Current Affairs

Abolish newly imposed housing development charge

By Ngeh Koo Ham

The BN Perak State Government who has only the minority support of Perakians was hypocritical when it announced recently that it will embark on building affordable homes for the people.

In fact the BN Perak State Government had just imposed as from 1st January 2014 a development charge/tax of between RM50,000-00 to RM100,000-00 on a new house or property in Perak making it the biggest burden Perakians have to bear in the increasing environment of price hike making it almost impossible for many people in Perak to own a house which they can call their home.

The abovesaid development charge is in addition to the present land conversion premium which developers have to when converting agricultural lands into housing and/or commercial developments.

The BN Perak Government has approved under the Town And Planning Act 1976 the Development Charge State of Perak Rules 2013, which imposes the following new development charges with effect from 1/1/2014.

 1) Change of Land Use 

      Development charge                           – 25% x increase in land value

 2) Change in Density

      Development charge                           -25% x increase in land value

 3) Change of Floor, Area

      Development charge                           -25% x increase in land value

For example, if the initial value of a property under the category of agricultural which has the potential to be developed is worth RM1,000,000-00 and its value  increased to RM5,000,000-00 upon conversion to housing or commercial development, a sum of RM1,000,000-00 will be imposed as development charge i.e 25% of the increased value of RM4,000,000-00. Only about 12 units of terrace house can be constructed on an acre of land. Therefore, the development charge imposed by the BN Perak Government to be collected by the local government will be about RM83,000-00 per unit. Depending on the appreciation of the land value upon conversion, the development charge imposed will be between RM50,000-00 to RM100,000-00 per unit.

In Perak if the land size is 10 acres or more, developers will be required to build 20% low cost priced at RM42,000-00 per unit and another 20% medium low cost units price at RM72,000-00 per unit. It will be impossible for low and medium low costs to be built in view of the new development charge.

I call on the Perak Government to abolish the newly imposed development charge immediately. If the Government govern prudently, there will be more than sufficient funds as the Government yearly revenue has increased by more than 50% from about RM600 million in 2008 to more than RM900 million in 2013.

More importantly, the Perak State Government lost about RM2.0 billion when it approved about 120,000 acres of land since BN’s power grab on 6/2/2009 to mainly cronies without the more transparent open tender system. BN Perak Government will not need to increase any form of tax had this additional RM2.0 billion be added to the state’s coffer.

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