What is HDA (Act 118)? The Housing Development Act explained for buyers - who it covers, the HDA account, Schedules G and H, LAD and the Tribunal
HDA is the Housing Development (Control and Licensing) Act 1966 - Act 118 in the Laws of Malaysia - the statute that regulates anyone developing more than four units of housing in Peninsular Malaysia. Under it, a developer must hold a licence and an advertising-and-sales permit (Section 5), keep every ringgit you pay in a Housing Development Account held on trust for completing the project (Section 7A), and sell you the home on a statutory contract - Schedule G for landed, Schedule H for strata - that fixes the payment stages, a delivery deadline of 24 months (G) or 36 months (H), liquidated damages of 10% a year for late delivery, and a 24-month defect liability period. Disputes up to RM50,000 go to the Tribunal for Homebuyer Claims (Section 16M) for a RM10 filing fee.
Since the 2007 amendment, serviced apartments and other homes on commercial land are inside the Act if they are built for people to live in. Offices sold as SOHO or SOVO usually are not. That is the whole difference between an "HDA project" and a "non-HDA" one: same building style, completely different legal floor under your money.
Which properties and developers does Act 118 cover?
Any licensed housing development of more than four units in Peninsular Malaysia, on residential or commercial land, if the units are meant for living in. Section 3 of the Act (Act 118 reprint) defines housing development as developing "more than four units of housing accommodation", and housing accommodation as any building "wholly or principally constructed, adapted or intended for human habitation or partly for human habitation and partly for business premises". The Housing Development (Control and Licensing) (Amendment) Act 2007, in force 12 April 2007, removed the old requirement that the land be zoned residential - so a serviced apartment on commercial title that is built to be lived in is a housing accommodation (Malaysian Bar Q and A on the 2007 amendment).
Outside the Act: developments of four units or fewer; Sabah and Sarawak (own ordinances); and commercial units that are genuinely offices or shops - the SOHO, SOVO and SOFO products marketed as "residential-like". Whether a given tower is inside depends on what its title and approval say it is for, not on the marketing. Serviced apartment vs condo and SOHO, SOVO, SOFO vs condo walk through the product types.
Licensing has teeth. Section 6 requires a company applicant to have RM250,000 paid-up capital and to lodge a deposit of 3% of the estimated construction cost with the Controller of Housing; Section 18 makes developing without a licence an offence carrying a fine of RM250,000 to RM500,000, imprisonment up to five years, or both; and Section 18A (added by the 2012 amendment, in force 1 June 2015) makes abandoning a project an offence with the same fine range and up to three years' jail. Every licensed project is on KPKT's TEDUH register - check any name in our free project check.
What does an HDA project actually give you?
Five statutory protections, each traceable to a section or schedule:
| Protection | Where it comes from | What it means |
|---|---|---|
| Housing Development Account | Section 7A | Your purchase money goes into a project account |
| Statutory SPA | 1989 Regulations, Schedules G, H, I and J | Contract terms are prescribed |
| Progressive payments | Third Schedule of Schedule H | 10% on signing, then by certified stage |
| Delivery deadline | Schedule G clause 24 / Schedule H clause 25 | Vacant possession in 24 months (G), 36 months (H) |
| LAD for late delivery | Schedule G clause 24 / Schedule H clause 25 | 10% per annum of the purchase price, day by day |
| Defect liability | Schedule H clause 30 | Developer fixes defects, 24 months from VP |
- Housing Development Account - The developer must open an HDA account per project (per phase if phased) and pay your purchase money into it; withdrawals are restricted to what the regulations allow. Your instalments fund your building, not the developer's other debts.
- Statutory SPA - Schedules G (landed) and H (strata) of the 1989 Regulations; I and J for build-then-sell. The contract terms are prescribed - the developer cannot rewrite the delivery period, payment stages or defect period in its favour.
- Delivery deadline - Counted from the SPA date - or from the booking-fee date if one was collected (Federal Court, PJD Regency, 2021).
- LAD for late delivery - Late: liquidated damages at 10% per annum of the purchase price, day by day. How to claim is in LAD claims.
- Defect liability - Defects appearing within 24 months of vacant possession must be made good by the developer at its cost.
