DEVELOPERS may not be in such a rush to collect booking fees in the future following a recent Federal Court ruling that not only is such a practice expressly prohibited by the law, but perhaps more crucially, that the calculation for late delivery of a house commences from the date a booking fee is paid, and not when the sale and purchase agreement (SPA) is signed.
Commenting on the recent landmark ruling, legal experts say developers will likely be more cautious about collecting a booking fee or initial payment on a house as this would be considered illegal. Furthermore, they expect new residential SPAs to be signed only when developers are genuinely ready to commence a project, a move that could potentially deter them from building too many houses unless there is strong demand and help to reduce the significant property glut (see accompanying story, “What should developers do moving forward?”).
