Government extends all construction contract deadline by four months

November 4, 2020

Singapore HDB Flat

Affected homebuyers can seek reimbursement from developers, including the Housing and Development Board (HDB), for out-of-pocket costs due to construction delays, such as when they would have to rent a place for a longer period.

A bill passed in Parliament on Tuesday (3 November) extended the deadline of all construction contracts by four months due to COVID-19’s impact on the construction sector, reported TODAY.

Homebuyers can also seek reimbursement from developers, including the Housing and Development Board (HDB), for out-of-pocket costs due to construction delays, such as when they would have to rent a place for a longer period.

Private property buyers can be reimbursed by up to 70% of the liquidated damages payable in the purchase agreement. For HDB flats buyers, the formula is 10% per year of 60% of the new flat price.

Any disputes arising from reimbursement claims will be resolved by an independent assessor.

Recommended article: COVID-19 (Temporary Measures) Act: How Property Buyers Can Apply for ABSD, OTP and S&P Relief

Moreover, the COVID-19 (Temporary Measures) (Amendment No. 3) Bill – which was tabled in Parliament on Monday (2 November) and passed the following day – also allows contractors and sub-contractors to equally share any additional costs incurred due to the pandemic, such as costs incurred to rent construction equipment for a longer period of time.

These added costs, which excludes manpower costs, are subject to a monthly cap of 0.2% of the contract sum, while the total claimable amount is capped at 1.8% of the contract value. 

“The built environment value chain is very much interconnected and the impact to our construction sector has a cascading effect on the entire value chain,” said National Development Minister Desmond Lee as quoted by Today.

Aside from work suspensions, the construction sector suffered from cash flow issues and supply chain disruptions due to COVID-19 outbreak among foreign workers as well as the pandemic’s impact on the global economy.

Suggested read: 4 Financial Tips for Managing Your Property Amid the COVID-19 Crisis

Despite past relief provided to the sector, builders operate at reduced operating capacity due to on-site management measures, while the shortage in foreign workers have resulted to increased labour costs.

Lee noted that universal extension of four months will “reduce the administrative burden for contractors so that they can focus on restarting and ramping up work quickly and safely and adjusting to the new measures required”.

The four-month extension account for the two-month work stoppage during the circuit breaker period and the delay of another two months as health authorities clear migrant workers’ dormitories of COVID-19.

With the bill, housing, commercial and industrial property developers facing construction delays may serve a notice to property buyers to extend the estimated delivery date by up to four months.

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