KPKT studies option-to-purchase mechanism with payments of up to 5%
Malaysia's Ministry of Housing and Local Government is studying an option-to-purchase mechanism that would let homebuyers pay up to 5% of the purchase price, with full refunds plus accrued interest if developers do not proceed. The proposal aims to reduce sick and abandoned projects while giving buy
PETALING JAYA (Oct 16): The Ministry of Housing and Local Government (KPKT) is studying an option-to-purchase (OTP) mechanism under which prospective homebuyers could pay up to 5% of the proposed purchase price, with a full refund and accrued interest if the developer decides not to proceed with a project.
KPKT Minister Nga Kor Ming said the proposal aimed to establish a more structured process before sale and purchase agreements (SPAs) are signed, allowing developers to assess genuine demand while safeguarding buyers' interests. Under the proposal, developers would be given a specified period to assess buyer interest before deciding whether to proceed, and buyers could submit their financial information for loan assessments, according to KPKT's statement dated Oct 15.
The proposed mechanism would also require developers to honour the indicative selling prices initially offered to buyers, providing greater price certainty before SPAs are signed. "For developers, this means greater certainty over genuine market demand. For homebuyers, it means greater transparency and price certainty before making a major financial commitment," Nga said at the fifth Malaysia Developer Awards 2026 on Wednesday (Oct 14).
The ministry said the proposed mechanism was intended to reduce the risk of sick and abandoned private housing projects. Nga said developers often assessed market demand through booking fees but faced difficulties distinguishing genuine purchasers from those who might not proceed, while buyers risked losing their booking fees if they withdrew and indicative prices could change before a project was launched. KPKT's statement did not specify an implementation date or set out a detailed implementation framework.
Nga also reiterated the government's target of achieving zero sick housing projects by 2030. He said KPKT had revived 1,726 sick and abandoned housing projects worth more than RM158 billion as of August 2026. He encouraged established developers to step forward as "white knights" to revive abandoned developments, citing Budget 2027's proposed full stamp duty exemptions on qualifying loan agreements and property transfers involving rescue developers and original homebuyers.
On housing affordability, Nga highlighted Budget 2027's proposed extension of full stamp duty exemptions for eligible first-time homebuyers purchasing homes priced up to RM500,000 until 2030. Under the Budget proposals announced by Prime Minister Datuk Seri Anwar Ibrahim on Oct 9, the exemptions would cover loan agreements and property transfer instruments. For eligible first homes priced above RM500,000 and up to RM750,000, the proposed relief would provide a full exemption on the duty attributable to the first RM500,000 and a 50% exemption on the duty attributable to the balance. The proposed first-home measures would apply to SPAs executed between Jan 1, 2027 and Dec 31, 2030.
Nga also said KPKT had secured a larger allocation under Budget 2027 to implement big data analytics aimed at addressing mismatches between housing supply and demand. The initiative would support the government's target of delivering one million affordable homes over the next decade under the National Housing Policy 2026–2035, he said. "We want to build the right homes, at the right prices, in the right locations," Nga said.
