Malaysia’s Real Estate and Housing Developers’ Association (Rehda) has thrown its support behind a proposed “Option to Purchase” (OTP) clause set to be introduced under the new Real Property Development Act, which is slated to replace the Housing Development (Control and Licensing) Act 1966.

Rehda president Datuk Ho Hon Sang welcomed the proposal by Housing and Local Government Minister Nga Kor Ming, describing the mechanism as beneficial for both homebuyers and developers — provided the details are properly worked out.

“In principle, the OTP mechanism is beneficial in protecting prospective home buyers who intend to purchase a specific residential unit,” Ho said, adding that it also gives buyers room to reconsider if their circumstances change.

Under the proposed framework, either party may withdraw from a property transaction before a Sale and Purchase Agreement is formally signed. Buyers gain the flexibility to walk away if their financial or personal situation shifts, while developers retain the option to exit projects that prove commercially or financially unviable.

For developers, the OTP clause also offers a practical tool to assess genuine market demand before committing to binding agreements or breaking ground — potentially reducing the risk of costly missteps.

Rehda also highlighted the clause’s potential to address the longstanding issue of abandoned housing projects, a persistent concern in Malaysia’s property sector. Ho noted that the mechanism could serve as a safeguard for both buyers and developers caught in difficult circumstances before construction begins.

While the association expressed broad support, Ho acknowledged that the finer details of the mechanism have yet to be finalised, and uncertainties remain. Rehda is expected to engage further with policymakers as the legislation takes shape.