the SP (JPBD

Semenanjung Malaysia, 1981). Besides, it is also a duty of the LP to outline the

planning guidelines and standards to control the planning and development of

housing.

a. The Survey of Existing Housing Condition

The aspects of existing housing conditions that need to be surveyed during the

preparation of LP are outlined in detail in all LP manuals, except for the DP Manual

1981. The DP Manual 1981 only addressed a broad statement on the aspects,

problems and potentials that should be examined and analysed during the LP study

(JPBD Semenanjung Malaysia, 1981). The statement basically applies to all sectors

of the LP study, including the housing study. For the other LP manuals, the various

aspects to be surveyed were underlined comprehensively (Table 2).

The table indicates that there are seven main aspects, item (1) to item (7), that need

to be considered by the housing study in the preparation of LPs. Besides

emphasizing on the examination of the characteristic of existing housing stock and

collecting of data on committed development and proposed new housings, the LP‟s

housing study also need to identify the total supply of and demand for housing, carry

out analysis on demographic data relating to the identification of effective demand for

housing and analyse the trend and direction of housing development for each LP

area. Moreover, there are also additional aspects outlined in the LP Manual 2001

and LP Manual 2002 that require the LP‟s housing study (in particular for district LP)

to look in detail the trend and preferences in the current housing market and analyse

the figures on housing oversupply together with the factors that caused the

existence of the problems.

The above explanation indicates that there was already a comprehensive guidance

to carry out housing study in the preparation of the LP. It is shown that the LP‟s

housing study has to cover various aspects from the examination of existing housing

stocks, housing needs and committed housing up to the detailed assessment on

households effective demand and housing preferences in the current market.



43


Table 2: The aspects of existing housing conditions that need to be surveyed during

the preparation of a local plan

The Aspects of Housing Study

LP

Man

ual 19

93

LP

Man

ual 19

99

LP

Man

ual 2

001

LP

Man

ual 20

02

1. Examination of the characteristics of existing housing stock such as total quantity, type, housing condition, density, physical distribution and existing supply by price category.

2. Analysis of supply and demand for current housing stock by category.

3. Collection of figures on new housing approvals (committed development) and applications under consideration by LPA and housing units under construction (covering the location, type, total unit, development size and density).

4. Analysis of the trend and direction of growth of housing development.

5. Identification of problems, limitations and potentials in housing development.

6. Analysis of current housing guidelines applied in the LP area. 7. Analysis of demographic figures, such as total population,

household size and income levels that relate to the need and demand of housing.

8. Examination of the provision and requirement for low-cost housing.

9. Analysis of the trend and preferences in the current housing market.

10. Analysis of housing oversupply consisting the total unit and causal factors.

11. Analysis of National and State housing policies.

12. Analysis of squatters, polluted housing schemes, traditional housing and houses with historical values.

Sources: Adapted from JPBD Semenanjung Malaysia (1993:21-22; 1999:17; 2001:

3-11; 2002: L3-4-13)

b. Forecasting of Future Housing Requirement

The process of forecasting of future housing requirement in the LP is basically similar

to the preparation of SP. All LP manuals have stipulated that the outcome of future

housing forecasts should be produced in two forms, that is in the form of broad

housing requirement (total housing needs) as well as in the form of housing

demands. The manuals also specify that the forecast of housing needs must be

produced in two time-frames, which is by the overall planning period and a break-

down by certain planning periods. The DP Manual 1981 suggested that the forecast

must be divided based on a 5-year interval. In relation to the forecast of future

housing demands, requirement for the forecasting in the form of category, type and



44


prices of housing expected to be demanded by the future households in the planned

areas were suggested by the LP Manual 1993.

With regard to the application of forecasting techniques and aspects that need to be

considered in calculating the future housing requirement, similar to the DP Manual

1981 and SSP Manual 2001, the LP manuals have also not specified any guidance.

This has caused each LP to independently apply different housing forecasting

techniques. As in the SP, there are at least three techniques that could be applied by

the LP, ranging from an integrated technique to a common and a simple one.

