SINGAPORE - Property buyers who have difficulties in making payments because of the Covid-19 pandemic can get temporary reprieve under a new law that gives individuals and businesses more time to satisfy contractual obligations.
The Covid-19 (Temporary Measures) Act will now be expanded to cover option to purchase (OTP) agreements and sale and purchase (S&P) agreements or agreements for lease (AFL) for residential properties. The changes took effect on Wednesday (May 13), said the Ministry of Law.
The enhancements are aimed at helping buyers affected by the pandemic hold on to the HDB flat or private property that they have committed to buy.
But only agreements between home buyers and developers for private housing and Housing and Development Board (HDB) are covered. Like other contracts covered by the Act, these contracts must have been entered into before March 25, with payments due on or after Feb 1.
In other words, as long as the contracts were signed before March 25, home buyers can opt to defer making progress payments to developers and HDB from Feb 1 until Oct 19. But downpayments and progress payments will continue to accrue and will be payable after Oct 19.
The relief period is for six months, from April 20 to Oct 19, and may be extended by another six months.
During the relief period, developers cannot terminate the agreements with home buyers.
The Act, which kicked in on April 20, already covers contracts for rentals in the industrial and commercial sectors, construction and supply contracts, and certain secured loan facilities granted by a bank or a finance company to small and medium-sized enterprises.
The latest changes come after MinLaw received feedback that some home buyers who have entered into these agreements are facing difficulties making payments because of Covid-19, and as a result, risk lose their booking fees or deposits.
But if deposits or booking fees have already been forfeited, they will not get any relief.
Mr Karamjit Singh, chief executive of Showsuite Consultancy, noted that the expanded provisions allows buyers caught in a difficult situation to seek up to six months of extra breathing room to make payments for their new home purchase. In the meantime, the developer cannot terminate the contract and forfeit the deposits paid by the buyer.
"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," he said.
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."