What is the Housing Development Act (HDA) in Malaysia?

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What is the Housing Development Act (HDA) in Malaysia? 1
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Buying a house is a big decision given the amount of money at stake. When you buy a house, you’re making a long-term commitment to that house and everything that comes along with owning a home. 

Of course, buying a property comes with careful evaluation and proper research – but it does not have to be difficult. Many new home buyers are not aware that their interests are actually protected under existing legislation, called the Housing Development Act which was established in 1966.

Essentially, the HDA is the mother of all housing development regulations in Malaysia that protects the interests of residential title home buyers against developers for a specific period. Protections include defect liability period, management of strata title issues, and safeguard of buyer-related conflicts, disputes, and claims against unscrupulous developers.

If you are planning to buy a residential property, here’s what you need to know about the HDA:


What is HDA?

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The HDA was formerly known as The Housing Development (Control and Licensing) Act 1966 (Act 118) until the Amendment Bill became law – which is what we call the Housing Development Act today.

The HDA serves two main functions whereby its provisions detail the licensing rules of housing developers and their associated duties and responsibilities, which in turn serves to fundamentally protect the interests of purchasers of a housing accommodation.

Since its implementation, the HDA 1966 has undergone a number of amendments in the effort to better regulate residential developers and keep it in sync with the existing challenges of home buyers. To a great extent, each amendment has always resulted in stricter rules being imposed on developers and greater protection of home buyers.


What are the protections under the HDA?

Prescribed Sale and Purchase Agreement (SPA)

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The HDA has mandated a standard format to the statutory Sale and Purchase Agreement (SPA), which, in simple terms, is an agreement for property transactions that signifies a developer agrees to sell and a purchaser agrees to purchase a property. 

No matter if a home buyer buys a landed residential property such as a terrace or bungalow, or a residential unit in a subdivided building, such as a flat or condominium, the developer must adopt a standard agreement prescribed by regulations made under the HDA.

This means that the developer has no liberty to remove the protection given to the purchaser in the standard agreement, and that buyers will be able to grasp the intricacies a lot better and be on top of the standard procedures in play. Any terms inserted by the developer to change the agreement are not valid.


Mandatory Advertising Permit and Developer’s License (APDL)

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The Advertising Permit and Developer’s License (APDL) is an advertising license given by the local housing ministry to developers. Developers of residential properties need to apply for the APDL before they can start placing advertisements and sell their products.

Basically, the APDL was formed to prevent any wrongdoings and to ensure developers have proper authorisation and compliance to advertise and sell a property. The government will require information such as 

  • the name of the licensed housing developer,
  • what is being launched,
  • at what price the land is being sold or bought, 
  • the expected completed date of the property, 
  • number of units available, 
  • the number of parking lots, and all the development details.

That way, consumers are protected from any potential deception or false advertising.

The importance of these details comes forth when serious problems present themselves. For instance, if for some reason you need to take a developer to court, then the APDL will be a big help. 


Defect Liability Period

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If a home buyer purchases a primary residential property, the standard Sale and Purchase Agreement (SPA) has a defect liability period clause thanks to the Housing Development Act. This is basically a warranty period for a new house, whereby the defect liability period spans 24 months from the date a buyer receives the keys to their new home, or in another term, known as the time a developer delivers the Vacant Possession (VP) to a purchaser.

Serving as a guarantee, the defect liability period empowers purchasers to bring legal action against the developer with the relevant authorities for breach of contract.

During this time, if a problem is found in your property, you can file a report with the developer and they are obliged to repair faulty workmanship discovered at no cost to the buyer. Defects may include defective workmanship or materials, incomplete construction work, or work not conforming to the plans or specifications as stated in the SPA. 

Thus, it is advisable for first-time homebuyers to do a thorough home inspection during this timeframe, prior to the commencement of any renovation work, to identify any defects such as cracks, uneven surfaces, holes and chips, missing plaster, fungus and watermarks, or lumps and flaky paint, to name a few examples. Otherwise, you will be shouldering the repair costs for defects spotted after this period.

Additionally, if the unit is strata titled, the buyer will also get additional legal protection under the Strata Title Act of 1985 and Strata Management Act of 2013. These Acts deal with the management and maintenance of the building and common property in the developments.


Housing Development Account (HDA Account)

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A Housing Development Account (HDA) is a bank account opened and managed by a housing developer. It is a mandatory requirement that all housing developers who carry out housing development open an HDA Account – whereby all payments received from the sale of houses in a housing development project must be channelled into the developer’s HDA account. 

With an HDA account, buyers’ rights are protected as the funds are channelled properly. Developers are only allowed to use the funds subject to the conditions of the Housing Development Act. This includes paying for items such as taxes, quit rent, assessment rates, levy charges, stamp duty, insurance premiums, consultants/architects/engineers’ fees, and costs of construction.


