The COVID-19 (Temporary Measures) Act has been extended to cover lease of residential properties, option to purchase (OTP) agreements as well as sale and purchase agreements (S&PA).
Legal reliefs are now available to property buyers with agreements to purchase or lease homes from developers in case they experience difficulties in paying their obligations due to the COVID-19 pandemic, reported Channel News Asia.
The initiative is an extension of the COVID-19 (Temporary Measures) Bill passed last in April, which accorded temporary relief from certain legal action for event agreements, construction or supply contracts, non-residential leases and tourism-related contracts like tour packages and secured loan facilities for six months.
Taking effect on Wednesday (13 May), the Singapore Ministry of Law (MinLaw) announced that the protection will now be applicable to buyers that entered into agreements for lease of residential properties, option to purchase (OTP) agreements as well as sale and purchase agreements (S&PA).
The extension, however, only applies to contracts between buyers and private developers or the Housing & Development Board for new properties, and does not cover agreements made between individuals.
“Like other contracts covered by the Act, these contracts must have been entered into before 25 March 2020, with contractual performance due on or after 1 February 2020,” explained the ministry.
The extension came after the ministry received feedback that buyers are facing difficulties in making payments due to the pandemic and stood to lose their booking fees or deposits.
According to MinLaw, in applying for the relief, buyers must first seek an extension from the developer. In case of disagreement or when negotiations are not possible, the buyer may then serve a Notification for Relief (NFR) on the developer pursuant to the Act.
In this way, the concerns regarding the forfeiture of booking fees in case of OTP agreement as well as the termination of the agreement due to non-payment in case of a sales and purchase agreement or agreement for lease, will be addressed.
“The conditions and framework for how disputes are to be resolved under the Act will apply. We encourage parties to discuss and reach a mutual agreement,” MinLaw said.
Aside from such protections, additional actions relating to the “unilateral increase of charges” are likewise prohibited.
“Since the Act commenced, MinLaw has received queries and feedback that some parties are seeking to impose additional interest and charges for late payment that are not provided for in their contracts, even though an NFR has been served,” added the ministry.
Hence, temporary relief from making payments is also accorded to parties concerned, prohibiting landlords “to unilaterally increase interest rates or impose new charges on delayed payment” for purposes of preventing or discouraging parties from seeking the relief granted under the Act.
As for the property market, analysts welcomed the changes as “highly helpful”.
“By offering relief to property buyers who have difficulty in exercising their option to purchase or fulfilling obligations of their sales and purchase agreement, this is actually beneficial to developers – because they will not end up in conundrums with such buyers who faced difficulties in financing their property going forward,” said property analyst Ong Kah Seng.
Meanwhile, the Real Estate Developers’ Association of Singapore (REDAS), for its part, opined that the relief measures will help genuine buyers during these challenging times.
“The enhanced COVID-19 (Temporary Measures) Act will help to provide relief to affected genuine buyers from financial commitments and protection as well as time to reach an amicable settlement with developers in good faith,” it explained.
Victor Kang, Digital Content Specialist at PropertyGuru, edited this story. To contact him about this or other stories, email email@example.com