PETALING JAYA: The proposed “Option to Purchase” (OTP) clause is a positive step towards improving Malaysia’s housing delivery system, but its success will depend on clear legal safeguards for homebuyers, say consumer groups.
The proposed OTP mechanism, being studied under the Real Property Development Bill, would allow both buyers and developers to withdraw from a transaction before signing a sale and purchase agreement.
Pertubuhan Mesra Pengguna Malaysia (PMPM) said it welcomed the government’s effort, adding that the proposal could improve the sustainability and feasibility of housing projects if implemented with proper safeguards.
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Its deputy president Azlin Othman said the mechanism could help developers better assess genuine market demand before fully launching a project, potentially reducing the risk of sick or abandoned developments.
However, she stressed that the system must be supported by strong safeguards and greater transparency and accountability to protect homebuyers.
“Without proper controls, it may expose buyers to uncertainties, particularly regarding refunds, project timelines and pricing changes,” she said.
Among PMPM’s proposals are fixed refund timelines, mandatory placement of buyers’ payments into protected trust or stakeholder accounts, transparent disclosure of project risks and strict penalties for developer misuse or delays.
Azlin also said developers should only be allowed to cancel projects during the OTP stage under strict conditions and regulatory oversight with buyers receiving automatic full refunds and where appropriate, compensation.
Recently, Housing and Local Government Minister Nga Kor Ming said the OTP clause is intended to help developers assess project feasibility more accurately and reduce the risk of sick, delayed and abandoned housing projects.
Consumer Association of Penang (CAP) took a more cautious stance, saying it would only support OTP if it is backed by comprehensive statutory safeguards and clearer legal design.
Its president Mohideen Abdul Kadeer said the proposal required wider consultation with stakeholders, including housing NGOs, before it is finalised.
“The key issue is not the concept itself but how it is designed and regulated in law,” he said.
Mohideen said the government should avoid rushing the legislation.
Among CAP’s proposals are placing all option fees in regulated escrow or stakeholder accounts, limiting the duration of OTP validity and requiring developers to secure land ownership, approvals, financing and minimum capital requirements before offering OTP schemes.
He also called for stronger buyer protections such as full refunds, interest compensation, statutory penalties for unjustified cancellations and potential criminal action against errant developers for misleading launches or repeated cancellations.
Mohideen added that buyers must also be granted statutory cooling-off rights without penalties and that developer-initiated cancellations should only be allowed under strict regulatory oversight.
