The Temporary Measures for Reducing the Impact of Coronavirus Disease 2019 (Covid-19) (Amendment) Act 2022 (“the Act”) was gazetted on January 13, 2022 and the Act introduces some key amendments affecting housing developers and purchasers as follows:

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Definition of agreement and first agreement

Clause 38A of the Act defines an agreement to be a contract of sale for the sale and purchase of a housing accommodation as prescribed in Schedules G, H, I and J of the Housing Development (Control & Licensing) Regulations 1989.

It also defines “first agreement” as the first agreement entered into between a purchaser and developer for a housing accommodation. Therefore, whenever first agreement is mentioned in the provisions, it applies only to the first purchaser who entered the sale and purchase agreement of the property with the housing developer and the provision will not apply to subsequent purchasers.

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New provision under Part XIA providing modification the law of housing

Clause 38B of the Act proposes that the developer shall not impose any late payment charges for unpaid instalments between January 1, 2021 to December 31, 2021. This would mean that if the developer is going to claim for late payment charges from the purchaser, the developer will have to exclude the late payment due for the said period, if the purchaser is able to show that his failure to pay instalments due during the said period was due to measures by government to prevent Covid-19. Note that the provision only applies to the first agreement entered before May 31, 2021.

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Developer may apply to the Minister for extension of time to deliver vacant possession

Under the sale and purchase agreement of a housing accommodation, the housing developer has a duty to deliver vacant possession of the property within a fixed timeline, failing which it will be liable to pay liquidated ascertained damages to the purchaser for the period delayed.

For the purpose of calculation of liquidated ascertained damages, the housing developer may apply to the Minister of Housing and Local Government (thereafter referred to as the Minister) to exclude the period between January 1, 2021 to December 31, 2021. The reason for such application must be that it was unable to deliver vacant possession within the prescribed timeline due to the measures by the government to prevent the spread of Covid-19 virus.

Application to the Minister must be made before the expiry of time for delivery of vacant possession under the sale and purchase agreement and this relief is only applicable to first agreement entered before May 31, 2021.

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Taking of vacant possession

Clause 38D of the Act provides that where after the housing developer has served to the purchaser a notice to take vacant possession of the property and the purchaser is unable take vacant possession between the period of June 1, 2021 to October 31, 2021 or during any period excluded by the Minister, the purchaser will not be deemed as having taken vacant possession of the property.

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Defect liability period

Clause 38E of the Act provides that for purpose of calculation of damages arising from defects to the property during the defect liability period, the period between June 1, 2021 to October 31, 2021 is to be excluded.

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Effect of the modification

Any exclusion or extension granted by the Minister does not affect any exclusion or extension obtained under Sections 34, 35 and 36 of the Act. Further, the modifications do not affect any legal proceedings already commenced or judgment obtained to recover late payment charges or liquidated ascertained damages payable during the period of Oct 24, 2020 until date of publication of this new provision.

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Conclusion

The amendments above are meant to assist housing developers and purchasers whose contractual obligations under a sale and purchase agreement are affected due to measures by the government to control the spread of Covid-19 virus. We hope that the amendments will work out to address the issues currently faced by housing developers and purchasers in a sale and purchase of a housing accommodation.

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This article is intended to be informative and not intended to be nor should be relied upon as a substitute for legal or any other professional advice.

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About the Author

Tan Poh Yee

Senior Associate

Halim Hong & Quek 

pohyee.tan@hhq.com.my