The Role of Institutions in Sustaining Mandatory Low-Income Housing

State intervention is crucial in delivering adequate housing for the urban poor. In 1982, the Malaysian government introduced a policy mandating low-income housing of prescribed building standards within new developments. Basically, private developers are required to have a certain proportion of low-cost housing in new developments above a certain size. The “low-cost housing quota” (LCHQ) policy has delivered almost 600,000 low-cost houses. Although the literature has described housing regulations as costly and inefficient, little is known of how Malaysia’s LCHQ requirement has continued to successfully produce low-income housing.Employing an institutional approach, this study provides a meso-level analysis of LCHQ in an understudied state in Malaysia. Findings show that planners adopt a semi-flexible stance in interpreting housing regulations, whereas developers assume strategic compliance behaviour. Furthermore, the study indicates that the mandatory low-cost housing has been sustained due to the reconciliation of actors’ motivations, negotiations between actors and reasonable regulatory mediations. By focusing on the behaviours of the two main actors in low-cost housing provision, this paper contributes to an understanding of on the ground operation of the LCHQ and, thus, informs policymakers on improvements to the existing system.