News & Articles Late delivery charges may be a thorny issue
Late delivery charges may be a thorny issue
22 Jan 2021
PETALING JAYA: The decision by the Federal Court on late delivery charges paid by developers to house buyers could be an issue for property developers, according to Maybank IB Research.
On Tuesday, Jan 19, the apex court ruled that developers must pay Liquidated Ascertained Damages (LAD), or late payment charges, based on the booking date instead on the formalisation date of the sales and purchase agreement (SPA).
Maybank IB, in a report said developers may now have to pay higher LAD.
“We see higher risks in developers which have more high-rise and mixed-use development projects, ” the research house said.
The report said it is maintaining a tactical positive on the Malaysian property sector for now, pending further information from the Housing and Local Government Ministry.
According to Chief Justice Tengku Maimun Tuan Mat, (pic) people, including developers, are prohibited from collecting booking fees under Regulation 11(2) of the Housing Developers (Control and Licensing) Regulations 1989.
The developers who are about to pay LAD, those who have already paid, or those who are already late in delivery would now have to pay more LAD as the transition between booking and SPA could take months to complete, the report said.
The research house saw “higher risks” among developers who have more high-rise units and mixed-use developments as the projects have more complicated substructure and take longer time to build.
It said the actual damages are difficult to ascertain at this juncture. Its checks with some industry players indicated that the LAD is retrospective and it is the potential losses which make it complicated.
On Tuesday, Jan 19, the apex court ruled that developers must pay Liquidated Ascertained Damages (LAD), or late payment charges, based on the booking date instead on the formalisation date of the sales and purchase agreement (SPA).
Maybank IB, in a report said developers may now have to pay higher LAD.
“We see higher risks in developers which have more high-rise and mixed-use development projects, ” the research house said.
The report said it is maintaining a tactical positive on the Malaysian property sector for now, pending further information from the Housing and Local Government Ministry.
According to Chief Justice Tengku Maimun Tuan Mat, (pic) people, including developers, are prohibited from collecting booking fees under Regulation 11(2) of the Housing Developers (Control and Licensing) Regulations 1989.
The developers who are about to pay LAD, those who have already paid, or those who are already late in delivery would now have to pay more LAD as the transition between booking and SPA could take months to complete, the report said.
The research house saw “higher risks” among developers who have more high-rise units and mixed-use developments as the projects have more complicated substructure and take longer time to build.
It said the actual damages are difficult to ascertain at this juncture. Its checks with some industry players indicated that the LAD is retrospective and it is the potential losses which make it complicated.
Source: The Star