By Prof Dr Ismail Omar and Dato’ Dr Azimuddin Bahari
Covid-19 is a deadly disease worldwide. To date, Covid-19 has infected more than 3,000,000 human life and killed more than 200,000 victims worldwide. To date, in Malaysia alone, the pandemic has killed more than a hundred and affected more than 8,000 victims.
Disastrously, it had affected the unemployment rate worldwide. People in hospitality industry, manufacturing and many more are losing their job. Media reported that about 600,000 people are losing their jobs in Malaysia by the end of May 2020.
Significantly, Covid-19 had reduced the property transactions and prices which generally has fallen about 15% to 25% in different sub-markets in Malaysia. According to Ian Scott International, a local property firm, the impact is up to 65% to 90% depending on location and commercial property sub-market. As a result, buyers and tenants are having difficulties owing to loss of income and the restriction of at least 30% of income is available for loan repayment, a condition imposed by Bank Negara Malaysia. This is known as affordable housing stress that needs immediate action from the government to respond and mitigate the impact during post-Covid-19.
Actually, the government has introduced numerous efforts and programmes to provide adequate affordable housing to meet the needs of the low income or the middle-income households since 1970s. One of the efforts is to identify suitable land and make it available in the market for the development of affordable housing.
However, there are still gaps in the supply of land suitable for the construction of affordable homes to meet the high demand. Supply of suitable land for affordable housing in the market may be restricted and therefore the constraining factors must be investigated and unlocking its potential values accordingly. There are calls for exploring the potentials of waqf land to be developed with affordable homes. Since there are potentials of developing waqf land for affordable houses, in-depth studies into these opportunities on how the restraints and constraints can be unlocked accordingly.
In real estate, waqf can be viewed as long term assets to produce and generate income for the poor and the people as a whole. This means that waqf can protect and provide security in the long run in the forms of security of tenure (freehold and leasehold interests). Waqf can also be viewed in generating security of income or the flow of returns in the form of rental and capital appreciation as ‘hedge against inflation’ in property investment.
Therefore, the security of capital in landownership may strengthen the value of the investment assets of the people in the long term. In a way, waqf properties are devoted to provide capital assets that produce an ever-increasing flow of revenues (manfaat) to serve its objectives for the benefit of mankind at large.
Unfortunately, there are less than 12% of about 30,000 hectares designated and registered waqf land that had been improved and developed in the country and the rest is under-utilized and left idle (JAWHAR, 2013-2016). Therefore, it is timely to revisit the constraining factors of waqf land in order to pave the way forward to respond and mitigate the impact of post-Covid-19 and to further sustain economic growth.
In Islam, the objectives of the maqasid Shari’ah can allow for the provision of affordable homes to those in need. The maqasid includes religion, human life, family, property and human dignity which are all the basic necessaries (daruriyah), needs (hajiah) and embellishment (tahsinyah) that form the purposes for which the waqf assets can be invested and disbursed. The waqif (the donor) and mawquf alaih (beneficiary) may consider waqf as one of the tools for the fulfilment of the second Shari’ah objective that is hajiyat or the needs of society. The Nazir can use waqf properties in line with Shari’ah objectives (maqasid Shari’ah) even in cases where the terms and conditions of the donors are restrictive.
The development for affordable homes can still be carried out on the waqf land with a mosque constructed on the land. Such development can even be better to obtain the benefits of the waqf as the occupants of the homes will make use of the mosques for prayers and religious activities at the site. One may presume that a waqif can equally state in his ‘hujjah waqf’ that the land can be developed in housing and the rental of which can be used for the benefit of waqf. When a waqif is silent on purpose or has dedicated the land for the benefit of someone or something, generally, there may arise dispute on whether or not the Nazir can develop housing on such land and under what conditions. It is suggested that this should be permissible as the Nazir or waqf trustee has the duty towards waqf and its beneficiaries by protecting the existing waqf assets and maximizing income to the beneficiaries.
Waqf is not obligatory but in Islam, it is a righteous gesture surrendering assets to be benefitted by the beneficiaries. Therefore, Muslims can play a big role in the development of affordable homes by exploring the use of waqf property. It was right that affordable homes constructed on waqf properties can be priced at affordable prices which will be affordable for the low and middle-income households to purchase these houses as there is no element of land cost in the development and the development can be developed at a much lower cost in comparison to those in the open market.
