Understanding Housing Development Act Malaysia (HDA) And Defect Liability

PropertyGuru Editorial Team
Understanding Housing Development Act Malaysia (HDA) And Defect Liability
Many Malaysian new homebuyers are not aware of it, but their homes are warrantied against defects for a limited amount of time after they receive the keys to their new home.
This comes with the legal safeguards courtesy of the Housing Development Act (HDA) of 1966.
On top of that, if the unit is strata titled, the buyer will also get additional legal protection under the Strata Title Act of 1985 and Strata Management Act of 2013.
Before we dive deeper into the nitty-gritty details about the HDA and what it can do, here’s a little background story about it!

What Is The Housing Development Act (HDA)?

The HDA was formerly known as The Housing Developers (Control and Licensing) Act 1966 (Act 118), until the Amendment Bill became law. Thereafter, it was renamed to what we call it today – the Housing Development Act.
Back in the beginning, it was implemented and passed in Parliament based on 3 main objectives:
  1. To check on the abuse of the then infant housing industry.
  2. To regulate the activities of the housing developers.
  3. To protect house buyers (only up to a certain point).
Fast forward to the 21st century, the HDA has pretty much kept to its word and original objectives. Contrary to popular belief, the HDA is not a comprehensive law that governs the housing industry.
In actual fact, it works to control and provide licensing in regards to the business of housing developments in Peninsular Malaysia.
hda, housing development act, housing development act malaysia, hda malaysia, hda act malaysia
At the same time, the Act also serves to protect the interest of purchasers, as well as other matters that are connected to it.
However, the HDA mainly protects primary market properties bearing a residential title and new developments, and only for a specific period of time. Other crucial roles of having the HDA around are:
  • Purchasers’ interests are protected, especially when it comes to purchasing your first property.
  • Sale and Purchase Agreement follows a mandated, standard format so buyers are able to understand the contract and SOPs better.
  • Encourages transparency and accountability as every detail is laid out clearly in the agreement with no room for misinterpretation.
  • Purchasers are protected by law, ensuring that developers will need to play by the book, or else!
  • Homebuyer Tribunal addresses any buyer-related conflicts, disputes, and claims.
  • Funds are held in a Housing Development Account, which enhances the protection of users’ rights so the funds are channeled properly.
Now, once you purchase a home and receive the keys, there’s a little something called a warranty period.
The warranty period for a new home is also known as a defect liability period. During this time, the developer is obliged to repair faulty workmanship discovered at no cost to the buyer.
Under HDA Malaysia, the defect liability period spans 24 months starting from the receipt of the keys.
Thus, it’s advisable to do a thorough check of the house you’ve purchased during this timeframe and report the flaws to the developer. Otherwise you’ll be shouldering the repair costs for defects spotted after this period!
hda, housing development act, housing development act malaysia, hda malaysia, hda act malaysia
The guarantee also gives the purchaser power to compel the builder to comply with the agreed specifications.
This is represented in the Sale and Purchase Agreement (SPA), and you can file for claims with the relevant authorities for breach of contract.
In case of a dispute from the developer, the process of submitting a claim for defects is stated clearly in HDA Malaysia’s prescribed contracts.
Any issues between the purchaser and the developer relating to this can be elevated to the Homebuyer Tribunal established under the act.
Additionally, if the property in question is strata titled, residents can file claims for defects involving common property.
They’re also entitled to an additional retention sum under the strata act as ruled by the Commissioner of the Buildings (COB).

