Gated Community Scheme (Gacos): Development In Malaysia In Light Of Amendment To Strata Titles Act 1985

Development Of GACOS In Modern Living

If you regard yourself as a "Yuppie", or a family man with a high taste of living, or simply a man who cannot afford to sleep tight at night without worrying about security, then GACOS is definitely your top priority. In Kuala Lumpur, the GACOS is not a new idea of modern living, to afford security, trendy neighborhood, extra-privacy, as well as a luxury address, to say the least. A development such as Country Height resembles the high class modern living, affordable only to the successful individual.

On top of class and standard of living, of course the primary factor for development of GACOS is security. In the world of fear, bizarre criminal acts and insecure surrounding, maximum security is a primary consideration. Peace of mind is interpreted as less worry about any possible threat of victimization, such as being robbed, being beaten, or to some extend being raped or killed. And that peace of mind does not come cheap. It comes in the form of high class residential property known as GACOS.

In this paper however, we are not intent in explaining the price and costing of GACOS, but instead we shall look into the legal aspect of GACOS and compare it with other jurisdiction.

Legal Definition And Characteristic

The definition and characteristic of a gated community in general would depend very much on the country and surrounding area. Some may consider a cluster of houses with common fencing surrounding the area is a gated community, and some would want a centralized patrol including CCTV and guard house for their so called gated community.

Goobler (2002) described a Gated Community as residential development where access is restricted and public spaces are privatized. Such development will have potential impact on their surrounding neighborhoods such as threatening safety, restricting access and perpetuating social inequality.¹ Blakeley and Snyder (1998) identify three main categories of gated communities. "Lifestyle" communities, such as retirement communities and golf club leisure developments, provide security and access to exclusive leisure facilities.²

Further, Sarah Blandy (2001) explains that gated communities can take many forms, including private apartment blocks, social rented tower blocks, new housing developments which include land and/or leisure facilities, and (in the States at least) existing neighbourhoods which become gated after their initial development.³

In United States of America, the gated communities have been popularly known as "Fortress America". Blakeley and Snyder (1997) explains that since 1980s Americans started forting up, attempting to secure the value of their houses, reduce or escape from the impact of crime, and find neighbours who share their sense of the good life.⁴

In Malaysia, the definition is rather focused on security rather than facility. Azimudin Bahari (2005) stated that the gated communities may refer to as cluster houses or buildings that are surrounded by a wall or fence or a perimeter with entry or access of houses or buildings controlled by certain measures or restrictions such as guards, ropes, strings, boom gates, chains or blocks which normally includes 24-hour security, guard patrol, central monitoring systems and closed circuit televisions (CCTV).⁵

Yong Yung Choy (2005) has laid down the following as the features that are commonly found in a GC:

a) The owners of a GC exercise some form of control over their buildings, roads, car parks, gardens, community halls (if any), clubhouse (if any), pools (if any), lakes (if any) etc. and these are called amenities;

b) The owners of a GC will determine the usage and privileges assigned to the buildings and amenities;

c) The owners of a GC will maintain the use and repair of the buildings and amenities;

d) The owners of a GC will be liable for the upgrading or construction of the buildings and amenities;

e) The owners of a GC will be responsible for their safety and protection;

f) The owners of a GC can control the movement of people and vehicles within its area;

g) In some GC schemes the owners expect to have the individual titles to their properties and expect private ownership of some of the land surrounding their properties.⁶

The example of gated communities in Malaysia is Sierramas (Sungai Buloh), Kajang Country Homes (Kajang), Tropicana (Damansara), Damansara Indah Resort Homes (Damansara), Pusat Bandar Putra Permai (Serdang), Bandar Nusaputra (Tanjung Malim), Subang Villa (Subang), The Mines (Serdang), Sering Ukay (Ampang), Saujana Akasia (Sungai Buloh), Bandar Botanic (Klang), Sri Pulai Perdana (Skudai, Johor), and Desa Park City (Damansara).

Position Under The Law: Pre-STA Amendment 2007

Before 2007, there is no law governing the development of land conforming to the GACOS concept in Malaysia.⁷ Mainly, the development of housing project will be governed by National Land Code, the Strata Titles Act 1985, the Town and Country Planning Act 1976, the Housing Development (Control and Licensing) Act 1966 and the Street, Drainage and Building Act 1974.

