Covid Act 2020: Impact On Housing Development

he Covid-19 Temporary Measures for Reducing the Impact of Coronavirus Disease 2019 (Covid-19) Act 2020

On 25 August 2020 and 22 September 2020, Malaysia’s Temporary Measures for Reducing the Impact of Coronavirus Disease 2019 (COVID-19) Bill (“COVID Act“) was passed by the Dewan Rakyat and Dewan Negara respectively. The COVID Act shall remain effective for the next two years commencing from 23 October 2020. The introduction of COVID Act is said to be part of the measures taken by the Malaysian Government to reduce the impact caused by the COVID-19 pandemic.

This article is intended to highlight the key impacts of Part XI of the COVID Act on the Housing Development Industry. The Housing Development Act 1966 is one of the 16 legislation(s) that has been modified via the COVID Act.

The Act introduces the following modifications in relation to agreements entered into before 18 March 2020 in the forms prescribed in Schedules G, H, I and J of the Housing Development (Control and Licensing) Regulations 1989

Q : When does Part XI of the Act come into operation?
A : This part is deemed to have come into operation on 18.3.2020.

LATE PAYMENT CHARGES

A developer is precluded from imposing late payment charges in respect of any unpaid instalment in the event the purchaser fails to pay such instalment for the period from 18 March 2020 to 31 August 2020. 1

1 Section 34 of Temporary Measures for Reducing the Impact of Coronavirus Disease 2019 (Covid-19) Act 2020

The Purchaser may apply to the Minister for an extension of the period mentioned in Section 34 (1) of the Act. The Minister may direct the developer to extend the period in which the developer is precluded from imposing late payment charges on the purchaser on the unpaid instalment up to 31 December 2020. 2

VACANT POSSESSION AND LIQUIDATED DAMAGES

Section 35 (1) of the Act provides that the period from 18 March 2020 to 31 August 2020 shall be excluded from the calculation of:

1. 1. 1. The time for delivery of vacant possession of a housing accommodation; and
      2. The liquidated damages for the developer’s failure to deliver vacant possession of a housing accommodation;3

The Minister may, upon the developer’s application, grant the developer an extension up to 31 December 2020 to deliver vacant possession only if the Minister is satisfied that additional time is required by the developer to deliver vacant possession. 4

If the purchaser is unable to take possession of a housing accommodation from the date of service of a notice to take vacant possession from the developer during the period from 18 March 2020 to 31 August 2020 or any extension period referred to in paragraph (4) above, the purchaser shall not be deemed to have taken such vacant possession upon expiry of the developer’s notice to take vacant possession. 5

DEFECT LIABILITY PERIOD

The period from 18 March 2020 to 31 August 2020 shall be excluded from the calculation of:

1. 1. 1. The defect liability period; and
      2. The time for the developer to carry out works to repair and make good the defects and other faults in a housing accommodation; and

The Minister may, upon the purchaser’s application, by written direction, extend the period referred to in paragraph (6) above up to 31 December 2020 from the calculation of:

1. 1. 1. The defect liability period; and
      2. The time for the developer to carry out works to repair and make good the defects and other faults if the Minister is satisfied that additional time is required by the purchaser;6

HOUSING TRIBUNAL CLAIM

Notwithstanding section 16N(2) of the Housing Development (Control and Licensing) Act 1966, if the limitation period for a homebuyer to file a claim in the Tribunal for Homebuyer Claims has expired during the period from 18 March 2020 to 9 June 2020, a homebuyer is entitled to file the claim from 4 May 2020 to 31 December 2020 and the Tribunal shall have jurisdiction to hear such claim.7

The modifications referred to in paragraphs (1) to (7) above shall not affect any legal proceedings commenced, or any judgment or award obtained, to recover late payment charges payable by the purchaser or liquidated damages payable by the developer or any other sum during the period from 18 March 2020 until the date of publication of the Act.8

The Government has further established a mediation centre conducted by the PMC-19 (which is open to public) to manage and handle disputes valued at RM 300,000.00 and below. For the benefit of the “rakyat” wherein the government will bear the costs of this mediation service for categories B40, M40 as well as micro and small industries.

Further, notwithstanding the provisions referred to in paragraphs (1) to (5) above, any late payment charges paid by the purchaser or liquidated damages paid by the developer before the date of publication of the Act shall be deemed to have been validly paid under the Housing Development (Control and Licensing) Act 1966 and its regulations, and such payment shall not be refunded to the payer.9

EXAMPLE

Disclaimer: Please note that the contents above do not constitute legal advice. Should you require legal advice, please contact any of our lawyers as listed below:

If you have any queries, please contact our via e-mail, we are available for a scheduled conference call.

Messrs. Jeeva Partnership
Dato’ Shamesh (Partner): shamesh@jeevaretnam.com.my
Charlotte Williams (Senior Associate): charlotte@jeevaretnam.com.my
Lim Yi Chan (Associate): yichan@jeevaretnam.com.my