Mechanisms that can be applied by waqf managers are the property can be for sale, for rent, subsidized or otherwise and, if qualified, for free. Where it is a matter of necessity (daruri), the waqf manager should provide free shelter. People below the poverty line and with difficulty to sustain their families due to their low income may qualify for such free housing. In case a person does not have the house and is looking for a house to own it, waqf managers may provide some subsidy compare to the market if he fits within criteria that the managers have fixed for grant of subsidies and for those who can afford the conventional homes which can still be considered under the categories of the ‘maqasid’ and the managers can provide housing, but not with subsidy but rather making a profit for the waqf property when can then be ploughed back to the waqf institution.
Professor Djurdjani Wardata, a researcher at the University Gadjahmada, Indonesia considers land development constraints to include expenditures that incurred while managing the waqf properties such as time, ownership, legal, planning constraints that are necessary for undertaking any development. Whilst Professor Patsy Healey from Universiti Newcastle, United Kingdom categorises those constraining factors on waqf lands into two categories: structure to include rules, resources and ideas whereas agency to comprise roles, motivation, strategies and actions. Furthermore, Islamic Research and Training Institute (IRTI) had undertaken a study that indicated the supply of affordable housing to include non-availability of suitable land in cities, poor quality of infrastructure, problems with land ownership, legal matters, high transaction costs and lacking housing finance.
First, the legal and administrative frameworks are referred to the lacking of proper registration of waqf land deriving from inadequate administrative laws which leading to improper waqf land database. State-of-the-art data on waqf land must be rearranged to ease the analysis of its categorization and problems identified for improvements. Additionally, problems in administering land tenure, rental management, planning and difficulty in controlling the charges and payments to the authority further dampened the good governance and state-of-the-art of waqf land management and administration.
Secondly, tight financial rules in securing fund for the development of waqf land from banks and financial institutions had dampened the initiatives to develop waqf land. In addition, there are cases whereby the rental paid by the tenant to the religious council is lower than the rental market due to long term rentals and non-renewable rental agreement. Furthermore, waqf properties must enjoy related tax exemption such as ratings and quit rent. This tax exemption relief the burdens of outgoings to the Religious Councils who are just the caretakers and trustees thereof. Partnership and joint venture schemes must be encouraged between smart partners to help each other to undertake the development of waqf lands. Again, human resources in relations to waqf property development must be strengthened and retrained.
Thirdly, with reference to socio-political agenda, the sensitivity of the ownership and survivorship of the Malay/Muslims agenda had adversely affected the way waqf land must be viewed to enhance its highest and best use in the open market. For sure, this required training and retraining human resources for administering and managing waqf land in the country. According to a study, almost all Majlis Agama Islam Negeri (MAIN) is having a lack of experience and professionalism in waqf land management. Therefore, the Waqf related agencies have to come forward with the agenda of human resources transformation to professionalise staffing of waqf human capital.
Last but not least, agents and agencies need to be together hand-in-hand in administering, investing, managing, developing and maintaining waqf lands in the country. By undertaking all the efforts to improve the waqf land management, and improving the constraints, the values of waqf lands will be enhanced and the fruit will be for the people as a whole.
Surely, waqf properties can stand in to provide some relief to the low income and middle-income households to purchase affordable homes. Therefore, Islamic Representative Council (IRC) as sole trustees of waqf lands in their fulfilment of management responsibilities has the duty of care to protect and add values to the waqf assets and to provide maximum benefits to the beneficiaries based on ‘hujjah’ thereof. Affordable housing development may be carried out on waqf land or land acquired using waqf liquid capital market instruments like ‘sukuk’ and crowd-funding. The completed accommodation can be rented or leased, whereby the occupant will enjoy the house, and the waqf institution and beneficiaries will benefit from the income, which can be invested further, and the ever-flowing ‘manfaat’ can be redistributed to the poor and needy. This way, waqf may pave a way forward to respond and mitigate the affordable housing stress during the impact of post-Covid-19.
Prof Dr Ismail Omar is the president of the Land Professionals Association of Malaysia (PERTAMA) since 2014 and a senior lecturer in real estate management at Universiti Tun Hussein Onn Malaysia
Dato’ Dr Azimuddin Bahari is a former Deputy Director-General, Ministry of Natural Resources and Environment Malaysia and at present is running his own property firm AB Property Consults Sdn Bhd