Occasional Paper Series

OCCASIONAL PAPER SERIES FDTCP 01/2011

LAND USE PLANNING SYSTEM Its Role In Housing Development Process

Prepared by:

Dr. Alias bin Rameli Research and Development Division FEDERAL DEPARTMENT OF TOWN AND COUNTRY PLANNING PENINSULAR MALAYSIA

1 December 2011

OCCASIONAL PAPER SERIES – FDTCP 01/2011 Land Use Planning System : Its Role in Housing Development Process

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

2.4

2.5 3.0 3.1

Legislation and Mechanism of Land Use Planning 2.2.1 United Kingdom

8 8

2.2.2

The United States

10

2.2.3

Malaysia

11

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

Rationale for Land Use Planning to Intervene in the Development Process LAND USE PLANNING SYSTEM AND HOUSING SUPPLY PROCESS

19 21

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 4.0

The Importance of Market Demand in the Planning of Housing Supply HOUSING DEVELOPMENT PROCESS IN MALAYSIA

28 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 The Controlling of Housing Supply

41 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

5.2

6.0 7.0 8.0

THE OBJECTIVES OF HOUSING SUPPLY

PLANNING AND CONTROLLING OF 48

THE FRAMEWORK OF THE PLANNING AND CONTROLLING OF HOUSING SUPPLY

49

CONCLUSION

53

Federal Department of Town and Country Planning, Peninsular Malaysia

LIST OF TABLES Table 1 Table 2:

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

34

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

43

LIST OF FIGURES Figure 1 Figure 2

Land development systems Framework of land use planning system

4 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 Figure 7

Housing Development Process in Malaysia The framework of the process of planning and controlling of housing supply

31 50

OCCASIONAL PAPER SERIES – FDTCP 01/2011 Land Use Planning System : Its Role in Housing Development Process

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

OCCASIONAL PAPER SERIES – FDTCP 01/2011 Land Use Planning System : Its Role in Housing Development Process

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 consumerâ€&#x;s `tasteâ€&#x; 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 Federal Department of Town and Country Planning, Peninsular Malaysia

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OCCASIONAL PAPER SERIES – FDTCP 01/2011 Land Use Planning System : Its Role in Housing Development Process

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.

Federal Department of Town and Country Planning, Peninsular Malaysia

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OCCASIONAL PAPER SERIES – FDTCP 01/2011 Land Use Planning System : Its Role in Housing Development Process

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.

LAND DEVELOPMENT SYSTEMS

Development Agents Predevelopment landowners

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

Developers

Land conversion or re-conversion

Consumers

Purchasing or leasing locations and facilities

Financial intermediaries

Public agencies

Acquisition and development – financing transactions Review and approval of land use and development

Figure 1: Land development systems Source: Chapin and Kaiser (1979:30) Federal Department of Town and Country Planning, Peninsular Malaysia

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OCCASIONAL PAPER SERIES – FDTCP 01/2011 Land Use Planning System : Its Role in Housing Development Process

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).

GOALS OF LAND USE PLANNING (Sustainability, Health and Safety, Convenience, Efficiency and Energy Conservation, Environmental Quality, Social Equity and Amenity

KEY URBAN LAND USE SYSTEMS Aspatial

Spatial

Land Use Pattern

Economic and Population Growth Activity Systems

Development Systems

Environmental Systems

URBAN PLANNING AND GUIDANCE SYSTEM (decision guides and action instruments)

Planning Activities

Political Activities

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 Federal Department of Town and Country Planning, Peninsular Malaysia

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OCCASIONAL PAPER SERIES – FDTCP 01/2011 Land Use Planning System : Its Role in Housing Development Process

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).

Federal Department of Town and Country Planning, Peninsular Malaysia

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OCCASIONAL PAPER SERIES – FDTCP 01/2011 Land Use Planning System : Its Role in Housing Development Process

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 Nationâ€&#x;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).

Federal Department of Town and Country Planning, Peninsular Malaysia

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OCCASIONAL PAPER SERIES – FDTCP 01/2011 Land Use Planning System : Its Role in Housing Development Process

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 Vancouverâ€&#x;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).

Federal Department of Town and Country Planning, Peninsular Malaysia

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OCCASIONAL PAPER SERIES – FDTCP 01/2011 Land Use Planning System : Its Role in Housing Development Process

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 Federal Department of Town and Country Planning, Peninsular Malaysia

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OCCASIONAL PAPER SERIES – FDTCP 01/2011 Land Use Planning System : Its Role in Housing Development Process

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 Federal Department of Town and Country Planning, Peninsular Malaysia

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OCCASIONAL PAPER SERIES – FDTCP 01/2011 Land Use Planning System : Its Role in Housing Development Process

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 Britishâ€&#x;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.

Federal Department of Town and Country Planning, Peninsular Malaysia

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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).

Federal Department of Town and Country Planning, Peninsular Malaysia

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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).

Federal Department of Town and Country Planning, Peninsular Malaysia

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NATIONAL

National Physical Plan

LEVEL

(NPP)

STATE

State Structure Plan

LEVEL

(SSP)

Local Plan (LP)

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.

LOCAL LEVEL Special Area Plan (SAP)

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

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.

Federal Department of Town and Country Planning, Peninsular Malaysia

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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 socioeconomic 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) (ii) (iii) (iv) (v) (vi) (vii)

Interpreting national, state and regional policies; Establishing aims, policies and general proposals; Providing framework for local plans; Indicating special area plans; Providing guidance for development control; Providing basis for coordinating decisions; and 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 LPâ€&#x;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 Federal Department of Town and Country Planning, Peninsular Malaysia

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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.

