The Housing Development Act (HDA) was enacted in Malaysia in 1966 to provide for the regulation of housing development and to make housing development a controlled activity.

The act protects Malaysian homebuyers' interests when buying properties from developers.

The HDA is administered by the Ministry of Housing and Local Government. The HDA requires that all housing developments in Malaysia be registered with the Ministry of Housing and Local Government. The registration of housing developments is necessary to ensure that the developments are carried out in accordance with the provisions of the HDA.

1.0 Mandatory Advertising Permit and Developer’s License (APDL)

The Housing Development Act (HDA) act guarantees that property advertisement is only allowed to licensed developers. The Advertising Permit and Developer’s License (APDL) given by the local housing authority permits developers to advertise. The APDL will ensure that the developers comply with the rules and do not mislead homebuyers with false information. In any event, if developers overpromise and under-deliver with their project details, such as building materials, facilities, or offers, homebuyers can take legal action against the developers.

2.0 Defect Liability Period

Upon Certificate of Completion and Compliance (CCC) and Vacant Possession (VP), which is the moment you receive your keys from the developer and are ready to move into your new property, you are entitled to a defect liability period for 24 months due to HDA. Hence, you should be vigilant in checking for any cracks, leaks, or defects in your new property, which you can report to the developer to rectify at no cost if you find any.

3.0 HDA Account

Have you ever heard of abandoned projects or buyers losing their initial deposits or down payments due to developers declaring bankruptcy? The Housing Development Act (HDA) account serves to prevent that from happening.

Developers must create an HDA account for all of their residential developments, and the HDA requires developers to direct any payments from buyers into their HDA account. The funds in the HDA account will be disbursed by the bank progressively to be used for paying quit rent, assessment rates, levy charges, stamp duty, insurance premiums, consultant fees, and construction costs.

It’s similar to your Employees Provident Fund (EPF) account, in which you can only use the funds in your account 2 for specific reasons like education and buying a property.

Hence, the HDA account protects the funds generated from homebuyers by preventing the developers from spending on anything unrelated to the development. This also prevents developers from charging you anything extra than what was agreed in the Sale and Purchase Agreement (SPA).

4.0 Project Completion Deadline

There are cases of ongoing property developments spanning more than 10 years, yet still fail to materialise despite homebuyers paying initial deposits and down payments for it. The Housing Development Act (HDA) prevents this from happening through Schedule G (individual title) and schedule H (strata title).

Completion Period

Schedule G - 24 months

Schedule H - 36 months

The developer is responsible for paying a late penalty should any delays in completing the project occur. The late delivery interest will be calculated on a day-to-day basis at a 10% per year rate of the SPA price. This condition should motivate the developers to complete the projects within the stipulated time frame of Schedule G and Schedule H.

This protection provides peace of mind for homebuyers because the property they purchased will be completed within the agreed pre-determined schedule; otherwise, they will be compensated with interest for the delay.

5.0 Other Safeguards

Developers must adhere to a standard set for the Sale and Purchase Agreement (SPA) to protect home buyers from signing overly complicated contracts that may benefit the developers. The Housing Development Act (HDA) encourages simplicity and clarity on all details written in the agreement so that the home buyer can easily understand it.

5.0 Comparison versus HDA & non-HDA

	HDA	non-HDA
Sale and Purchase Agreement	Standard format; Simplified	Customised by developer, may be more complicated
Progressive Payments	Developers receive funds from the bank during the final progressive stage	Developers receive funds from the bank during the early progressive stage
Defect Liability Period	24 months upon VP	Developers’ choice
Quit Rent	Residential rates (lower)	Commercial rates (higher)
EPF Account 2	Able to withdraw	Not able to withdraw