HOUSING DEVELOPMENT

(CONTROL & LICENSING)

ORDINANCE 2013 & REGULATIONS
2014 & REGULATIONS
(AMENDMENTS) 2015: RATIONALES
& SCOPE OF CHANGES

by
Permanent Secretary
Ministry of Housing Sarawak
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Purpose of change and improvements

 To strike a balance between the interests of house

buyers with housing developers in an equitable and fair
manner;

 To further enhance and safeguard house buyers’

interests;

 Simplify housing regulatory procedures towards reducing

red tapes and creating more-business-friendly
environment;

 To mitigate the occurrence of abandoned housing

project.

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Main objective of the Law

o To protect the interest of house purchasers

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Scope of the Ordinance
o Applicable to all “housing development”
* not applicable to commercial development

 “housing accommodation” includes any building, tenement or

messuage which is wholly or principally constructed, adapted or
intended for human habitation or partly for human habitation and
party as business premises or such other types accommodation as
may be prescribed by the Minister pursuant to section 4;

 “housing development’ means the carrying out of any building

operations for the purpose of erecting in any manner housing
accommodation in, on, over or under any land or the collection of
moneys therefore, or the sale of such housing accommodation.

What about mixed development, services apartment, SOHO, SOVO,

SOFO etc ?

 build on commercial land for residential living

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A license is required for each & every phase of
Housing developments.

Phase 2

Phase 1

Phase 3

> 100 units

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 Housing Development Regulations
2014

• Regulation 3(2)(a)(i): The licensing criteria has been

revised whereby a minimum paid up capital of
RM100,000.00 is required if the application is made by a
company

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Minister to give directions for
safeguarding interest of purchaser
Where a housing developer informs the Controller or where
as a result of an investigation or for any other reasons the
Controller is of the opinion that the housing developer has
or is likely to become unable to meet his obligations to his
purchasers or is about to suspend his building operations
or is carrying on his business in any manner detrimental to
the interest of his purchasers, the Minister may

1) direct the housing developer take such steps to rectify

any matter ;

2) appoint a person to advise housing developer in the

conduct of his business;
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3) direct any other housing developer to assume
control and carry on the business of the housing
developer upon such terms and conditions as the
Minister may determine to completing any housing
development which the housing developer is
undertaking;

4) direct the housing developer to present a petition

to the High Court for the winding up of his
business; or

5) take action as the Minister may consider necessary

for carrying into effect the provisions of the
Ordinance.

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 Housing Development Account (HDA)
• Section 12: HDA shall be opened for each phase of development .
Purchaser moneys received by the licensed housing developer from
the sales of housing accommodation and any other sums of money
which are required by regulations shall be paid into the HDA. The
developer shall not withdraw from HDA except as authorized by
Regulations.

• Non – compliance: liable to a fine of not less than RM200,000.00

but not exceeding RM500,000.00 or to imprisonment for a term not
exceeding three (3) years or to both;

• Housing developers shall be required to open HDA within 14 days

after issuance of a housing developer’s license and shall submit a
copy of the bank-in slip/bank statement/the Certificate from the
bank upon payment

• HDA is not required for “build then sell” development (section 9 of

ordinance)
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HDA Audited Report
Regulation 24: Every auditor a licensed housing developer
shall, within 6 months after the close of the financial year
make an annual report to the Controller on the Housing
Development Account and shall state whether or not-

a) Each and every deposit and withdrawal recorded in the

account are accordance with these Regulations;

b) The accounting and the records examine by him are properly

kept;

c) If the auditor has called for an explanation or information

from the officers or agents of the developers, such
explanation information has been satisfactory. 1010
Deposit
The housing developers are required to deposit the money
and maintain a balance as prescribed under the Housing
Development (Controller and Licensing) Regulations, 2014
as follows if they choose to pay the deposit into the HDA:

(a) Licensing to develop more than 8 units RM100,000.00

not but more than 30 units

(b) Licenses to develop more than 30 units RM200,000.00

but not more than 100 units

(c) 1.5% of the estimated cost of RM500,000.00

construction but up to a maximum for
more than 100 units

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 License can be revoked/suspended &
Deposit can be forfeited if:
o Project detrimental to interest of purchasers or to any
member of the public

o Developers has insufficient assets to cover liabilities

o Contravening any provision of the Ordinance

o Ceased operation

Appeal against such action to the Minister

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New Sale & Purchase Agreement (S&P)
Provisions

Clause 13(2) of S&P: The vendors shall construct all the

infrastructure works at its own cost and to get the
Appropriate Authority to take over the completed facilities,
otherwise, they are responsible for the maintenance and
repair of these facilities at an apportioned cost;

Clause 17 of S&P: The purchaser not liable to indemnify

the vendors for introduction of new laws or amendment of
existing laws which shall impose on the vendor additional
fee or taxes for payment for completing the housing
project.

