Property buyers who are finding it hard to make payments on account of the Covid-19 pandemic can get 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 kicked in on April 20 and covers rental contracts in the industrial and commercial sectors as well as certain loans for small businesses, has been extended to the purchase of homes.
The relief measures will last for six months, with the possibility of being extended for a further six months.
The aim is to help buyers affected by the pandemic hold on to the Housing Board flat or private property they have committed to buy, or – at least – guard against their deposit or booking fees being forfeited should the outbreak make it difficult for them to stick to their end of the deal.
“Members of the public have written to us to convey their difficulties in making payments under their OTP (option to purchase) and S&P (sale and purchase) agreements with developers because of Covid-19. Such buyers stand to lose their booking fees or deposits. We are also aware that buyers facing such difficulties have been working with their developers, and URA’s Controller of Housing, to extend the validity of their OTPs,” a Ministry of Law (MinLaw) spokesman told The Straits Times.
“We have considered these concerns, and have decided to provide some relief, in particular for those buyers who are unable to arrive at a mutual agreement with the developers,” MinLaw said.
But only agreements between home buyers and developers for private housing and the 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.
In other words, as long as the contracts were signed before March 25, home buyers can opt to defer progress payments and down payments to developers and the HDB from Feb 1 until Oct 19. But these payment sums will continue to accrue and will be payable after Oct 19.
During the relief period, developers cannot terminate the agreements 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,” said Mr Karamjit Singh, chief executive of Showsuite Consultancy.
He added: “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 also 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 for late payment that are not provided for in their contracts, even though a notification for relief has been served.
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.
The Real Estate Developers’ Association of Singapore (Redas) said the relief measures will help genuine buyers during these challenging times.
“Redas shares the Government’s views that contracting parties face considerable constraints on many fronts,” it said.
Update from : The Straits Times, 14 May 2020