No, we’re not testing if you know your alphabet. We just want you to know your rights, and protect yourself when you’re buying your home!
It’s not exactly a smooth sailing process, and can quickly become tedious and confusing, especially for first-time buyers who don’t have enough knowledge about the Housing Development (Control and Licensing) Act 1966 or Act 118 (HDA).
According to HDA, a housing development should only be “engaged in, carried on, undertaken or caused to be undertaken” by a property developer who has a license that was issued in accordance to the Act.
When you buy your home from a developer, chances are that you haven’t seen the bricks and mortar yet, but have only seen words on documents. It’s the norm in Malaysia for developers to sell their units during the construction phase.
There might be a chance that you were promised ‘heaven on earth’ during the purchase by the developer, but your completed home turns out to be delayed AND an utter disappointment.
This is when the HDA will have your back! Basically, the Act ensures developers deliver according to their promises, by completing the project on time and delivering it as the marketing materials have stated.
But, What Sort Of Issues Do Homeowners Generally Face?
According to the House Buyers Association (HBA), the most common complaints received from buyers who aren’t satisfied with their completed units, are property defects and the way they’re rectified.
The HBA has said that construction defects can range from very complex structural issues (which threaten the integrity of buildings), to simple things related to aesthetics. Often, there are several existing defects.
One essential point to look at when buying your home will be the authenticity of the developer. The track record is as important, if not more, as the other elements buyers normally look into when they are property hunting.
A thorough background check must be made in terms of the development’s site and the developer’s credibility. You should also make sure they have their Advertising Permit and Developer’s License (APDL), which is basically like a permission from the local housing ministry.
It’s stated under the Housing Development (Control and Licensing) Regulation 1989 (HDR) that no advertisement or sale can be made by any licensed housing developer without first getting the APDL.
In order to acquire that, developers must submit the approved building plans, proposed advertisements, and other crucial information on the development. So, by checking this permit, buyers can be assured that the developer is genuine!
The Sale and Purchase Agreement (SPA)
One of the more complex bits for homebuyers, is going through the Sale and Purchase Agreement (SPA). What is this ‘SPA’, and why is it so important?
This agreement basically covers the who, what, when, where, why, and how of the purchase. It’s extremely important for you to read everything properly, and understand it, before signing the paper. Because once you’ve signed, there’s no turning back!
To safeguard buyers, there are different Schedules for SPA under Regulation 11 of the HDR, which are issued according to the type of property and its purchase method. It states that:
Every contract of sale and purchase of a housing accommodation together with the subdivisional portion of land appurtenant thereto shall be in the form prescribed in Schedule G and where the contract of sale is for the sale and purchase of a housing accommodation in a subdivided building, it shall be in the form prescribed in Schedule H.Every contract of sale for build then sell for a housing accommodation together with the subdivisional portion of land appurtenant thereto shall be in the form prescribed in Schedule I and where the contract of sale for build then sell is for the sale and purchase of a housing accommodation in the form of a parcel of a building or land intended for subdivision into parcels, as the case may be, it shall be in the form prescribed in Schedule J.
Sounds complicated? Don’t worry, we’re going to break it down into simpler terms below:
1) Schedule G
This is for the sale and purchase of landed properties (both land and building), which is delivered in a ‘sell then build’ (STB) concept.
The property units under this category are sold under individual titles, which will be issued to the homebuyer. When you complete the purchase, the plot of land AND building will be under your name.
2) Schedule H
Remember this, H is for ‘high-rise’! This schedule is important for those who wish to buy and stay in strata properties (building and land intended for subdivision into parcels), also in the STB concept.
It involves more complications than the earlier Schedule G, as it includes the ownership of common properties, and your rights to it.
Common properties are the spaces that you share with other owners within the compound of the development, such as the swimming pool, lounge, gardens, corridors, car parks, and pathways.
3) Schedule I
Schedule I is for the sale and purchase of a landed property which is bought through a different model: ‘build then sell’ (BTS) concept.
So, under this Schedule, buyers can actually see the fully completed unit before deciding to go ahead with their purchase.
4) Schedule J
This schedule will be for the purchase of strata property delivered through that very same BTS concept.
Schedules I and J materialised after the amendments made to the HDR in 2007. Under that amendment, the Government introduced the BTS 10:90 delivery concept through the statement of the statutory agreements of the Schedules I and J.
In this concept, you’re only required to pay 10% of the purchase price on the date of signing of the SPA with the developer, while the balance 90% is to be paid after completion of the property.
This completion involves receiving the Certificate of Completion and Compliance (CCC) as well as the Vacant Possession (VP) which shows that the building is indeed ready for delivery to the purchaser on full settlement.
CCC Or CFO?
We know, yet another bunch of acronyms! Basically, the Certificate of Completion and Compliance (CCC) tells you that your home is safe, and you can stay in it with complete peace of mind.
The CCC replaces the Certificate of Fitness for Occupation (CFO) issued by Local Authorities for projects approved, prior to April 2007.
The amendment of the Street, Drainage, and Building Act was made to stipulate that:
- A Principal Submitting Person (PSP) must sign the CCC to confirm that the project has obtained the Building Plans’ approval from a Local Authority.
- Is completed and has met all statutory requirements with regards to health and safety aspects.
- Is ready to be occupied with all essential utility services connected.
The PSP can only be either a Professional Architect or a Professional Engineer with a Practising Certificate, depending on the type of building involved.
BONUS: Liquidated Ascertained Damages (LAD)
Remember to keep an eye out for this clause! It’s one of the most important ones to look out for, as it ensures you receive a compensation, in case the developer doesn’t deliver what has been promised.
The LAD is designed to cover any predicted losses which might occur as a result of a project overrunning or being delayed.
It Pays To Know Your Stuff!
As a homebuyer, especially if you are a first-time owner, it’s crucial to have a comprehensive knowledge about the signing of the SPA and the relevant Schedule involved. After all, it’s there for your own safeguarding!
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Type Of Schedule
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What It’s For
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Schedule G
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Schedule H
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Schedule I
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Schedule J
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It’s also advisable for you as a buyer to check out everything related to the property you intend to purchase to avoid regrets, should any complications arise in the future.
Make sure you’re aware of the additional ‘hidden charges’ that come with buying a home, you wouldn’t want to be caught off-guard and realise that you’re going to be overspending from your carefully planned budget!
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.