If you are keen on buying a property, it is important to know about the Housing Development Act (HDA) in Malaysia.

This is primarily for new development projects and protects homeowners interests for a specific period.

In very simple terms, it is an act that plays a major role in keeping buyer interests safe.

The Housing Development Act was established in 1966. This act has been updated several times to keep it in sync with the existing challenges of home buyers.

Apart from the protection for residential title house buyers, this Act also provides protection to certain commercial title new projects, eg: service apartment or SOHO.

This act is instrumental in empowering property buyers and compelling the developers to stick to the provision of the contract.

The developers, especially in the case of residential accommodation need to comply with HDA.

All disputes in this regard are heard at the Homebuyer Tribunal that was established under this Act.

Why HDA Is Important

Housing Development Act  (HDA) plays a crucial role in protecting the rights of home buyers in a comprehensive manner.

1. Protecting the Purchasers’ Interests

A majority of home buyers in Malaysia are first time buyers without too much understanding or exposure in the real estate world.

As a result, the bargaining power that they exercise is way limited compared to the developers who are mostly veterans operating for years.

To protect buyers’ interests, the government comes out with this HDA.

So this means, the buyer who has probably gathered their life savings to invest in a house stands a far better chance to get a fair deal under this Act.

2. Prescribed Sale and Purchase Agreements

This is one of the biggest advantages of HDA.

Many times, buyers are not really thorough with either the procedure or the intricate details of the SPA (Sales and Purchase Agreement).

But now the HDA has mandated a standard format for the purchase agreement.

This means the buyers will be able to grasp the intricacies a lot better and be on top of the standard procedures in play.

3. Ensure Transparency and Accountability

How exactly are the purchaser rights protected? Well, for starters it brings in a certain degree of transparency to the whole deal.

The details of the purchase agreement are stated in clear terms without any room for misinterpretation.

From the building materials to the SPEC, layout and date of completion, everything is mentioned in clear terms in the Sales and Purchase Agreement (SPA).

4. Buyers are Protected By the Laws

The Housing Development Act also pressurizes the developers to abide by the law. There is a sense of accountability that seeps in as a result of the provision of this act.

Developers know that if they fail to abide by the Act, customers can raise the issues to the tribunal. The developers can be fined or even get imprisoned if he is convicted.

5. Tribunal For Homebuyer Claims

There is a special tribunal, the Homebuyer Tribunal to address all buyer related disputes and conflicts.

Here the buyers can lodge complaints without hiring a lawyer. The claims here are limited up to RM 50,000, but it surely provides an adequately empowered body to the buyer to fix their complaints and potential dispute elements with the developer.

If your claims are more than RM50,000. You can choose to go for an alternative way which is civil litigation.

Besides, it is important to know that there is a time limit for filing a claim to the tribunal, which is:

1. Within 12 months of the CCC (Certificate of completion and compliance) issue date


2. Within the defect liability period

6. Holding Funds in a Special Account

This is another interesting provision under the Housing Development Act. The money that the buyers pay to the developer is held in a special trust. It is called the Housing Development Account.

This money cannot be withdrawn easily apart from some special clauses. That means there is significantly better protection of user rights under this account.

What Does HDA Cover?

You have already understood by now that buyer interest is the predominant point of protection under the HDA.

Here is a quick lowdown on how exactly this is done in a step by step process.

1. Defect Liability Period

In very simple terms, this is the warranty period for new homes.

This period spans about 24 months from the day the buyer receives delivery of vacant possession (VP) and gets the keys to the house.

In this period, the developer is duty-bound to repair any kind of construction fault that may come to light.

The buyer will not have to shell out additional cost for that defects repair.

Therefore, buyers should inspect the house carefully and report the defects to the developer in this period if they find some.

2. Schedule Payment

To prevent developers declare bankruptcy or abandon the project with all the buyers’ money.

The will be a schedule of payment depending on the stage of the development’s progress.

There are 5 main stages of payments as below:

  1. Signing of SPA
  2. Completion of various development stage
  3. Vacant Position
  4. Application for subdivision of the building
  5. Final payment held by the stakeholder

The Purchase agreement needs to specify in clear terms. As a result, there is much less ambiguity or scope of misinterpretation.