Progressive payments - stage payments against certified construction:
- On signing: 10%
- Construction stages: 10% below ground, 15% structural frame, 10% walls, 10% roofing and wiring, 10% finishes, 5% sewerage, 2.5% drains, 2.5% roads
- At vacant possession: 17.5%
- On strata title transfer: 2.5%
- Held by the developer's solicitor as stakeholder: 5% - released 2.5% at 8 months and 2.5% at 24 months after VP
Two more that matter when things go wrong. Section 8A lets you terminate the SPA if the developer stops work for six continuous months after signing, provided your bank consents and the Controller certifies the stoppage. And regulation 11(2) bars anyone from collecting any payment "by whatever name called" except as the statutory contract prescribes - which is why a booking fee before the SPA is unlawful and recoverable: see booking fee refunds.
What is the Tribunal for Homebuyer Claims and what can it award?
A fast, cheap forum for claims against a developer up to RM50,000, no lawyer needed. Section 16M of Act 118 gives the Tribunal Tuntutan Pembeli Rumah jurisdiction where the award sought "does not exceed fifty thousand ringgit"; Section 16O lets both parties agree in writing to extend that limit. The claim must arise from the SPA (Section 16N), and since the 2012 amendment the Tribunal can also hear claims against an unlicensed developer. Filing costs RM10 (law firm MahWengKwai's guide), and the claim must be lodged within 12 months of the certificate of completion and compliance, the expiry of the defect liability period, or the SPA termination date, whichever applies.
Typical Tribunal claims: LAD for late delivery, defects not rectified within the 24-month period, refund of unlawful booking fees, and the developer's failure to deliver what the SPA's building description promised. Above RM50,000 - which a 12-month delay on a RM600,000 home already is - you go to court, or you agree with the developer to let the Tribunal hear the larger sum. A homebuyer under the Act includes a subsequent purchaser, so subsale buyers of a recently completed unit can also claim within the window.
What does 'non-HDA' mean for you in practice?
It means every protection above is replaced by whatever the developer wrote into its own contract. As law firm Lui and Bhullar summarises the difference: an HDA sale uses the prescribed Schedule G/H/I/J form and a delivery period the Housing Controller cannot waive; a non-HDA sale is an ordinary commercial contract in which "developers can willy-nilly choose any period for delivery", may hand over on a partial completion certificate rather than the full CCC, and owe LAD only if their own contract says so.
Practical checklist before booking anything marketed as a serviced residence, SOHO, SOVO or "commercial-title residential":
- Ask for the APDL number and check it on TEDUH. An HDA project has one; a non-HDA one does not.
- Ask which Schedule the SPA follows. "Schedule H" is the answer you want. "Our own SPA" means non-HDA.
- Ask where your money goes. HDA account, or the developer's general account.
- Read the delivery and LAD clauses in a non-HDA contract before you sign - they are all you will have.
- Budget for commercial rates on utilities and assessment if the title is commercial, HDA or not.
Non-HDA is not automatically a bad buy - many serviced apartments and SOHOs complete on time. It is a buy with less law behind it, and the price should reflect that.
Frequently asked questions
What is an HDA project?
A housing development licensed under Act 118: the developer holds a KPKT licence and sales permit, your payments go into a Housing Development Account, and you sign the statutory Schedule G or H contract with its fixed delivery period, LAD and defect liability. Almost every condo, terrace and serviced apartment built for living in Peninsular Malaysia is one.
Are serviced apartments covered by HDA?
Yes, since the 2007 amendment (in force 12 April 2007), if the units are intended for human habitation - even on commercial land. SOHO, SOVO and SOFO units approved as offices generally are not, unless the Minister has prescribed them under Section 3A.
What is the maximum deposit a developer can take?
10% of the purchase price, payable on signing the SPA (item 1 of the Third Schedule to Schedule H). Nothing may be collected before the SPA - regulation 11(2) - so a "booking fee" is not a lawful deposit.
How much is LAD under HDA?
10% per annum of the purchase price, calculated day by day from the delivery deadline until vacant possession is delivered (Schedule H clause 25(2); Schedule G clause 24). On RM500,000 that is roughly RM137 a day.
Does HDA apply in Sabah and Sarawak?
No. Act 118 applies to Peninsular Malaysia. Sabah's Housing Development (Control and Licensing) Enactment and Sarawak's Housing Development (Control and Licensing) Ordinance regulate developers there, with their own forms and tribunals.
What is section 433B of the National Land Code?
A different law: section 433B of the National Land Code 1965 is the provision requiring State Authority approval before a non-citizen or foreign company acquires land. It is not part of HDA - see state consent for foreign buyers.
Section and schedule references are to Act 118 and the Housing Development (Control and Licensing) Regulations 1989 as amended (P.U.(A) 106/2015), read from the published reprints and law-firm commentary in September 2026. General information, not legal advice - for a specific SPA, have your conveyancing lawyer read the actual document.