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How Does the Covid-19 Act Protect Homebuyers and Housing Developers?

The amendments to the HDA 1966 came into effect retrospectively on 18 March 2020 after the enforcement of the Covid-19 Act on 23 October 2020. Its primary purpose is to offer protection to defaulting parties for inability to perform a contract during these difficult times.

The relief is limited to homebuyers who are unable to make payment due to measures taken to control or prevent the spread of COVID-19 under the PCID Act 1988.

However, contracting parties may dispute whether a causal link exists between failure to pay a homebuyer and actions under the PCID Act, such as the Movement Controlling Order (MCO), Conditional MCO and Recovery MCO.

We will take a further look into the amendments by section below.

Modifications to HDA 1966 by section

  • Section 32

The changes to the 1966 HDA were retrospective; despite being passed by Parliament at a later date, they came into effect as if they had been implemented from 18 March 2020.

  • Section 33

The amendment covered any agreement entered in before 18 March 2020 under Schedule G, H, I and J of the 1989 Regulation on the Controlling and Licensing of Housing ("HDR 1989").

  • Section 34

Developers were not to charge a late payment fee to any purchaser who failed to pay for any instalment for the period 18 March 2020 until 31 August 2020. The bill allowed the purchaser to extend the period up to 31 December 2020, and the developer cannot charge the buyer with a late payment charge for the extended period if the extension is given.

  • Section 35

Developers are given protection against any purchaser's claim for Liquidated Assessment Damages (LAD) from 18 March 2020 to 31 August 2020. Developers could create an extension until 31 December 2020, in accordance with Section 35(2). When granted, the purchaser will be restricted until 31 December 2020 to seek any LADs against the developer.

In section 35(4), purchasers were given further protection. In cases where the purchaser could not take possession of that property, the purchaser would not be deemed vacant from the date of the notification to have taken possession of the developer from 18 March 2020 to 31 August 2020 or any extended period granted to it.

  • Section 36

With regard to the period of defect liability provided for by Article 36 of the COVID 19 Act, the period from 18 March 2020 to 31 August 2020 or any extended period of time allowed by the Minister until 31 December 2020 for the developers to carry out work to remedy or repair defects is exempted from the calculation of the time period for defect liabilities.

  • Section 37

Any legal proceedings, judgment or award to recover late payment interest payable by the purchaser or LAD to the developer between 18 March 2020 and the date of publication of the new Act were not affected.

Any late payment charges paid by the purchaser or LAD paid to the developer before the actual publication of the new Act were non-refundable.

  • Section 38

In respect of the submission of home-buyer claims pursuant to section 16N(2) of HDA 1966, the government made further changes. Under section 38 of the COVID‐19 Act, the home purchaser was entitled to file a claim between 4 May 2020 and 31 December 2020 and has jurisdiction to hear the claim if a term of limitation of the home-buyer's claim expires the period 18 March 2020 through 9 June 2020.

After Effect

While the period of these amendments has ended, they are still significantly in play.

In a recent case whereby a purchaser bought an apartment under construction in January 2020 and expected key-collection in February 2021, the developer demanded a penalty payment of RM1000 for the balance purchase charges price.

In this case, the developer sent out the billing in February 2020 and should have received the balance purchase a month after they issued the billing. However, due to strict MCO regulations at that time, the bank only disburses the balance purchase price only in May 2021. Upon discussing with the developer and relying on this Act, the purchaser must not pay the said interest as it is waived.

The above was one of many cases where purchase and developer were affected, and the Act came into play. If you need further advice on the matter, our lawyers are always available and ready to help.


Note: This article does not constitute legal advice to any specific case. The facts and circumstances of each and every case will differ and, therefore, will require specific legal advice. Feel free to contact us for complimentary legal consultation.

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