The application of the common forecasting technique, which only considers the

figures of existing stock, backlog, vacancy and surplus, immediate and normal

replacement and additional new household, has caused the forecasting of future

housing requirement in those LPs to produce results only in the form of total housing

needs. This technique can be considered less effective compared to the integrated

forecasting technique which is capable of forecasting the future housing demands in

terms of house category, type and price ranges preferred and afforded by the future

households (Mark, 1995; Blake and Nicol, 2004).

c. Determination of Land Requirement For Future Housing Development

The determination of future housing land requirement is one of the important

activities in the preparation of LP. This activity enables sufficient land area to be

provided to accommodate the requirement of future housing developments in the

planned areas. According to Bramley et al. (1995), the accuracy of future housing

land area very much relies on the outcomes of the housing requirement forecast. As

such, if the housing requirement forecast is inaccurately conducted, it will implicitly

contribute to the inaccuracy of the figures for future housing land area.

The significance of the activity was addressed in the DP Manual 1981 as well as in

the LP manuals. Nevertheless, there is no specific guidance in terms of time-frame

and forms of outcome that should be produced by the activity outlined in those

manuals. It is found that all manuals only specify in general that the housing study

should identify the land requirements for future housing. The general guidance has

caused each LP to conduct the activity differently.

After the total land requirement for future housing is determined, the subsequent

process is to translate it properly and accurately into the LP‟s proposal map. This

process involves the identification and distribution of suitable areas for the

development of housing together with other land use sectors, such as commercial,

industry and public facilities.

d. Distribution of Suitable Locations For Future Housing Development

It is identified that all manuals do not provide in detail the aspects or factors that need

to be considered in distributing locations or zones for future housing development.



45


DP Manual 1981 only highlights that the LP should determine and allocate precise

zones for all land use categories covering all land lots (lot-based). In addition, the LP

Manual 1993 and LP Manual 1999 specify that the distribution of housing location

should consider the trend and direction of existing and committed housing

development, development pressure and physical characteristics.

These aspects remain in both LP Manual 2001 and LP Manual 2002 to guide the

process of distribution of locations for housing development, especially for the

preparation of district LPs. In addition, these two manuals also suggest the

preparation of district LPs to apply the technique of multi-criteria evaluation (MCE) to

enhance the effectiveness of the distribution of various land use zones, including

housing land uses, in the LP areas.

Similar to the activity of determination of housing land requirement, as discussed

above, the absence of a clear guidance has resulted in each LP conducting the

activity differently. Nevertheless, it is identified that there are several common

aspects that are usually considered by the LPs in distributing suitable locations for

future housing development as follows:

(i) Availability of land adjacent to the existing housing development;

(ii) Good accessibility from main road;

(iii) Adherence to the alignment of current and new development corridor;

(iv) Avoiding from developing housing in restricted area, such as environmental

sensitive areas, highland areas and at the areas near to industrial zones; and

(v) Adherence to the determination of new areas for housing development as set

by the State Government and local authorities.

e. Outlining the Planning Guidelines and Standards to Control the Housing

Development

The role of LP as a main planning tool to the development control process (Asiah,

1999; Wan Muhammad Mukhtar, 2004), has led all LP manuals, including DP Manual

1981, to include the aspects of housing planning and development control in detail.

The DP Manual 1981 has outlined that the LP should set out a specific guidance to

control the capacity of total quantity and density of housing for the whole planned

area and formulate a detailed planning guideline and standards comprising building

set-back control, minimum land lot size and permissible floor space and height

control. This manual also requires the LP to demarcate the order and priority areas

for housing development by phasing it in every five years time-frame (5-year planning

phases).

The requirement to outline the various planning guidelines and standards for housing

development control in the preparation of LP is seen to have complemented the

overall process of planning of housing supply in Malaysia. The outcomes of this



46


activity and other housing planning activities in the NPP, SP and LP, particularly

those related to housing development strategy and policies, determination of future

housing land requirement and distribution of locations or zones for future housing

development will become a vital guide to the LPAs in Malaysia to control, monitor

and approve the applications of housing development. The extent to which the

outcomes are considered and how the LPAs control the housing supply will be

clarified in the next section.

5.2 The Controlling of Housing Supply

Healey (1983) and Groves (2000) describe planning control as the executive arm and

becomes the heart of the land use planning system. It has also been referred to as

the `Cinderella‟ (Ratcliffe et al., 2004) and as `conveyor belt‟ (Hull, 1997) of the

system that deals with the day-to-day administration of controlling, monitoring and

making decision on planning applications. In relation to the housing land use,

Farthing (1996) perceives that there are three distinct roles played by the planning

control mechanism, namely to regulate the amount and location of land to be

developed for housing, to regulate the layout, density and form of housing and to

regulate the price at which land has been made available for housing. These

aspects will be examined in this section by exploring the process and the aspects

that are considered in controlling and approving the housing supply in Malaysia.