This, no doubt, ensures much better dealing and fair practice in property transactions.

3. Completion Deadline

This is one of the biggest pluses of the Housing Development Act when you see it from the buyer’s perspective.

The sale and purchase (SPA) agreement clearly state the project completion and delivery date.

Under schedule H (strata titles) is 36 months while Schedule G (landed property individual titles) is 24 months upon the SPA signing date.

So that means both the buyer and the seller are bound by this date to deliver and accept on the pre-determined schedule.

This cuts out the biggest uncertainty from sell and builds model properties. Even if your property is under construction, you know when you will get delivery of the same.

4. Delay in Completion and Its Penalty

The developer is liable to pay penalty for any delay completion of the project. The late delivery interest is calculated on a day to day basis at 10% per year rate of the SPA price.

That means if the developer does not deliver on time, they will have to pay a hefty penalty to every buyer. It, therefore, makes timely delivery a necessity for the developer.

5. Specify Building and Materials SPEC

The details of the building material and SPEC are also clearly stated in the SPA.

As a result, the buyer is making an informed choice about the kind of property that they are buying.

Even after handing over the property, the buyer has 24 months time to report any faulty workmanship or damage. Thanks to this Act, the developer is bound to rectify them without any charges.

6. The Relevant Approved Plans of the Property

This is the other major uncertainty that is ruled out by the Housing Development Act.

Once the sale agreement is drawn, the property plans cannot be altered without the approval of legal authorities.

This protects the buyer interest and mitigates chances of the developer cutting corners or misappropriating buyer money.

Not All Properties Come With HDA Protection

However, as we mentioned, not all properties are covered by the Housing Development Act.

Below properties are protected by HDA:

1. Residential Title Project (New development)

The Housing Development Act (HDA) is primarily meant to safeguard the interest of residential buyers. The residential title means that the property is primarily developed for accommodation purpose.

This means all new development of residential title project across Malaysia come under cover of HDA.

So whether you are a first-time buyer or going for your second home, buying from a developer under HDA offers a sense of assurance and fair practice.

2. Commercial Title Project with HDA (New development)

There are some commercial properties that also come under the HDA, eg: serviced apartments or SoHos. They are partly used for business and partly for residential purpose, they come under the Housing Development Act.

3. Resale Projects (with HDA) That Are Within Developer Defect Liability Period

Even you buy a sub-sale property from the first buyer, as long as the property is still under the developer defect liability period, you are still protected by HDA.

Below Properties Are Not Protected by HDA

1. Fully Commercial Property

So basically the HDA covers properties that primarily have a residential title while fully commercial ones like retail shops, office spaces and industrial units are not covered by this Act.

Therefore, you must carefully study the sale and purchase (SPA) agreement before committing any cash in such properties.

The terms of SPA, in this case, are dictated by the contract document as decided by the buyer and seller.

A little background check is also necessary to ascertain the credibility of the developer and the track record that he has in the market.

2. Resale property after Developer Defect Liability Period

If you have decided to buy a property from the secondary market, you are going to miss the HDA cover.

By secondary market, you agree to buy the house as it is, or in other words, when existing houses are sold as per what you agree to purchase, the risk is much lower compared to committing a house that is yet to build.

Therefore, when you are buying this sub-sale property, be careful to check all details like a floor plan and terms of the SPA.

Though it is a residential title, you cannot seek any redress after the deal is done and the house is bought.

3. Built Then Sell Model

In this case, the developer first builds the property, gets the certificate of completion and compliance (CCC) and then offers it for sale.

As a result, the buyer only starts to make payment after the project is completed, so it does not fall under the HDA ambit.

But currently, very few developers are adopting this Built Then Sell model due to developers need to come out with a lot of money to complete the projects first before getting any money from the buyers.


Investing in a house is often a once in a lifetime affair for most Malaysians. They gather their life savings to buy the house.

Therefore, the Housing Development Act (HDA) is pretty much one of the most important forces that ensure fair practice across the real estate sector in Malaysia and safeguards the buyer’s interest.