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New S&P Provisions
Clause 18 of S&P: For landed building, if vendor fails to
deliver vacant possession, he shall be liable to pay the
purchaser damages calculated from day to day at the rate
of 3% per year of purchase price from the date of
expiry for delivery of vacant possession. For Strata-
titled building, the rate reduced from 10% to 8%;

Clause 22 of S&P: Defect liability period is within 18

months after the date when the purchaser takes vacant
possession;

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LAD

Clause 26: For Strata-titled building, rates for Liquidated

Ascertained Damages for failure to complete the common
facilities in time has been revised from “10% per annum on
the amount of purchase price paid to date by the
purchasers to “an amount to be calculated from day
to day at 10% per annum of the last 20% of the
purchase price”;

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Progress Payment
The Third Schedule or progress payment for housing
development has been revised to suit current industry
need.

o Gives flexibility to developers & consultants in

determining details of payment items

o Allows developers to manage their cash flow better

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Licensing & Permit Requirements
• Housing Development License & Advertisement and Sale
Permit is not required upon Occupation Permit (OP)
being issued by Local Authority.

• However, termination of Banker’s Guarantee shall only be

considered after expiry of the project defect liability
period.

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Licensing & Permit Requirements
• Housing Development License Advertisement & Sale
Permit shall be issued for a 3 year period for landed
property & 4 year period for high-rise building.

• Bank Guarantee has to be valid for 54 months for

landed property & 66 months for high rise building.

• Upon expiry of Housing Development License and

Advertisement & Sale Permit and add-on units,
developers need to apply for new license and permit

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Simultaneous Application

Developer given the option to choose whether to submit

their application for Housing Development License &
Advertisement and Sales Permit separately as is the current
practice or submit simultaneously provided that the
project has been approved by SPA and Building Plan
approved by Local Authority.

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Abandoned Housing Project
• Abandoned housing development means housing
development which has been abandoned as declared by the
Minister under Section 27(2);

Abandoned Project (5.27(2)

“Where a housing developer had refused to carry out or delayed
or suspended or stopped or ceased works continuously for a
period of 6 months or more or beyond the stipulated period of
completion as agreed under the S&P”

Penalty
• Housing developer who abandoned a housing development or
any phase of housing development shall commit an offence
be liable to a fine of not less than RM250,000.00 but not
exceeding RM500,000.00 or to imprisonment for a term of not
exceeding years or to both.
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Enforcement of New Ordinance/Regulations:

Enforcement of the new Ordinance and Regulations shall be applicable

to all housing development application that are submitted on 1st
November 2014 and thereafter. From then onwards:

o The use of new Sale and Purchase Agreement (Form B and Form C)
is applicable for all new housing development with effect from 1st
November 2014 ; &

o For the existing housing development existing prior to 1st November

2014, the new Sale and Purchase Agreement (Form B and Form C)
shall also be applicable to all agreements executed on or after 1st
November 2014.

o With effect from 20th March 2015, the new Form B & C & Third
Schedule shall be applicable
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For the existing housing projects which have commenced
but yet to be completed or with approved licenses prior to
1st November 2014:-

o Housing developers are not required to open HDA;

o Deposit fixed at RM100,000; &

o The license shall be issued on annual basis.

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 Duties of Licensed Developers
1) Within 4 weeks of making of any alteration in or to
any of the documents submitted to the Controller under
section 6 to furnish to Controller written particulars of
the alteration.

2) Exhibit at all times in any office and branch office a

copy of his last audited balance sheet and such
information as the present or former full name, usual
residential address, nationality of origin business or
occupation of the business of the licensed housing
developer and particulars of any other directorship held
by the person.

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3) Keep in his office accounting and other records as will
sufficiently explain the transactions and financial
position of the licensed housing developer and shall
cause these records to be kept to enable to be
conveniently and properly audited.

4) Not later than 21st day of January and the 21st day
July of each year, send to the Controller a statement
in the prescribed form

5) Where he considers that he is likely to become unable

to meet his obligations to the purchasers, notify the
Controller of such fact in writing.

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