5.2.1 The Process and Procedure of Controlling Housing Supply

The process of controlling housing supply in Malaysia is bound by the provisions of

planning control as enacted by Act 172. The preceding discussion indicates that in

principle the specific procedure to control and approve housing supply does not exist.

The control process is included in the general procedure of planning permission for

housing applications which also applies to other development applications . Based

on the procedure, the aspect of housing supply is controlled by the LPA together with

other housing planning aspects, such as preservation of topography, coordination of

layout plan and control of the provision of public facilities, in the approval process of

housing developments.

The planning permission procedure requires LPAs not to grant the housing planning

approval otherwise than in conformity with the proposals in the LP (S. 18(1), Act

172). The LPAs also have to take into consideration other matters, such as the

provisions of the gazetted SP, direction given by the SPC and provisions that the

LPA thinks are likely to be made in development plans under preparation (S. 22(2),

Act 172) when dealing with housing development applications.

In addition, if the proposed new housing developments involve a population

exceeding ten thousand or cover an area of more than one hundred hectares, the

LPA (through the SPC) shall request an advice from the NPPC on the submitted

application (S. 22A, Act 172). The rationale of this provision, according to the NEAC

(Kerajaan Malaysia, 1999a; 1999b) and Ismail (2002) is to allow Federal Government



47


to take part in the approval process of mega-scaled housing projects throughout the

country aimed to avoid oversupply and overhang of housing property.

Similar to the preparation of development plans, there are various manuals on

planning permission prepared by the Federal TCPD and every State TCPD aimed to

lead LPAs to enforce the procedure accordingly. The manuals, other than detailing

the process and procedure of submission and approval, also include the factors that

need to be considered by LPA in controlling and approving development proposals,

including housing applications.

5.2.2 Factors to be Considered in Controlling Housing Supply

There are many factors and aspects that need to be considered in controlling

housing supply. The compliance to the SP and LP proposals, particularly land use

zoning, stipulation of housing development priority areas, density control and

planning guidelines become the basis or guidance to the LPA in considering the

housing development applications (Asiah, 1999).

With regard to the compliance of land use zone, legally the LPA may only grant an

approval if the housing application is situated in the housing zone. Nevertheless, in

practice there are many cases where approvals were still given although the sites are

planned for other land use activities or located outside the permitted development

area. The practice of non-compliance to the LP‟s land use zoning occurred

extensively in mid 1990s. This practice was argued to have contributed to the

existence of housing oversupply and property overhang in Peninsular Malaysia

(Kerajaan Malaysia, 1999a; 1999b; Mohamad Fadzil, 2005).

In relation to the requirement to comply with the stipulation of priority areas for

housing development, less attention is given regarding the matter in the process of

controlling and approving of housing supply. The failure of most LPs to mark clearly

the boundary of housing development priority areas (housing development phases)

has discouraged the LPAs to consider this factor. With regard to density control,

housing development applications will need to follow the permitted maximum density

as outlined in the LP. Basically, there are two methods of housing density control

enforced by LPAs, namely a control by area and control by housing category

particularly for flatted housing. The examples of the methods are as follows (JPBD

Johor, 2002; Alias, 2006):

(i) Housing density control by area : 6-8 units per acre for village settlement area

and 10-15 units per acre for urban area; and

(ii) Housing density control by flatted housing categories : 20 units per acre for

condominium, 40 units per acre for apartment and 60 units per acre for low-

cost housing.



48


The planning guidelines related to the ratio of housing category and types of housing

development have also become a significant factor in controlling housing supply.

Most of the LPAs particularly in the Johor State stipulate a ratio of 40:40:20 (that is

40.0% for low-cost, 40.0% for medium-cost and 20.0% for high-cost) as a condition

that need to be followed by housing developers (Alias, 2006). In relation to the type

of housing development, there are LPAs that set the condition where only landed

housing is permitted to be developed in certain areas.

Besides having to be in conformity with the LP, the housing development applications

also have to fulfil the current housing policies formulated by each State. The policy

on low-cost housing allocation is one of the eminent policies that are directly related

to the control of housing supply. This policy requires housing developers to construct

at least 30 percent (40 percent for the Johor State) of the total housing units as low-

cost housing (Chan, 1997; Ghani and Choong, 1997; Nor‟Aini, 2001; KPKT, 2005;

Alias, 2006).