How Else Does The HDA Protect Me?

hda, housing development act, housing development act malaysia, hda malaysia, hda act malaysia
The HDA will be able to carry out the following:
  • Mediates any issues that arise between buyers and developers
  • Implements certain rules/regulations if developers start charging buyers for new property
  • Assists residents or owners if a property has been abandoned
Ever seen a property advertisement by a developer? The HDA also safeguards homebuyers by ensuring developers have proper authorisation, plus Advertising Permit and Developer’s License (APDL), before they can sell property.
Property advertisements are mandatory to have the following:
  • Housing developer’s licence number, and validity date
  • Advertisement and sale permit number, and validity date
  • Name and address of the licensed housing developer
  • Tenure of the land, expiry date, any restriction in interest (if there is)
  • Description of the development
  • Name of the development
  • Expected completed date
  • Selling price of each type (if there are many different types ie. Type A, Type B, etc.)
  • Maximum – minimum selling price of each type (where applicable)
  • Number of units available for each type
  • Number of parking lots as an accessory
An implemented housing development account (HDA Account) must be opened and maintained by the developer for each of their residential developments.
Any payment received for the sale of a housing development must be paid into the developer’s HDA Account.
hda, housing development act, housing development act malaysia, hda malaysia, hda act malaysia
Money in the HDA Account will be used to pay for a variety of items, including:
  • Taxes
  • Quit rent
  • Assessment rates
  • Levy charges
  • Stamp duty
  • Insurance premiums
  • Architects, engineers, quantity surveyors, and consultants’ fees
  • The cost of construction or infrastructure work

Differences Between Residential & Commercial Properties

Certain properties under commercial titles may not have HDA protection and as such, it’s important to understand clearly what this means, especially if you’re making changes to your property.


  • ✅ You’re free to do anything to your house, even hosting lavish parties and events!
  • ✅ No law constraints regarding installation of emergency alerts such as water sprinklers, fire alarms, etc.
  • ✅ Enjoy your very own full-fledged kitchen and decorate it to your taste.
  • ✅ Utility bills, quit rent, and assessment fees follow residential rates (cheaper than commercial)
  • ❌ You are not allowed to transform your property into an office, shop, or business unless you have a special permit.


  • ✅ You must follow the rules of Malaysia’s Bomba department and install water sprinklers.
  • ❌ You cannot turn your commercial property into a house or even throw a party as it’ll land you some serious legal action.
  • ❌ You are not allowed to have a kitchen – only one pantry. Restaurants are an exception but only with special approval.
  • ❌ Commercial rates for utility bills, quit rent, and assessment fees are higher compared to residential rates.
If you’re considering purchasing a property as an investment or to live in, make sure to check whether it’s a commercial or residential title, and understand how it’ll affect you and your lifestyle.

Issues That May Arise During The Defect Liability Period

1) Mistaken Interpretation Of SPA

hda, housing development act, housing development act malaysia, hda malaysia, hda act malaysia
While the process of submitting claims may sound easy and straightforward, in reality it can become complicated and troublesome due to issues that may arise.
For instance, the buyer and property developer may have different interpretations or expectations regarding the signed agreement.
This is why it is always important to go through the SPA carefully during the signing period, to avoid any misunderstandings.

2) Renovation During Defect Liability Period

Besides that, buyers of new houses are advised to make any defect warranty claims before carrying out renovations during the defect liability period, or engage an expert before carrying out the refurbishment.
This is because a well-intended renovation by the buyer could contribute or lead to defects, which the developer will unlikely be willing to fix.
A paint or cement job may also conceal defects that you could have reported to the developer.
The best decision during this time is to wait for the defect liability period to lapse before renovating the home; unless the house owner does not wish to make any defect claims.

3) Sale Of Property During Defect Liability Period

hda, housing development act, housing development act malaysia, hda malaysia, hda act malaysia
Another common problem is the sale of a property during the defect liability period.
If this happens, it is vital that the original buyer’s right to make claims within the said timeframe is transferred to the new owner so that the latter can report flaws and have it fixed by the developer at no cost.

4) Significance Of Defects And Timeline Of Repairs

Another potential contention between buyer and seller is measuring the significance of the defects, and the subjectiveness of what is acceptable workmanship or quality.
Both parties may also disagree on the speed of rectification works and its standard.
On top of that, architects and engineers also need ample time to confirm whether the developer followed all relevant rules when building the property or carrying out the repairs.
It’s also possible that these experts may overlook some flaws.

