Housing Development Act

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 Introduction
A) Housing Development (CONTROL AND LICENSING) ACT 1966 AND REGULATIONS
1989

A) The Act Generally

• Developers must apply for Planning and Building approval before developing
houses for sale in this Act.(Act applies only to housing > 4 units, not other types of
properties).
• The land may belong to the developer or it may be a joint venture with a
Landowner.
• Most Developers have limited capital and need finance upfront to start projects
such as earthworks etc, ie. need bridging finance (up to 15 % project cost).
Purchasers seldom pay cash, they borrow from bank (end financing), pay by
installments to
• Developer, repay bank by installments (principal plus interest over 15-20 years).
• Collections by i keep prices down but presents problems if project fails.
• In early days of property development developers few and could select customers,
collect booking fees etc. but nowadays market is very open.
• The 1966 Act attempts to control and license developers to monitor their conduct :

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Developer’s License :-
• To be eligible for license. (See also pages 10,11
of Act.)
• A company must have paid up capital
<RM250,00.00 and deposit RM200K with the
Minister.
• Directors of companies to be free from
criminal charges and not still bankrupt.
• Applicants must have not been subject to a
fine of more than RM10K by this Ministry.
• Applicant should not have been connected
previously with a bankrupt Developer.
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• Developers to open and maintain Housing
Development Account, the money collected
from sales to be placed in a Bank, can only be
withdrawn if certified by a qualified person.
• The Main Act legalizes Licensing, Defines
Duties of Developers, Disciplinary action,
scope of Housing Tribunal whilst the S & P
defines Rights and Obligations of Developers
and Purchasers.

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B) Housing Developer’s Control and Licensing Regulations
1989.
• This Act has several sections: Application for license
(schedule A),the License (Schedule B),Application for
Advertising and Sales permit (Schedule D),the Permit
Schedule E ,the Standard Sale and Purchase Agreement
(G & H).
• Developers are not allowed to sell before obtaining an
Advertising and Sales permit to prevent cheating the
ignorant and gullible public.
• To apply for a permit the Developer needs to submit to
the Ministry of Housing :
a) Copy of approved Building Plans
b) 2 Copies of the advertisement and brochures
c) Other relevant information
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Particulars required in Advertising and
Sales permit :
1) Developer’s license number
2) Advertisement and sales permit number
3) Name and address of developer
4) Tenure of land (freehold etc) and encumbrances (eg charges)
5) Description of housing scheme
6) Name of Housing Scheme
7) Selling Price of units
8) Number of units of each type available
9) Name of approving authority
10) Expected Completion Date.

Developers not allowed to use certain names eg .Royalty or claim to be

linked to the Government to enhance sales. (page 63)

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B.1 ) Sales and Purchase Agreement (Standard,A Formality)
(Schedule G and H )
G for Sale of Land and Building, H for Strata Title property.
• The S & P defines Rights and Obligations of Developers and
Purchasers.

2) Sold property to be free from encumbrances on handing

over vacant possession

3 & 4) Third Schedule-Breakdown of Stage payments of

Purchase Price by purchaser. Claims for payment to
Purchaser by Developer must be supported with an
Architect’s certificate stating amount due.( Architect can
lose his license for fraud and negligence in certifying if
complaint is made to the Board).

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• 9 ,10) Default of payment by purchaser entitles developer
to resell and reimburse less expenses in re-selling.
Developer can charge interest payments for late payment
• 13) Position and area of lot- The Developer must reimburse
buyer at rate of agreed X$ per m2 if completed unit smaller
than shown. If the difference between approved plans size
and actual built size is more than 3.0 % claim is allowed. For
landed properties the rule is 2 % of lot size.
• 14) Materials and workmanship specification as 4th
schedule. Difficult to ensure Developer will provide good
workmanship as buyer only sees unit on collecting keys.
The Purchaser is not to make variations that require re-
submission of Building Plans.
• 17,18,19) Purchasers need to contribute for upkeep of
external services from date of Vacant Possession.
Purchasers to pay to developer deposits for water,
electricity meters as required by JBA & Tenaga

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23) Vacant possession- Unit completed with water and
electricity supply connected, 24 or 36 months from Date of
Sales Agreement. If Developer delivers late delivery,
compensate 10 % per annum of the purchase price,
calculated per day to be paid by Developer to Purchaser.
24) Vacant Possession to be certified by an Architect, after
that Architect is supposed to inspect and issue the
Certificate of Compliance and Completion to Developer.
26) Defects liability period (18 months), last 2.5 % retention
to be released after Vacant Possession.

Most Buyers or their banks will enter a caveat on

Developer’s land to prevent Developer from disposing off
the master title before project is completed.

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Current Problems:
• Bad workmanship, Developer cutting costs-A Housing
Tribunal was set up by the Housing Ministry to settle
small claims from Purchasers. It is faster than the Court
process.
• Developer absconds and project abandoned.( Happens
to about 10 % of total projects, Build first, pay later
better?)
• No Certificate of Fitness (Developer or LA’s fault ?)
Government proposing that Architects should oversee
CF inspections and issuance. Probably means that
Developers and Buyers will need to pay additional fees
to Architects.
4) The Build and Sell concept now undergoing trial. Pay
only after House completed.
5) Inflation very high on cement, steel, and products
related to petroleum.
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