Homebuyer’s Tribunal

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Under the HDA, there is a special tribunal set-up, called the Homebuyer’s Tribunal – or more formally known as the Tribunal for Homebuyer Claims – to address all buyer-related disputes and conflicts between the purchaser and the developer. Claims at the Homebuyer’s Tribunal are generally inexpensive as there is no need for lawyers.

The Homebuyer’s Tribunal has the power to determine any claim lodged by the homebuyer for any loss suffered or any matter concerning the homebuyer’s interest as a homebuyer arising out of the Sale and Purchase Agreement such as defective workmanship, defective materials, or property not constructed in accordance with the approved plans stated in the SPA.

In case of dispute from the developer, a buyer can raise the issues to the tribunal by submitting a claim for defects according to the HDA’s prescribed contracts. Hence, the HDA pressurises the developers to abide by the law and instill a sense of accountability as developers can be fined or even get imprisoned if convicted.

The claims are limited up to RM 50,000, but it surely is a simple, easy, and quick way for homebuyers to fix any complaints and potential dispute elements with the developer.

If your claims are more than RM50,000, it is probably a wiser option to proceed to bring legal proceedings in Court to obtain a judgment against the housing developer.

It is important to know that there is a time limit for filing a claim to the tribunal, which is within 12 months from either:

  1. The date of issuance of the Certificate of Completion and Compliance (CCC) of the property; or 
  2. The expiry of the defects liability period as set out in the SPA; or
  3. The date of termination of the sale and purchase agreement if the agreement was terminated before the date of issuance of the CCC.

Additionally, if the property is strata titled, defects involving common property are claimable. Homeowners are also entitled to an additional retention sum under the strata regime as ruled by the Commissioner of the Buildings (COB).


Special Cases

All new development of residential title projects across Malaysia come under the protection of the HDA. However, there are also some unique additions to this list.


Commercial-titled residences

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There are some commercial properties that also come under the HDA, for instance: serviced apartments or SoHos. As these properties are partly used for business and partly for residential purposes, buyers will sign standard SPAs regulated under the HDA and be entitled to its due protection.


Sub-sale Projects that are within the Defect Liability Period

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As mentioned earlier, new homes in Malaysia are warrantied against defects for 24 months. However, if a new owner buys a sub-sale property from the first buyer, as long as the property is still under the developer defect liability period, they are still protected by HDA.

It is crucial that the original buyer’s right to make claims within the warrantied period is transferred to the new owner so that the latter can make a claim for defects if identified, and have them fixed by the developer at no cost as stated in the contracts regulated by the HDA.


What Properties are Not Protected Under the HDA?

It is important to note that not all properties are covered by the Housing Development Act,  and these properties are labelled as non-HDA.


Fully Commercial Property

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Fully commercial developments like retail shops, office spaces, SoVo, SoFo, Business Suite, Office Suite, and industrial units are not governed by the HDA and are classified as non-HDA properties.

This is because the properties are essentially offices/retail businesses and are not meant for dwelling purposes.

The terms for commercial property transactions are purely based on the contractual agreement between the buyer and seller. Since this is not a standard agreement, purchasers need to read the SPA carefully and check for any hidden clause on the contract which is may unfavorable to a purchaser before committing any cash to such properties.

A little background check is also necessary to ascertain the credibility and track record of the developer in the market to ensure risks like the developers abandoning the project due to lack of financing or projects not meeting deadlines can be lowered.


Secondary Market Property after Defect Liability Period

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If you are buying a sub-sale property, also known as a sale from the secondary market, you are going to miss the HDA cover. Sub-sales are not within the purview of the Housing Ministry & Local Government and do not enjoy the protection accorded to purchasers who buy new residential properties from developers. Hence, there is usually no defect liability period in sub-sale contracts.

Generally, by the meaning of secondary market, a property is sold on an ‘as-is basis’, which means a purchaser agrees to buy the house as it is after site inspection. 

In other words, the new owner will know what they are actually getting for the money they paid, as compared to new developments where buyers can only imagine what the view would be like. 

However, when buying a sub-sale property, buyers need to carry out their own due diligence work and be careful to check all details like a floor plan, upgrades or extensions that were performed previously, and terms of the SPA before signing to avoid any future dispute. Though it is a residential title, you cannot seek any redress after sealing the deal.



Buying a home is one of the greatest investments to make for most Malaysians. The best and least stressful way to purchase a home is to be well educated throughout the process.

Again, the Housing Development Act (HDA) plays a significant role to safeguard the interest of residential buyers. Hence, it is one of the most important forces to understand to ensure fair practice across the real estate sector in Malaysia. Before buying a house, check on whether a property is residential or commercial as they both hold different titles which are regulated by different laws, rules, and regulations.

Hopefully, after reading this article, you know more about the HDA and how it protects you as a homebuyer in terms of resolving any damages or issues that you might find at your new home.

If you’re still unsure about HDA and the nitty-gritty details surrounding it, feel free to drop us a line in the comment section below!

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