Normally, for a landed property development, the developer will acquire a land known as master title for development of the whole project. After completion of the development, the developer will submit the master title for subdivision into separate individual titles held under the developer’s name before transferring the separate individual titles to the legitimate buyer. Upon issuance of separate individual titles, the master title will be cancelled, and the area which is not covered under the separate individual titles (for example common area such as field, street, etc) will be under the ownership of the State.

Under the NLC, the developer may surrender the master title and apply for realienation⁸ for the purpose of maintaining common facility in the common area of the development. This surrender and realienation process is useful to provide the resident with public amenities occupying a portion of land such as mosque, park, playground etc.

Dr Azlinor Sufian (2005) argued that a construction of structure in the area not realienated by the State is considered as illegal and would tantamount to an obstruction of a public place in contravention of s. 46 of the Street, Drainage and Building Act 1974 or s. 80 of the Road Transport Act 1987.⁹ She also stated that the amenities provided in such land shall not be privatized to the resident only but must be open to the public at large. Restricting the amenities to the resident only would contravene the law as stated earlier.

Thus, the conclusion is that, unless the developer applies for realienation of some area of the land back to the developer to maintain common facilities, there is no way that GACOS can be implemented legally under the National Land Code or any other related legislation. Be that as it may, the developer has been extra-creative in bending the application of law by trying to use Strata Titles Act (STA) to implement the GACOS. However, it has been proven to be ineffective, and many applications for such scheme has been turned down by the Government.¹⁰

Housing Development Under Strata Titles Act 1985 ("STA")

Some may argue that the GACOS concept is more similar with the Strata Titles concept. Under STA, the building of more than two storeys can be subdivided into strata titles, and if there is any other single storey building on the same land, it too can be subdivided into strata titles.¹¹ This scheme allows for development of condominium, apartment or flat houses with building for common amenities. The double-storey houses and semi-detached houses are therefore not covered under the old provisions of STA. The above scheme is illustrated below as Scheme A.

Scheme A

The old provisions of STA also allow single storey houses in a same land which comprises of building/buildings having more than 2 storeys, to be subdivided into strata titles.¹² However this is not a popular concept as it is not cost effective.¹³ This scheme is illustrated below as Scheme B.

Scheme B

Under both Scheme A and B held under STA 1985, unlike NLC, there is no surrender of master title to the State or realienation process for common amenities. Under STA, after subdivision of the land into strata titles, common property of the land will be held under the management corporation, and not the State as in the case of landed property held under separate individual titles provided by the NLC. Therefore, common amenities in the land can be privatized to its residence and the security guard to some extent can refuse entry to outsiders to the area.

This concept of privatization of public area seems to conform to the idea of GACOS. However, GACOS is not covered by the old provision of STA. So, how do we go about it?

Dr. Azlinor Suffian (2005) also argued that the concept of strata titles cannot be applied to GACOS based on the following reasons:

1. Bungalow houses, semi-detached houses, double-storey houses and single storey houses do not fall within the jurisdiction of the STA 1985 and therefore incapable of being sub-divided into parcels.

2. Formation of the Management Corporation under the STA is not identical to the Management Company that is established under the GACOS. Under the STA all purchasers are the shareholders to the common properties whereas under the GACOS scheme, the common properties are registered under the name of the developer.¹⁴

So, the question is how do we go about it?

Amending The STA 1985

Realising the high demand on GACOS property and the incapability of the scheme to be in line with the laws, many quarters have been lobbying and pressuring the law-maker to amend the law. Real Estate and Housing Developers’ Association Malaysia (REHDA) and Association of Land Surveyors (PEJUTA) had been actively championing the issue since then. On 24 December 2003, PEJUTA forwarded to the Director General of Federal Lands and Mines Department of the Ministry of Lands and Co-Operative Development for its proposals to amend the STA 1985.¹⁵

The issue on amendment of the STA has also been debated heatedly in Parliament. On 17 July 2006, Datuk Hajah Rohani binti Haji Abdul Karim, Parliamentary Secretary of Kementerian Pertanian dan Industri Asas Tani, stated in answering a question on GACOS that the Ministry has not given any approval under STA 1985 for GACOS.¹⁶ Subsequently, the Amending Act was tabled in Parliament and approved. On 12 February 2007, the Amending Act obtained its Royal assent and was thereafter published in the gazette.

