Search Articles

Find tips, tools and how-to guides on every aspect of property

REHDA: Developers must honour agreements to deliver projects on time


REHDA: Developers must honour agreements to deliver projects on time

PETALING JAYA, 1 March: Datuk Muztaza Mohamed, national treasurer for Rehda Malaysia and trustee of Rehda Institute, said developers need to honour their agreements to deliver housing projects on time and that any delay on their part is no fault of the buyer.

Commenting on the High Court’s landmark ruling yesterday, which found that extensions given to developers for housing projects were void and did not absolve them of having to pay buyers liquidated and ascertained damages (LAD) or delivery compensations for late delivery, Muztaza said the court’s decision is respected.

“I think we need to honour our agreement, and all developers have to honour it unless there is a national crisis,” he said.

Murtaza advised developers to plan ahead and conservatively to avoid delays in project hand overs, as some developers start selling when the project is only halfway through completion, which results in a lot of lead time.

On whether developers can afford to compensate buyers due to EOTs (extensions of time), which in turn may affect their profits, Muztaza said developers will have to accept and follow the law even if it means a six-month delay will lead to a payout of 5% of the gross selling price of the property, which is not inclusive of discounts or rebates offered. Compensations are based on the sales and purchase agreement.

In yesterday’s judicial review hearing, the presiding judge Datuk Hanipah Farikullah granted 104 house buyers an Order of Certiorari, quashing the Urban Wellbeing, Housing and Local Government Minister Tan Sri Noh Omar’s decision to amend the time period for vacant possession of Sri Istana condominium in Kuala Lumpur.

Noh had given BHL Construction Sdn Bhd an EOT of 36 months to 48 months for the vacant possession of the condominium in a letter dated Nov 17, 2015.

The ruling also stated that Noh has no power under Section 24 of the Housing and Development (Control and Licensing) Act 1996 amended 2015, to empower housing controllers to waive or change any of the terms and conditions of the prescribed statutory agreement. In short, Parliament does not empower a minister to do so.

Under the SPA, developers must complete construction and hand over the housing project within 24 months for landed properties and 36 months for stratified homes, failing which it must pay LAD charges of 10% per annum times purchase price.


Disclaimer: The information is provided for general information only. Malaysia Sdn Bhd makes no representations or warranties in relation to the information, including but not limited to any representation or warranty as to the fitness for any particular purpose of the information to the fullest extent permitted by law. While every effort has been made to ensure that the information provided in this article is accurate, reliable, and complete as of the time of writing, the information provided in this article should not be relied upon to make any financial, investment, real estate or legal decisions. Additionally, the information should not substitute advice from a trained professional who can take into account your personal facts and circumstances, and we accept no liability if you use the information to form decisions.

More Articles