Both sections signify that many activities, factors and aspects need to be considered

in the planning and controlling of housing supply. The implementation of the

activities effectively are important to ensure the objectives of housing planning as

discussed in the next section, can be achieved exhaustively.

6.0 THE OBJECTIVES OF PLANNING AND CONTROLLING OF HOUSING

SUPPLY

There are various objectives that need to be achieved by the process of planning and

development of housing in Malaysia. In relation to the aspect and the process of

planning and controlling of housing supply, it is found that the objective related to the

process was not specifically or clearly underlined either in the development plan

manuals or housing planning control guidelines. Nevertheless, based on the

examination of the general objectives of housing study and outcomes related to

housing supply in some SPs and LPs, the objectives were successfully elicited. It

basically covers the objectives to provide adequate housing to the current and future

population; ensure housing provisions are within the affordability of various income

groups; coordinate and balance the supply and demand of housing; ensure new

housing is developed in the areas planned for housing use; and ensure the activities

of housing planning and control consider the market demand.

The requirement to achieve the above objectives along with the process of planning

and controlling of housing supply is also mentioned by Ho (1994) and Asiah (1999).

According to them, the process of housing planning and control should fulfil at least

four objectives, namely to meet the population housing needs, fulfil household

housing demands, consider current and future market demand and matching the

number of housing supply with the number of housing demand.



49


The objective to meet the population housing needs becomes the main basis for the

process of housing planning. Ratcliffe (1981) and Golland and Gillen (2004) perceive

the objective as a fundamental nature of housing planning and development. In

Malaysian context, the achievement of the objectives is important to ensure the aim

of the national housing development policy to provide adequate housing for all

Malaysians, as outlined by the five-year Malaysia plans since the Third Malaysia Plan

(1976-1980) and up to the Ninth Malaysia Plan (2006-2010), is achievable (Mohd.

Razali, 1997; Goh, 1997; Asiah, 1999). The significance of the objective was

translated at all levels of development plan from the NPP, to SSP as well as LPs.

Most of the housing policies and proposals formulated in the plans are found to have

stressed the requirement to meet the population housing needs for the planned

areas.

Achieving the objective to meet the population housing needs alone, however, was

insufficient in order to achieve a more integrated and responsive housing planning.

Hull (1997), Healey (1999), Nicol (2002), Golland and Gillen (2004) perceive that the

process of housing planning also needs to fulfil and consider the aspects related to

housing demand, particularly household effective demands (household affordability)

and current and future market demands. In relation to the objective to balance the

housing supply with housing demand, Ho (1994) generally perceives that the process

of planning and controlling of housing supply has to achieve the objective to avoid

mismatch between the housing supply and demand that may cause shortage or

surplus to the housing supply.

7.0 THE FRAMEWORK OF THE PLANNING AND CONTROLLING OF

HOUSING SUPPLY

The exploration of the activities and objectives of planning and controlling of housing

supply in Malaysia, as discussed in section 4.0 through section 6.0, has led this

paper to develop the framework for its overall process. The framework as

conceptualised in Figure 7 shows that the planning for housing supply is given an

emphasis in all development plans. The NPP which is prepared at the federal level

has examined the status of current housing supply and housing needs and forecasts

the future housing needs and housing land requirement for Peninsular Malaysia. The

NPP has also formulated the land use planning strategy and policies to be

considered and implemented in the planning of housing supply at the state and local

levels.



50


Figure 7: The framework of the process of planning and controlling of housing supply

Meeting housing Needs.

Fulfilling housing demands.

Considering market demand criteria.

Ensuring housing is developed in the areas planned for housing.

Balancing supply and demand of housing

OBJECTIVES TO BE ACHIEVED

Forecasting future housing requirement for the LP’s area (total housing needs, housing demands and land

requirement in two time-frames, use certain techniques)

Controlling and approving new housing supply (apply the planning permission procedure, compliance to land use zone, priority areas, density control, planning guideline, ratio and types of development, low-cost policy)

ACTIVITIES OF PLANNING AND CONTROLLING OF HOUSING SUPPLY

PLANNING MECHANISM

Forecasting future housing requirement for the SP’s area (total housing needs, housing demands and land

requirement in two time-frames, use certain techniques)

Outline the general proposals (to overcome the

issues and to improve the process of housing development)

Locating locations for future housing development (in the form of land use zone, consider

physical potentials, trend and direction of current growth and future market demand, use the technique of multi-criteria evaluation)