Now That We Know About HDA Properties, What About Non-HDA?

For starters, you’d need to be aware that not all properties come with protection from HDA, and these are labelled as non-HDA.
In order to better differentiate one from the other, when you see commercial properties like SoVo, SoFo, Business Suite, Office Suite and anything of those sorts, they’re all classified as non-HDA properties.
hda, housing development act, housing development act malaysia, hda malaysia, hda act malaysia
When it comes to home loans, the maximum amount of loan that you’d be able to get for a non-HDA property is up to 90%, and with a shorter loan duration.
Now, if you buy HDA properties, the loan duration can go up to 35 years, or until you reach 70 years old (whichever comes first).
However with non-HDA, you can only get a loan for up to 25 years, which means that your monthly repayments will be high (depending on the price of the property you had in mind).
The loan margin for your 3rd and subsequent property purchase would also be much higher, as you can get up to 85%, whereas with HDA, the highest you can get is 70%.
Notwithstanding all of the above, it’s still of utmost importance to ensure that your financial standing is strong!
For your monthly repayments, the interest rate for a non-HDA property is generally higher, which is about 2.0% depending on the bank.
This is due to the commercial element, and also because the properties will be used for business purposes.
If you’re interested to buy a non-HDA property, check out some of the basic information, as well as how it compares against a HDA one down below.

1) Commercial Property

hda, housing development act, housing development act malaysia, hda malaysia, hda act malaysia
It’s important to note that not all properties acquired from the primary market come with a warranty and defect liability period, as the Housing Development Act (HDA) only protects properties and developments of Residential titles.
Buyers of commercial-titled properties such as office, retail or industrial units are hence strongly advised to scrutinise the SPA document’s terms and conditions, particularly the stipulation on claiming for defects.
Better yet, obtain a copy of the contract and consult a lawyer before signing it.
If the contract is disadvantageous to the buyer, it is advised that they ask for a revision to the agreement that will be satisfactory for both buyer and seller.

2) Secondary Property Market

Another case where the “new” property is not covered by a defect liability warranty is if the buyer purchased his/her property from the secondary market.
These properties are bought on an “as is where is” basis. This legal phrase means that the buyer agrees to buy the property in whatever condition it currently exists with all faults, whether or not immediately seen.
So before signing on the dotted line, do a meticulous check and bring along an expert (an engineer or architect) to advise you on whether to proceed with the transaction to buy a subsale home or not.

The Differences Between Non-HDA & HDA

We’ve placed the differences into a table format so that it’ll be easier for you to see and understand. You’re welcome!
Not standard, as it depends on the developer. SPA will be different for each non-HDA project.
Standard, as all projects need to follow the same template.
Bank will release the payment during the EARLY progressive stage.
Bank will release the payment during the FINAL progressive stage.
Depends on the developer whether they want to give it to you or not, and for how long.
Fixed, usually 24 months starting from the date you receive the keys.
Pay according to the rates of commercial properties, which can become really expensive.
Follow the flat rate that has been set for residential properties.
Need to get approval from the developer to obtain strata title. Usually the developer will charge 1% to 3% from the SPA price.
Sometimes, it does come with a strata title.
You can’t take your savings from EPF Account 2, so you’ll need to use your own money.
You have the option to pay the deposit using your savings from EPF Account 2 if you don’t have enough money.
Now that you know about this warranty, please don’t overlook any of the damages (no matter how small!) that you might find at your new home.
One more thing, if you’re still unsure about this HDA and non-HDA stuff, the most important thing to do whenever you want to buy a property is to check the grant or title of the property.
From there, you would know if the property is HDA or non-HDA. If the status is residential, then the property must already be under HDA. Easy, right? 😉

Relevant Guides:

Disclaimer: The information is provided for general information only. PropertyGuru International (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.