Construction Deadline to be extended by Four Months

Singapore Property

A bill passed in Parliament expanded the deadline for all building contracts by four months because of the effect of COVID-19 on the construction industry, Ministry of Housing announced.

Homebuyers can often demand refunds for out-of-pocket expenses related to building setbacks from developers, like the Housing and Development Board (HDB), such as whether they will have to reserve a spot for a longer time.

Up to 70% of the liquidated costs owed under the sales deal will be reimbursed to private land purchasers. For owners of HDB buildings, the calculation of 60 percent of the current flat price is 10% a year. Any issues resulting from requests for compensation would be resolved by an impartial assessor.

In addition, the COVID-19 (Temporary Measures) Law, which was tabled in Parliament on Monday (2 November) and approved the next day, also requires contractors and subcontractors to share any extra costs accrued as a consequence of the pandemic, such as costs incurred over a prolonged period of time for renting building machinery.

These added costs, which exclude the cost of manpower, are subject to a monthly ceiling of 0.2% of the contract amount, whereas the total claimable amount is limited to 1.8% of the contract value.

“The value chain of the built environment is rather intertwined and the effects on our building industry has a cascading effect on the whole value chain,” said Desmond Lee, Minister of National Growth, as quoted by Today.

In addition to work suspensions, the construction sector suffered cash flow problems and supply chain disruptions due to the outbreak of COVID-19 among foreign workers and the impact of the pandemic on the global economy.

Constructors function at a reduced working capacity due to on-site management steps, amid previous relief given to the industry, whilst the lack of international workers has resulted in higher labor costs.

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

The four-month extension accounts for the two-month work stoppage and the pause of another two months during the circuit breaker era as health officials clear the COVID-19 dormitories of migrant workers.

Under the law, developers of housing, commercial and industrial property facing construction delays could serve a notice to buyers of property to prolong by up to four months the expected delivery date.