Position Under The Law: Effect Of The STA Amendment 2007

The major effect of the amendment concerning GACOS is the amendment of s. 6. Section 6(1) has been amended to the following provision:

(1) Any building having two or more storeys on alienated land held as one lot under final title (whether Registry or Land Office title) shall be capable of being subdivided into parcels; and any land on the same lot shall also be capable of being subdivided into parcels each of which is to be held under a strata title or an accessory parcel.;

By amendment of s. 6(1), the land which comprises of high rise buildings and a mixture of single storey or double storey houses can be subdivided under the STA. The land other than the high rise buildings can be subdivided into land parcels. It is best illustrated below as Scheme C:

Scheme C

Furthermore, to accommodate GACOS, the newly enacted s. 6(1A) has been inserted in the STA 1985. The section, worth quoting as follows:

(1A) Any alienated land having two or more buildings held as one lot under final title (whether Registry or Land Office title) shall be capable of being subdivided into land parcels each of which is to be held under a strata title or as an accessory parcel.

The notable difference here is that a multi-storey building is not required to be in the same lot of land and this allows for development for an up-market GACOS.¹⁷ It is illustrated below as Scheme D

Scheme D

Note that there is no multi-storey or high rise building in the example of Scheme D, which is now, unlike before, allowed. Thus, the Scheme D is the most appropriate scheme for GACOS to be adopted by the developer. It is no longer an issue whether GACOS is illegal or not since s. 6(1A) of the STA 1985 has made it clear.

Be that as it may, resorting to the STA 1985 does not necessarily mean that the developer can straight away build a GACOS. The developer may still have to adhere to strict requirements of planning law and state authority guidelines on GACOS. Some of the matters addressed by the guidelines (in the case of Selangor) are as follows:

(i) Application is made only by the land owner/developer;

(ii) The maximum area allowed for each "parcel" for "gated community" should not exceed 20 acres;

(iii) Type of development, number of units, building set-backs and densities are regulated;

(iv) Roads in the housing scheme are not connected with the adjoining areas at the time the application is made or in the future;

(v) Facilities and open spaces to be provided are generally more onerous than normal development;

(vi) Facilities outside GACOS area are to be also provided by the developer;

(vii) Construction of guard house without barrier is permitted. The location should not obstruct the traffic (situated at road shoulder only);

(viii) The location and design of the guard house must be shown in the plan when the Planning Approval is being made;

(ix) The fencing height is regulated;

(x) Road reserves, street lights, drains, rivers, pavements, playgrounds and vacant areas remain as public reserved areas. developer can maintain the facilities based on agreements entered with the Local Authority;

(xi) Local Authority and other utility companies are free to conduct their maintenance work in the guarded area; and

(xii) Developer to propose detailed information with regards to the concept of ‘Gated Community’ development in:

a) Disclosure statements; and

b) Deed of Mutual Covenants

(minimum requirements must be incorporated as set out by the authority);

(xiii) Where developer wants local authority to provide some of the services then an agreement containing prescribed terms is to be included in the maintenance agreement between the local authority and the developer. These prescribed terms include a security bond.¹⁸

GACOS In Australia

In Australia the law with respect to development of land under GC schemes is the Community Land Development Act 1989 and the Community Land Management Act 1989. The former Act is to facilitate the sub-division and development of land with shared property, similar to the shared ownership of common property in a strata title scheme. It deals with plan requirements, plan registration, changes to the sub-division and dealings with the lots. The latter Act provides for a system for the management of community schemes, precinct schemes and neighbourhood schemes. This would include the management of funds and books of accounts, the holding of meetings of the property owners’ association and the executive functions and responsibilities of the association to maintain association property and to take out insurance.¹⁹

GACOS In UK

In UK, the concept of GACOS is similar to Strata Titles scheme in Malaysia. In UK, when the buyer buys the property, it will normally come with a share in Management Corporation. The Management Corporation shall maintain the public amenities held under the name of the Management Corporation.²⁰

Conclusion

The law now is very clear on the implementation of GACOS. It is now subject only to the developer and the local authority to adhere strictly with the requirements of planning law or other considerations. Factors such as social impact must also be taken into consideration. As can be seen in the West, the development of GACOS has also developed the anti-social community where people barely know their neighbours. Yes, it is a best measure to protect your family and property from the impact of heinous crime, but at the same time, living with the feeling of loneliness and over-protection is not good either. No doubt, the development nowadays must strike a balance between providing high class living and security on one side and social impact on the other. The writer would suggest that the Social Impact Assessment (SIA) be conducted by the authority before any GACOS development is approved and implemented. On top of that, below are a few suggestions which can improve the GACOS:

1. While the developer always focuses on high class luxurious GACOS, why not consider developing a low cost GACOS. It is now in the interest of the country that the distribution of wealth and benefit be shared among all walks of people from the wealthy to the needy. The needy also needs extra security and public amenities as crime can occur anywhere to any person. Therefore, GACOS must also be implemented to a low/medium class with minimal cost. Perhaps, the Authority can contribute by subsidizing the maintenance cost using various public funds already created for the needy.

