Developers of projects with safety issues or defects may be barred from buying land, selling homes

SINGAPORE – Property developers who deliver private homes with serious safety issues or defects can be barred from bidding for government land and selling homes for up to five years.

Such issues include regulatory breaches that result in fire hazards or walls collapsing, as well as defects such as broken windowpanes and visibly cracked tiles.

“There is scope to strengthen deterrence against severe errant developer behaviour, to provide greater protection for home buyers,” the Urban Redevelopment Authority (URA) said in a joint circular on May 22 with the Ministry of National Development and the Building and Construction Authority.

However, it noted that the new measures will not affect the majority of developers as most have complied with the existing rules on quality standards.

Under the new rules, which take effect from May 22, a no-sale licence condition could be imposed on errant developers’ future unlaunched projects. This means that they can start construction but they cannot sell the homes.

They may also be disqualified from participating in government land sales (GLS) for sites with residential components. These refer to land that is zoned as residential, residential with commercial on the first storey, commercial, commercial and residential, hotel and white sites. 

However, they would still be able to take part in private land sales, such as collective sales of residential projects between existing property owners and developers.

On why the safeguards are being beefed up now, Professor Sing Tien Foo, provost’s chair professor of real estate at NUS Business School, noted that it would be hard to fully eliminate errant developers, “as more new and inexperienced developers are entering the market, and some are short-term developers with the intention of making short-term profits in the heating property market”.

“The new measures would further weed out these short-term developers. However, these measures would not affect most developers who are in the business for the long term and would like to build a reputation,” he said.

These new safeguards send a clear signal that severe or recalcitrant non-compliance will not be tolerated, the Real Estate Developers’ Association of Singapore (REDAS) said in response to The Straits Times’ queries.

“Among REDAS members, there are no instances of such non-compliance,” a spokesperson for the association added.

REDAS said it will “look into suitable actions against any members who are disqualified or suspended”.

“We also welcome the built-in procedural safeguards, including early warnings and the opportunity for developers to make representations or undertake rectifications before any penalties are determined,” the spokesperson said.

The URA added that these penalties can also apply to a firm’s directors and others “with influence over the (developer’s) business decisions”.

In assessing the penalties to be meted out to errant developers, the authority said it would look at various factors.

These include the number and severity of regulatory breaches and major defects in a housing project that are attributable to the developer, in relation to the scale of the project.

However, this will be limited to defects that developers have been given reasonable notice to rectify.

Other factors in the assessment of penalties include the time taken for the developer to rectify the instances of non-compliance and defects, the extent of their impact on home buyers, and whether safety and liveability are affected.

Any relevant aggravating or extenuating circumstances faced by the developer, and the extent of relevant parties’ control over the errant developer, will also be considered, the URA said.

It added that errant developers and relevant parties will be given early warnings and opportunities to make rectifications.

The land sales disqualification and/or general sales suspension periods will commence on the date stated in the authorities’ notification to the errant parties, while the project-specific sales suspension period will begin on the date of issue of the housing developer’s licence, the URA added.

Where an errant developer and relevant parties are subject to land sales disqualification and/or sales suspension periods for one or more housing projects, the periods may apply concurrently and/or consecutively.

In 2022, ST reported that MCC Land (TMK), the developer of Sceneca Residence, a 268-unit leasehold condominium in Tanah Merah, was hit by a no-sale licence. That meant that at the time, MCC could start construction, but could not sell units off-plan without approval from the Controller of Housing. Representatives for MCC declined to say at the time why the no-sale licence was issued.

Sceneca Residence was built on a GLS site awarded to MCC Land (Singapore) in November 2020 at $248.99 million.

In January 2019, a ban on sales had also been applied against Kingsford Huray Development’s 1,862-unit Normanton Park condo.

It came after a raft of complaints from owners about shoddy workmanship and poor amenities at the developer’s other projects, including Kingsford Waterbay.

But the ban was lifted on Nov 30, 2020, and a sales licence for Normanton Park was issued to Kingsford Huray after it completed Kingsford Waterbay with a certificate of statutory completion and titles issued.