Buying an under construction property in Malaysia, otherwise known as a New Development, means that the development will have a Payment Schedule.This is unlike subsale developments, which involves applying for home loans from different banks and property buyers evaluating the properties first.

The Payment Schedule is a payment scheme that is applicable only to new and ongoing developments.

As compared to subsale developments where the payment goes directly to the previous owner, in the case of new developments, the payment goes directly to the developer.

The payment that needs to be made to the developer depends on the stage of the development’s completion. The payments are broken down into 5 main stages:

  1. Signing of Sale & Purchase Agreement (SPA)
  2. Various completion stages of the development (to be elaborated further below)
  3. Vacant Possession (VP)
  4. Submission for subdivision of building
  5. Final payments

Below is a sample of a Schedule of Payment which lists out each stage and the relevant percentage, which we’ll also discuss in greater detail.

You can also refer to the table at the end of this article for a summary of each stage!

1) Signing of SPA

The SPA is one of the first and most important documents that a property buyer will sign upon purchasing their property.

It’s the document that dictates the blueprint of the property that the buyer is purchasing, and all the details of the property.

These details can be as general as the number of parking lots (if it’s a high rise development), to something specific like the number of power sockets in a unit.

These documents are always signed in front of a lawyer, who will explain to the purchaser all the terms.

Upon signing the SPA, the property purchaser will need to immediately make 10% payment on the property.

2) The Completion Stages

Upon signing of the SPA, the purchaser may or may not need to begin servicing their instalment immediately.

a) Ground Level

The payment differs based on the type of property title, whether it’s Residential, such as condos and landed houses, and Commercial, such as office buildings and shoplots.

  • For Residential Title:

If the land is not even cleared, piling of the building has yet to begin, and if the property is a residential development protected under the Housing Development Act (HDA), then the property purchaser will not need to begin payment.

  • For Commercial Title

This is where a residential and commercial title development differs in payment.

While a residential property buyer need not begin payment if piling has not begun, commercial property buyers may have to being servicing their loan immediately – depending on the terms and conditions stated within the SPA.

The payment for both residential and commercial developments are however the same, at 10% of the full instalment rate, once the development begins its piling and foundation works.

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b) Structural Framework

The structural framework is where the concrete framework and floor slab of the development begins. This is where the actual construction of the development begins.

In the case where the purchaser had an 80% loan, they will only begin their loan repayment from this stage.

At this point of development, the developer will claim 15% of their monies from the bank.

Thus the purchaser will continue to make the same amount of payment, until the development reaches their floor.

Hence purchasers that bought units on the lower floors will need to begin their next stage of instalment earlier than the purchasers who bought units on the higher floors.

c) Walls with Door and Window Frames Placed in Position

This is the stage where the development has reached the purchaser’s floor. At this stage, the purchaser will also need to start paying an additional 10% of their loan.

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d) Roofing, Wiring and Internal Telephone Trunking and Cabling

When the development reaches the stage of fixing the wirings, the purchasers will then need to up their instalment by 10%.

e) Sewerage Works

Following the fixing of the wirings, the developer will then begin sewerage works on the development. The additional instalment at this stage will be 5%.

f) Internal and external plastering

Beginning the plastering of the development, the purchaser will then need to begin an additional instalment of 10%.

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g) Drains serving the building

Upon completion of the plastering, the developers will then begin building the drains that serve the building. Another 5% will be added to the instalment at this stage.

h) Roads serving the building

When the developers begin building and fixing the roads to the development, purchasers will need to begin paying an additional 5% of their instalment.

3) Vacant Possession

At the Vacant Possession stage, the development will be completed. The purchaser will however not be paying the final sum of the instalment yet, until they get Vacant Possession of their unit.

At this point of time, the water and electricity supply will also be ready in every unit. As soon as the unit owners obtain the keys to their unit, they will need to begin serving full instalment to the bank – of an additional 12.5%.

Approximately within 6 months of the development’s completion, the unit owners will then need to pay their Memorandum of Transfer (MOT) fee.

After completing the payment of their MOT, the unit owner will then be in full possession of their unit.

Now, we know that’s a lot of information above to process! So, to put everything into clearer perspective for you, here’s a quick reference table:

Instalments Payable %
1. Immediately upon the signing of this Agreement. 10
2. Within twenty one (21) working days after receipt by the Purchaser of the Vendor’s written notice of the completion of:
(a) the work below ground level, including piling and foundation of the said Building comprising the said Parcel. 10
(b) the reinforced concrete framework and floor slab of the said Parcel. 15
(c) the walls of the said Parcel with door and window frames placed in position. 10
(d) the roofing/ceiling, electrical wiring, plumbing (without fittings), gas piping (if any) and internal telephone trunking and cabling to the said Parcel. 10
(e) the internal and external plastering of the said Parcel. 10
(f) the sewerage works serving the said Building. 5
(g) the drains serving the said Building. 5
(h) the roads serving the said Building. 5
3. On the date the Purchaser takes possession of the said Parcel with water and electricity supply ready for connection to the said Parcel. 12.5
4. Within twenty-one (21) working days after receipt by the Purchaser of the written confirmation of the Vendor’s submission to and acceptance by the Appropriate Authority of the application for subdivision of the said Building. 2.5
5. On the date the Purchaser takes vacant possession of the said Parcel as in item 3 and to be held by the Vendor’s solicitor as stakeholder for payment to the Vendor as follows:
(a) two point five percent (2.5%) at the expiry of six (6) months after the date the Purchaser takes vacant possession of the said Parcel. 2.5
(b) two point five percent (2.5%) at the expiry of eighteen (18) months after the date the Purchaser takes vacant possession of the said Parcel. 2.5



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