2. Environment is the important factor. The "in thing" now is to live in a gated community up in the hilly area. Development such as Desa Park City (Damansara), Sering Ukay (Ampang) etc, is a GACOS developed on high ground. Thus, it involves shaving off the hills shelves to level the area. It does have an impact to the environment. The writer would suggest that for development of GACOS in high ground, the Environment Impact Assessment (EIA) must be conducted regardless of the size of the development of land area.

3. The public amenities must be diversified and well-maintained. There can be a couple of new additions such as roller skate parks, sports complexs, drifting areas, remote control car tracks, open space cinemas etc to offer better and attractive packages to the public.

Endnotes:

1. Goobler, A., "Outside the walls; Urban Gated Communities and their Regulation within the British Planning System", European Planning Studies, April 2002, pp. 321-335.

2. Blakeley, E. and Snyder, M.G. (1998) ‘Forting up : gated communities in the United States’ Journal of Architectural and Planning Research, 15, 61-72

3. Sarah Blandy. "Enemies within? Gated communities unhinged". A paper presented to the Housing Studies Association Autumn Conference. September 2001.

4. Blakeley, E. and Snyder, M.G. (1997) "Fortress America: Gated Communities in the United States", p. 2.

5. Azimudin Bahari, "Regulatory and Practical Aspects of Gated Community Projects", a paper presented in a Seminar on Gated Community Projects: Regulatory and Contractual Issues, organised by Lexis-Nexis & MLJ, Prince and Residence Hotel, Kuala Lumpur. 28 July 2005, p. 4

6. Yong Yung Choy, "Legal Issues of Gated Community Projects: Default of Parties, Exclusion of Liability and Right to Common Property", a paper presented in a Seminar on Gated Community Projects: Regulatory and Contractual Issues, organised by Lexis-Nexis & MLJ, Prince and Residence Hotel, Kuala Lumpur. 28 July 2005, p. 2.

7. Dr. Azlinor Sufian, Assistant Professor IIUM, "A Legal Perspective on "Gated Communities" in Malaysia", a paper presented in an 8th International Conference of the Asian Planning Schools Association 11-14 September 2005.

8. Sections 203 & 204 of the National Land Code.

9. Dr. Azlinor Sufian, Assistant Professor IIUM, "A Legal Perspective on "Gated Communities" in Malaysia", a paper presented in an 8th International Conference of the Asian Planning Schools Association 11-14 September 2005, at p. 4.

10. Hansard of Parliament, 17 July 2006 extracted from website: www.parlimen.gov.my

11. Section 6(1) of the Strata Titles Act 1985 (Old provision).

12. Section 6(1) of the Strata Titles Act 1985 (Old provision).

13. Andrew Wong, "Recent Legislative Amendments to Housing Development, Strata Title (Amendment) Act 2007", a paper presented at 14th Malaysian Law Conference, Kuala Lumpur Convention Centre, 29-31 October 2007, at p. 2.

14. Dr. Azlinor Sufian, Assistant Professor IIUM, "A Legal Perspective on "Gated Communities" in Malaysia", a paper presented in an 8th International Conference of the Asian Planning Schools Association 11-14 September 2005, at p. 5

15. REHDA Bulletin, November 2006 at p. 1.

16. Hansard of Parliament, 17 July 2006 extracted from website: www.parlimen.gov.my.

17. Andrew Wong, "Recent Legislative Amendments to Housing Development, Strata Title (Amendment) Act 2007", a paper presented at 14th Malaysian Law Conference, Kuala Lumpur Convention Centre, 29-31 October 2007, at p. 4.

18. Derek Fernandez, "Gated and Guarded Communities", an article published in The Sun, Property Plus, Friday 6 July 2007.

19. Dr. Azlinor Sufian, Assistant Professor IIUM, "A Legal Perspective on "Gated Communities" in Malaysia", a paper presented in an 8th International Conference of the Asian Planning Schools Association 11-14 September, 2005, at p. 5.

20. Sarah Blandy and Diane Lister, "Gated Communities: Negating Community Development?, a paper presented at "Gated Communities: Building Social Division or Safer Communities? Conference" 18-19 September 2003, Glasgow.