According to the Housing and Local Government Ministry, a development is called a ‘sick project’ when it has been delayed by more than 30% compared to its scheduled progress or has its SPA lapsed.

Currently, there are almost 23% of Malaysian homebuyers who are affected by purchasing ‘sick projects.’ The last 2 years of the COVID-19 pandemic have seen a 59% increase of ‘sick projects’, based on Government statistics.

You may have heard horror stories of homebuyers who bought into projects that eventually became ‘sick.’ Many experienced the trauma of not knowing whether construction progress will ever continue in the future.

‘The Liquidated Ascertained Damages (LAD) clause is there to cover predicted losses because of the delay or failure to deliver vacant possession of the property as per the agreement between the parties,’ says Jeremy Tan, an advocate and solicitor based in Rawang. ‘An extension of time to deliver vacant possession inevitably delays the homebuyer’s possession and use of the property. Such an event will also affect the calculation of the Homebuyer’s LAD claim.’

However, if the developer abandons the project, LAD recovery will not be possible anymore. ‘In the event the Developer goes into liquidation and abandons the project, the rescue developer would seek to protect themselves by requiring the Homebuyer to forgo his or her LAD claim for late delivery. On top of that, the rescue developer may require the Homebuyer to pay extra on top of the purchase price,’ said Tan. Tens of thousands of Malaysian homebuyers have already suffered the fate of crushed dreams when they bought into abandoned housing projects.

So how can you protect yourself from this situation in the first place? Taking precautions is important when choosing a home. After all, it’s a commitment that takes a big portion of your savings. It’s better to be safe than sorry.

Buy Completed Projects

Both completed or off-plan properties have their own advantages and disadvantages. An off-plan property often sells at a lower price than completed projects. This could serve as a great investment for the long term once the value appreciates. However, unlike completed projects, off-plan properties are at risk of becoming ‘sick’ projects. There are situations that could arise which are out of the developer’s control. For example, the effects of the COVID-19 pandemic.

With a completed property, what you see is what you get. There will be no construction delays to worry about. After purchase, you can immediately move in or rent it out.

Find a Reputable Developer

It’s important to ensure that experts are handling your property. A trustworthy developer has the experience to deliver quality projects. They are also more likely to hit their target completion date. Tan advises homebuyers to speak to industry experts for better insight into which developer you can trust. A property agent who prefers to remain anonymous suggests that homebuyers ‘do their own self-study on the developer and project before making a final decision.’

According to Tan, a homebuyer could assess a developer based on the following list of questions as starting points:

- Is the developer blacklisted by the Ministry of Housing and Local Government?
- Does the developer have a developer license (Advertising Permit and Developer License (“APDL”)) to sell the development, project and/or property in question?
- Does the developer have a showroom or sales gallery to visit?
- What is the overall reputation of the developer?
- Does the developer have a good track record in terms of delivery and completion of their projects?
- Does the developer have good construction practices? If there were instances of delays in previous or existing projects, were they unavoidable?

Choose a High-Demand Location

There are many things that can change about a home including the condition, size, and price. The only thing that will never change is the location. It is among the main factors that determine the value of your property in the long run. One way to safeguard your investment is by purchasing a property in a high-demand location. It should include a good surrounding infrastructure along with nearby amenities. You will likely get more returns and the demand will be there for a foreseeable future.

View all the top neighbourhoods in Malaysia here.

Selecting a project in a key location also increases the chances of developers to market and sell their projects with more ease. They will then be more likely to secure enough sales to satisfy cash flow requirements to complete the project.

By following the tips above, you could be saved from all the heartaches in the future. As a homebuyer, doing your research is the most crucial part of finding a dream home that will become a reality.

Looking for more information on property developments? Read honest reviews and browse through PropSocial for all your research needs:


Jeremy Tan and Company
Anonymous agent from The Roof Realty

(Written by Michelle Yoon, 8th August 2022)