Relief for home buyers with payment issues
For contracts signed before March 25, buyers may defer payments until Oct 19 under new law
Property buyers who are finding it hard to make payments on account of the Covid-19 outbreak can get a temporary reprieve under a new law that buys time for individuals and businesses to satisfy the terms of their contracts.
The Covid-19 (Temporary Measures) Act, which began on April 20 to cover rental contracts in the industrial and commercial sectors as well as certain loans for businesses, has been extended to the purchase and lease of homes. The relief measures will last for six months, with the possibility of being extended for a further six.
The aim is to help buyers hold on to the Housing Board flat or private property they have committed to buy or - at least - guard against having them forfeit their deposit or booking fees should the outbreak make it difficult for them to stick to their end of the deal.
A Ministry of Law (MinLaw) spokesman told The Straits Times: "Members of the public have written to us to convey their difficulties in making payments under... agreements with developers because of Covid-19. Such buyers stand to lose their booking fees or deposits.
"We have considered these concerns, and decided to provide some relief, in particular for those buyers who are unable to arrive at a mutual agreement with the developers."
But only agreements between home buyers and the developers for private housing or HDB are covered. And these contracts must have been entered into before March 25, with payments due on or after Feb 1. Agreements between individuals are not covered.
OPT TO DEFER
In other words, as long as the contracts were signed before March 25, home buyers can opt to defer progress payments and down payments from Feb 1 until Oct 19. These payment sums will continue to accrue and will be payable after Oct 19.
During the relief period, developers cannot terminate the agreements based on buyers' non-payment. But if deposits or booking fees have already been forfeited, they will not get any relief.
"This is not a free pass for a buyer to terminate a purchase contract with a developer. This also does not cover a sale and purchase contract of a resale property," Mr Karamjit Singh, chief executive of Showsuite Consultancy said.
"Likewise, this new provision also includes property developers who may now need some temporary relief from being sued for failing to fulfil contractual obligations arising from Covid-19."
Additional actions relating to the "unilateral increase of charges" are now prohibited under the enhanced Act.
MinLaw said it has received queries and feedback that some parties are seeking to impose additional interest and charges, not provided for in their contracts, for late payment.
In cases where affected parties are allowed temporary relief from making payments, landlords are not permitted to unilaterally increase interest rates or impose new charges on delayed payments.