Federal Department of Town and Country Planning, Peninsular Malaysia

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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 Federal Department of Town and Country Planning, Peninsular Malaysia

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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 Federal Department of Town and Country Planning, Peninsular Malaysia

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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 Federal Department of Town and Country Planning, Peninsular Malaysia

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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 UKâ€&#x;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.

Federal Department of Town and Country Planning, Peninsular Malaysia

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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. Bramleyâ€&#x;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.

Federal Department of Town and Country Planning, Peninsular Malaysia

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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).

Federal Department of Town and Country Planning, Peninsular Malaysia

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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.

Quantity

Equity

The market

The Government

Choice

Space (Location)

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.

Federal Department of Town and Country Planning, Peninsular Malaysia

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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 planningâ€&#x;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).

Federal Department of Town and Country Planning, Peninsular Malaysia

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FORWARD PLANNING Preparation of Development Plans

HOUSING PRODUCTION PROCESS

Site Appraisal and Feasibility Study

Building Design and Approval

DEVELOPMENT CONTROL Formulate housing policies

Determine future housing requirement (land allocation, quantity and location)

Contract and Construction

Housing Market Operations by Developer

Housing Planning Control Process

Monitor, control and approve new housing supplies

HOUSING PLANNING PROCESS

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 Federal Department of Town and Country Planning, Peninsular Malaysia

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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 Federal Department of Town and Country Planning, Peninsular Malaysia

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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.

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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 Federal Department of Town and Country Planning, Peninsular Malaysia

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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);

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(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.

Federal Department of Town and Country Planning, Peninsular Malaysia

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Feasibility Study

Application for Foreign Investment Committee (FIC) Approval

Appointment of Consultants

Land Surveyor (Survey Plan)

Town Planner (Layout Plan)

Architect (Building Plan)

Simultaneous Submission to the One Stop Centre (Local Authority) Application of Planning Permission Application of Building Plan Application of Earthwork Plan Application of Drainage & Sewerage Plan Application of Landscape Plan Endorsement by the LA‟s Full Council Meeting

Landscape Arch.

(Landscape Plan)

Engineer (Earthwork Plan)

Planning Permission Approval (OSC Committee)

District Land Office / State Land & Mines Office Application for Conversion and Sub-division (or Surrender and Re-alienation) Approval

 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

State Executive Council (EXCO)

Conversion and Sub-division Approval

Building and Earthwork Plans Approval (by OSC Committee)

Land Surveyor (Detailed survey and Prepare Pre-com. Plan)

Application of Developers License (from MHLG)

District Land Office / State Land & Mines Office Approval of Pre-comp. Plan and Issuing of Qualified Titles (Q.T.)

Application of Advertising and Sales Permit (from MHLG)

Sales and Construction

Project Planning

Contract Administration

Issuing of CFO or CCC

Finance and Control

Sales Administration

Delivery of Vacant Possession

Figure 6 : Housing Development Process in Malaysia Sources: Adapted from Tan (1996), Chan (1997a), KPKT (2002; 2007) and Alias (2006)

Federal Department of Town and Country Planning, Peninsular Malaysia

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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):

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(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 NPPâ€&#x;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.

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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 HOUSING SUPPLY STATE / REGION

Existing Units (2000)

Committed Units (2000)

HOUSING NEED Total Supply (2000)

2000

2005

Total Surplus (2000)

Total Surplus / Shortfall (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

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)

4,229,300

1,108,500

5,338,000

3,941,200

4,583,000

1,396,800

755,000

Central Region

Peninsular Malaysia

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) Federal Department of Town and Country Planning, Peninsular Malaysia

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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 NPPâ€&#x;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 Federal Department of Town and Country Planning, Peninsular Malaysia

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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

Federal Department of Town and Country Planning, Peninsular Malaysia

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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 Federal Department of Town and Country Planning, Peninsular Malaysia

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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 SPâ€&#x;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 Federal Department of Town and Country Planning, Peninsular Malaysia

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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).

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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;

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(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 SPâ€&#x;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 LPâ€&#x;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

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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.

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LP Manual 2001

LP Manual 2002

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.

LP Manual 1999

The Aspects of Housing Study

LP Manual 1993

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









































 

 

 

 



 









 

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 breakdown 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

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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 LPâ€&#x;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.

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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 Federal Department of Town and Country Planning, Peninsular Malaysia

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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 `Cinderellaâ€&#x; (Ratcliffe et al., 2004) and as `conveyor beltâ€&#x; (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 Federal Department of Town and Country Planning, Peninsular Malaysia

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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 LPâ€&#x;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 lowcost housing.

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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 lowcost housing (Chan, 1997; Ghani and Choong, 1997; Norâ€&#x;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.

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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.

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OCCASIONAL PAPER SERIES – FDTCP 01/2011 Land Use Planning System : Its Role in Housing Development Process ACTIVITIES OF PLANNING AND CONTROLLING OF HOUSING SUPPLY

PLANNING MECHANISM

NATIONAL PHYSICAL PLAN (National Level)

Examining current housing conditions (total supply, total needs and surplus/shortage)

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) Examining current housing conditions (total supply, total needs, surplus/shortage, household demand, market demand and issues)

STRUCTURE PLAN (State Level)

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) 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)

OBJECTIVES TO BE ACHIEVED

 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

Forecasting future housing requirement for the LP’s area (total housing needs, housing demands and land requirement in two time-frames, use certain techniques)

LOCAL PLAN (District or LPA Level)

Determining future housing land requirement (total land area to accommodate future needs in two time-frames)

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) Preparing housing planning guidelines and standards (maximum capacity of total quantity, permissible density, suitable category in certain areas)

PLANNING CONTROL (By LPA)

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)

Figure 7: The framework of the process of planning and controlling of housing supply Federal Department of Town and Country Planning, Peninsular Malaysia

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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 SPâ€&#x;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

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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.

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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 manageâ€&#x;. 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).

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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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