Ban on land sales, new launches for developers that deliver ‘defect-ridden’ projects

[SINGAPORE] Developers that deliver “defect-ridden” housing projects or commit serious safety breaches may be barred from taking part in future residential land tenders or selling new homes for up to five years.

In a circular issued on Friday (May 22), the Ministry of National Development, Urban Redevelopment Authority (URA) and Building and Construction Authority said that these tougher measures were introduced to provide greater protection for homebuyers and deter “severe errant developer behaviour”. 

Under the new Land Sales Disqualification Framework, developers that deliver projects with severe regulatory non-compliances affecting safety, or repeatedly deliver projects with major defects, may be disqualified from participating in all state land tenders for sites with residential components for up to five years.

This includes participation through joint ventures with other developers. 

Separately, a new Sales Suspension Framework allows the authorities to place errant developers on a sales suspension list for up to five years. A no-sale licence condition may also be imposed on their future unlaunched projects for the same period. 

These measures take effect from Friday, following consultations with industry stakeholders and a review of existing policies. 

The authorities said that the new measures will not affect the majority of developers, who have delivered “quality private housing projects to homebuyers”. 

They added that existing safeguards have “largely been effective” in maintaining construction quality standards.

These include more comprehensive workmanship quality checks for all government land sales sites and enhanced construction inspections of all homes built by developers with track records of poor construction quality.

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Errant developers will also have their Construction Quality Assessment System scores and suspension-of-sales privileges made public so that homebuyers can make informed decisions.

Still, the authorities noted that there remained “scope to strengthen deterrence against severe errant developer behaviour”. 

The new frameworks will apply not only to errant developers, but also to relevant parties, including directors and substantial shareholders who may exercise oversight and control over developers’ business decisions. 

In determining whether penalties should be imposed, the authorities will consider factors such as the number and severity of defects and regulatory breaches, the time taken to rectify them, the impact on buyers’ safety and livability, as well as any aggravating or mitigating circumstances. 

Major defects include cracked, chipped or broken windowpanes, shower screens, mirrors and tiles that are not promptly rectified after sufficient notice has been given to developers.

Examples of severe regulatory non-compliances include wall collapses, serious fire hazards or flooding that result in major damage or accidents.

The government said that developers and relevant parties reported for shoddy work will first be given warnings and opportunities to make representations or rectifications before penalties are imposed. 

URA will also publish a list of disqualified and/or suspended developers and individuals on its website, so that all prospective land bidders (including joint ventures) can check their eligibility to take part in tenders.

The Real Estate Developers’ Association of Singapore (Redas) welcomed the new measures, saying that it would help protect consumer confidence and the “long-term integrity of the industry”.

“The new (frameworks) send a clear signal that severe or recalcitrant non-compliance will not be tolerated,” it noted.

Melvin Yong, president of the Consumers Association of Singapore, added that the frameworks give buyers greater assurance that developers are held accountable for the timely rectification of defects.

Redas pointed out that there had been no instances of such non-compliance among its members, and that it would look into “suitable actions” against any members who are disqualified or suspended.