1 Jalan Utara in Section 52 has been rezoned from residential to limited commercial.
In PETALING Jaya, only 14 out of 633 houseowners who were given the opportunity to convert their land from residential to limited commercial, have paid the premium and accepted Selangor government’s offer for the land conversion.
The offer was made after a state exco meeting on Feb 5, 2014.
Those offered said they were reluctant to take it because of discrepancies in the land valuation between government and private valuers.
They also cited the short settlement period for the land premium of just six months as a negative factor.
Some houseowners pointed out that it was not fair to those of them who were law-abiding when others carried on their businesses illegally in residential properties and caused inconvenience to neighbours because of the authorities’ poor enforcement and lack of monitoring.
The issue was discussed at length during the “Limited Commercial in Petaling Jaya Symposium” organised by Petaling Jaya City Council (MBPJ) recently.
When StarMetro contacted the Finance Ministry’s Valuation and Property Services Department, its General Valuation (Technical) deputy director Dr Rahah Ismail explained that the law required the land to be evaluated based on the purpose of the conversion and in this case it was limited commercial.
A limited commercial land will often be valued higher than residential land.
Residential to limited commercial
It is against the National Land Code to conduct business from residential units.
However, retail businesses set up in residential properties have become a trend in Klang Valley over the years, especially in Petaling Jaya.
While some are operating with temporary business licences, others do not have any approval.
Jalan Gasingg has now limited commercial status.- Photos:SAM THAM and AFDHAL IRSHAAD/The Star
The unregulated businesses in residential areas have led to traffic congestion and noise disturbance to neighbours.
So in 2014, the state government decided to regulate conversion of residential premises by allowing limited commercial activities.
With amendments to Petaling Jaya Local Plan 1 and 2, 19 areas in the city were rezoned from residential to limited commercial status.
The 19 areas consist of 633 lots in areas such as Jalan Universiti and Jalan Utara (see chart for the full list).
However, residents claim their land was over-valued by the Valuation and Property Services Department.
Jalan Utara in Section 52 has been rezoned from residential to limited commercial.
Although 633 lot owners were entitled for the conversion, only 110 owners applied for and received planning approval. This is the first step in the process, before the property is evaluated.
Of those who have planning approval, 59 applied for change of land use and only 40 of them received approval. But out of the 40, only 14 owners paid the premium.
Landowner M. Rajesh said the difference in land valuation was up to RM1mil in some cases.
The land premium was between RM300,000 and RM500,000 per lot, after a discount given by the state government.
Rajesh said this was a large sum of money to be settled within six months.
“Why does the Government value the property much higher than the private valuers?
“Even after the discount, the premium is still high. We hope the state will stretch the premium payback period to a few years,” he said, adding that the Government should also take into consideration the current poor economic climate.
Rajesh said there were other fees required for the land conversion administrative process, which could amount to more than RM20,000.
He also highlighted the need for the process to be transparent to avoid potential corruption and mushrooming of unlicensed businesses.
At the symposium, landowners urged the council to beef up enforcement as there were numerous business operators not following the guidelines.
They also urged the council to be transparent with the conditions.
In certain areas, such as between Jalan 14/20 to 14/24 and Jalan 14/14 to 14/20, there must be 100% consensus from the neighbours for the limited commercial approval.
Houseowners in these streets want the council to amend the requirement, saying it was impossible to get all the neighbours to agree to their request.
“Some would just carry on without approval. There are even houses turned into hostels for foreign workers,” said a houseowner here.
Authorities
Petaling Jaya deputy mayor Johari Annuar said MBPJ would suffer losses from assessment if the land did not go through the conversion process.
Residential property owners make a bigger profit when they rent out their houses as commercial units compared to residential use.
“We will compile all the feedback and submit it to the state and other relevant departments.
“The premium payback period had been extended from three months to six.
“However, homeowners still cannot settle the payment,” he said.
As for the lack of enforcement, Johari said the council would increase inspections to weed out those running businesses in residential units.
Rahah said the differing valuation was because property owners did not tell the private valuers the purpose of the valuation.
She said the owners would often withhold the important information that they intended to convert their land from residential to limited commercial use.
“If the private valuers knew the purpose, I am sure their valuation would be close to that done by government valuers.
“In the case of Petaling Jaya, when my officers took a look at the private valuers’ reports, it was based on the property’s residential value and not limited commercial.
“That is why the residents have a lower property value when it is done by private valuers,” she said.
She elaborated that banks would accept the existing residential value because the land was not converted yet.
“Banks have their risk management departments and they will ask if the land will be converted.
“It is only when they have the limited commercial title that the banks will provide a loan,” she added.
When asked if the property value should be lower because of the limited trade status, Rahah said those factors were incorporated.
“Commercial lands are the most expensive followed by limited commercial and then residential,” she said.
“Factors such as the leasehold expiry term would also determine the valuation process.
“The valuation is always done on the value of the land and not on the size of the building.
“Land in Klang Valley is scarce and commercial rates are very high.
“I was surprised when owners said private valuers had evaluated their land because the state government had only recently converted the land and there are no transactions yet.
“If residential rates are already high in some locations, up to RM5,000 per sqm, you cannot expect limited commercial rates to be lower,” she reasoned.
Rahah said members of the public could obtain the market value of the land from the property market report done by her department or through other sources.
However, she said the department would not know the premium rates set by the state government which varied based on the type of conversion.
