Unlike subsale developments which involves applying for loans from different banks and property buyers evaluating the properties, buying an under construction property in Malaysia (ie, New Development, means that the development will have a Payment Schedule.
The Payment Schedule is a payment scheme that is applicable only to new and ongoing developments. In this case, the payment goes directly to the developer. (For subsale developments, the payment goes directly to the previous owner).
Usually, the payment that needs to be made to the developer depends on the stage of the development’s completion. The payment are broken down into 5 main stages, mainly:
- Signing of SPA
- Various completion stages of the development
- Vacant Possession
- Submission for subdivision of building
- Final payments
- Signing of SPA
SPA is the first, and most important documents that a property buyer will sign upon purchasing their property. It is the document that dictates the blueprint of the property that the buyer is purchasing, and all the details of the property from the number of parking lots. These documents are always signed in front of a lawyer, who will explain to the purchaser all the terms.
Upon signing the SPA, the property purchaser will need to immediately make 10% payment on the property. - The Completion Stage
Upon signing of the SPA, the purchaser may or may not need to begin servicing their installment immediately.GROUND LEVEL
For residential title, if the land is not even cleared yet and piling of the building has yet to begin, and if the property is a residential development protected under the Housing Development Act (HAD), then the property purchaser will not need to begin payment.
For commercial title, commercial property buyers may have to being servicing their loan immediately, depending on the terms and conditions stated within the SPA.
The payment for both residential and commercial developments are however the same, at 10% of the full installment rate, once the development begins its piling and foundation works.STRUCTURAL FRAMEWORK
The structural framework is where the concrete framework and floor slab of the development begins. This is where the actual construction of the development begins.
In this case where the purchaser had an 80% loan, they will only begin their loan repayment from this stage.
At this point of development, the developer will claim 15% of their monies from the bank.
Thus, the purchaser will continue to make the same amount of payment, until the development reaches their floor. This meaning the purchasers that bought units on the lower floors will need to begin their next stage of instalment earlier than the purchasers who bought units on the higher floor.WALLS WITH DOOR AND WINDOW FRAMES PLACED IN POSITION
This is the stage where the development has reached the purchaser’s floor. At this stage, the purchaser will also need to start paying an additional 10% of their loan.ROOFING, WIRING AND INTERNAL TELEPHONE TRUNKING AND CABLING
When the development reaches the stage of fixing the wirings, the purchasers will then need to up their instalment by 10%.SEWERAGE WORKS
Following the fixing of the wirings, the developer will then begin sewerage works on the development. The additional instalment at this stage will be 5%.
INTERNAL AND EXTERNAL PLASTERING
Beginning the plastering of the development, the purchaser will then need to begin an additional instalment of the 10%.DRAINS SERVING THE BUILDING
Upon completion of the plastering, the developers will then begin building the drains that serve the building. At this point, another 5% will be added to the instalment at this stage.ROADS SERVING THE BUILDING
When the developers begin building and fixing the roads to the development, purchasers will need to begin paying an additional 5% of their instalment. - Vacant Possession
At the Vacant Possession stage, the development will be completed. The purchaser will however not be paying the final sum of the instalment yet, until they get Vacant Possession of their unit. At this point of time, the water and electricity supply will also be ready in every unit.
As soon as the unit owners obtain the keys to their unit, they will need to begin serving full instalment to the bank – of an additional 12.5%.
Approximately within 6 months of the development’s completion, the unit owners will then need to pay their Memorandum of Transfer (MOT) fee. After completing the payment of their MOT, the unit owner will then be in full possession of their unit.