Determining future housing land requirement (total

land area to accommodate future needs in two time-frames)

NATIONAL PHYSICAL PLAN

(National Level)

Forecasting future housing requirement

(total housing needs and total land requirement)

Formulating development planning strategies and policies (1 strategy and 3 policies touched on the

housing planning and development)

STRUCTURE PLAN

(State Level)

LOCAL PLAN (District or LPA

Level)

PLANNING CONTROL (By LPA)

Formulating housing planning and development policies (specific and general policies on housing supply

planning)

Examining current housing conditions

(total supply, total needs, surplus/shortage, household

demand, market demand and preference, direction of current growth, problems, limitation and potentials)

Preparing housing planning guidelines and standards (maximum capacity of total quantity,

permissible density, suitable category in certain areas)


(total supply, total needs and surplus/shortage)


(total supply, total needs, surplus/shortage, household demand, market demand and issues)



51


The preparation of SP, which currently is prepared for the whole state, also requires

the examination of the current housing conditions covering the data on housing

supply, housing needs, household demands and market demands and forecast the

future housing requirement for the whole state. In this plan, the future housing needs,

housing demand and land requirement are required to be forecasted in two planning

time-frames, namely for the whole planning period as well as a breakdown by certain

planning periods. It is a duty of SP to formulate the planning policies related to the

aspect of housing supply to be enforced throughout the state.

The preparation of LP, which covers the whole district or certain LPA areas, is seen

to have a greater responsibility in the planning of housing supply in Malaysia. This

plan has to examine the current housing market preferences, the trend and direction

of housing growth as well as the problems, limitations and potentials of housing

development for the planned areas. This plan also has to forecast the future housing

needs, housing demand and land requirement in two planning time-frames, similar to

the SP‟s housing forecast. The main duty of the LP is to decide on the total housing

land area required for certain planning periods and locate the suitable locations for

future housing development in the form of housing land use zones. It is also a duty of

the LP to prepare the planning guidelines and standards to guide the development of

housing in the planned areas.

The outcomes in the form of strategies, policies, determination of future housing land

requirement, proposed future housing locations (housing land use zones) and

guideline and standards produced by the above plans will be used as basis or

guidance for the LPAs to control and approve housing supply. The new housing

development applications will be assessed and controlled through the procedure of

planning permission before an approval is granted. In exercising this procedure,

there are many factors and aspects that will be considered by LPA, such as land use

zoning, stipulation of housing development priority areas (housing development

phases), density control and current housing policies.

In addition, the framework also clarifies that the implementation of planning and

controlling of housing supply in Malaysia need to achieve the objectives of housing

planning, namely to meet the population housing needs, to fulfil the household

housing demands, to consider the criteria of housing market demand, to ensure the

housing is developed in the areas planned for housing and to balance the number of

supply and demand of housing.

The process of housing planning in Malaysia is basically quite similar to the process

and practice adopted in the UK. The UK, before introducing the Local Development

Framework provided by the Planning and Compulsory Act 2004, applies the county

level SPs and district level LPs (including Unitary Development Plans for Unitary

authorities) to plan the development of housing (including the planning for housing

supply). The activities of examination of housing conditions, forecasting of housing

requirement, formulation of housing policies and allocation of future housing land



52


requirement and locations are exercised at various levels of the development plans

(Golland, 1996; Greed, 1996; Ratcliffe et al., 2004).

The UK, since the implementation of the 1947 Town and Country Planning Act until

the 2004 Planning and Compulsory Act, also applies the system of development

control through the procedure of planning permission to assess, control, monitor and

approve the housing development applications (Mohd Anuar, 1991; Ratcliffe et al.,

2004). Similar to the practice in Malaysia, provisions and proposals of the

development plans are regarded as the basis in making a decision for housing

planning applications.

Several advantages are found in the UK housing planning process. The provision of

future targets for the allocation of housing needs and housing land in the UK‟s

development plans, particularly the district levels LP, is based on medium-term

projections of housing needs and housing demands and latest housing market

demands (Cooper and Lybrand, 1985; Bramley et al., 1995). The calculations are

revised regularly to enable the allocation of housing needs and housing land to

respond quickly to the changes in household effective demand and market conditions

(Monk, 1996). This is different from the practice in Malaysia where future housing

needs and land requirement for the planned areas are only determined based on the

data (population, household and housing data) of the base year of preparing

development plans.

Another advantage about the UK‟s housing planning process is the requirement for

the LPAs to have a close working relationship with the housing associations (housing

developers), through joint housing studies, in formulating LP housing policies and

proposals. This enables the LPAs to make available a five year supply of housing

lands to meet forecast needs and to take into account the housing developers‟

assessment of the availability and the marketability of sites (locations) for immediate

and future housing development (Bramley et al., 1995; Lambert, 1996; Hull, 1997;

Ratcliffe et al.; 2004). This practice does not officially exist in the process of housing

planning in Malaysia. The LP‟s housing proposals as well as the SP‟s housing

policies are solely based on the outcomes of the housing study in the plans‟

preparation conducted by planning authorities.

The adoption of the system of „plan, monitor and manage‟ in the UK, as discussed in

section 3.2, has also differentiate its housing planning practice from the practice in

Malaysia. The system enables housing supplies to be planned and produced in the

right type and quantity and at the right locations, aimed to meet the best housing

requirement for local population in the particular periods (Adams and Watkins, 2002;

Carmona et al., 2003). Housing planning in Malaysia is seen still emphasising on the

system of „predict and provide‟ which aimed to meet sufficient housing needs for the

population. This system has not only caused the LPAs to deliver the allocation of

housing supply in advance of demand, but may also cause the provision of the

wrong type, quantity and location of housing.



53


8.0 CONCLUSION

The above discussion clarifies that the land use planning system, which acted as a

government intervention instrument in the process of urban development, plays an

important role to plan and control housing development, especially in relation to the

aspect of housing supply. The role of land use planning in this aspect is not limited

to achieve the objective of meeting housing needs, but also to fulfil the household

housing demands. With regard to this, it is important for the land use planning to

understand and distinguish the concepts of housing needs and housing demand in

planning housing supply. The need to differentiate between housing needs and

demand is not only significant at the stage of formulation of housing policies but also

important at the stage of determination of the volume of housing to be produced, the

tenure of new housing development, locations and the types of housing to be built.

The market demand criteria, in addition to the aspects of housing demand are also

important to be considered and incorporated in the planning of housing supply. The

local housing market conditions and the expected house buyer preferences in terms

of price, location and type of housing are among the criteria that influence the

effectiveness of land use planning system in managing housing supply. In other

words, to achieve an effective planning for housing supply, it is vital for the land use

planning system to understand, be sensitive and responsive to the need of housing

market.

Another important issue relates to the system of „plan, monitor and manage‟. This

new system applied in the UK has led the LPAs to endeavour to meet the best

housing requirement for local population. The introduction of the system was

perceived as responsive approach to plan and control housing in the right type and

quantity and in the right locations.

It can also been seen that the development plan and planning control as legislative

mechanisms in the land use planning system have a specific role in the process of

housing supply. The development plans play a role in formulating housing policies

and determine future housing requirements, followed by the process of planning

control to monitor and control the applications of new housing development before it

is approved to be developed. In carrying out the activities, both mechanisms should

recognised that the future housing requirement is not only driven by the population

trend but also influenced by other factors, such as effective demand (household

affordability and their willingness to pay for housing), household choices (in terms of

tenure, dwelling type, form and method of new homes to be developed) and market

demand criteria (conditions of local housing market and buyer preferences in terms

of price, location and type of housing).



54


The above discussion also explains the complexity of the process of housing

development in Malaysia. The process is very highly regulated, and involves many

stages of approval from various authorities before the housing project is permitted to

be implemented. The process of planning and controlling of housing supply which

adheres in the whole process of housing development is also very complex and go

through a tight process. The activity of planning for housing supply was given a

special attention in all hierarchies of development plan. The NPP has formulated a

general strategy and policies to guide the planning and controlling of housing supply

in Peninsular Malaysia. In the preparation of SSP, the activity continues through the

examination of the existing housing conditions, forecasting of future housing

requirement and formulation of specific policies to be enforced throughout the state.

The preparation of LPs plays a greater role in planning housing supply. These plans

have to examine in detail the existing housing conditions, forecast the future housing

requirements accurately, determine the total housing land area required for certain

periods and distribute the most suitable locations for future housing development.

The activity of controlling of housing supply is exercised through the procedure of

planning permission. This procedure requires LPAs to consider the outcomes of

development plans before making a decision to approve a new housing supply.

Theoretically, by following the existing processes, from the stage of preparation of

NPP to the planning control process, housing supply should be planned and

controlled effectively and fulfil the objectives of housing planning.

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