Licence First, Then Sell
Why this matters to developers
The licensing of housing developers is a regulatory measure under the Housing Development (Control and Licensing) Act 1966. It is meant to ensure that only financially stable and ethically sound entities undertake housing projects.
The basic rule
A housing developer who intends to engage in, carry on, undertake or cause to be undertaken a housing project must secure a licence from KPKT before moving forward with the project.
Absolute prohibition
Except with written consent of the Controller, no unlicensed housing developer may use the words “housing developer” or words indicating that it carries on housing development business. This is an absolute prohibition under the licensing framework.
The key question is whether the developer is properly licensed before it holds itself out, advertises or sells.
What Must Be Shown for a Licence?
Financial capacity is central
For a company, the licence will not be granted unless the applicant has paid-up capital in cash of not less than RM250,000 and deposits 3% of the estimated construction cost with the Controller.
Key licensing filters
1. Paid-up capital
Company applicant: not less than RM250,000 paid up in cash.
2. 3% deposit
Deposit equivalent to 3% of the estimated construction cost, excluding land cost.
3. Clean record
Applicant / key personnel must not be convicted of fraud or dishonesty or be undischarged bankrupts.
4. Fit professionals
The applicant’s architect or engineer must not have cancelled registration that has not been reinstated.
Developer note
Licensing requirements safeguard purchasers by keeping out unqualified or unscrupulous developers and by encouraging accountability and timely completion.
APDL: The Gate Before Advertising and Sale
What is APDL?
An Advertisement Permit and Developer’s Licence (“APDL”) is issued by KPKT. Without it, a housing developer cannot advertise and sell the properties. Developers must obtain it in advance.
When to apply?
Once the housing developer’s licence is granted, the applicant may apply for the APDL. The application includes information such as launch date, land cost and details of the housing development project.
The regulatory flow
Developer licence — Licence from KPKT
APDL application — Project details submitted
Permit issued — With conditions if any
Advertise / sell — Only after approval
No advertisement or sale shall be made without an advertisement and sale permit first obtained from the Controller.
What Must an Advertisement Disclose?
Transparency to purchasers
Advertisements by licensed housing developers must include key particulars so purchasers know who they are dealing with and what is being sold.
Examples of required particulars
1. Licence & permit
Licence number, APDL number and their validity dates.
2. Developer details
Name and address of the licensed housing developer and approved agents if any.
3. Land information
Tenure, expiry date for leasehold, restrictions, encumbrances if any.
4. Project details
Description, development name, expected completion date and approving authority details.
5. Price & availability
Selling price, where applicable minimum and maximum price, and number of units available.
6. Accessory parcel
Parking lot details if it is an accessory parcel and not common property.
A licensed housing developer must issue a brochure to each purchaser free of charge.
What Should Not Appear in Advertisements?
Developers must avoid overpromising
The Housing Development Regulations restrict certain advertising claims and names that suggest patronage, official connection, or attributes the developer cannot genuinely claim.
Prohibited advertising claims include:
1. Free legal fees
Do not advertise offer of free legal fees.
2. Projected returns
Do not promise projected monetary return gains or rental income.
3. Panoramic view
Do not claim panoramic view if it cannot be genuinely claimed.
4. Travel time
Do not advertise travelling time to popular destinations.
5. False attributes
Do not include particulars to which the developer cannot genuinely lay proper claim.
6. Official patronage
Do not suggest patronage or connection with government, public bodies or foreign governments.
Practical drafting point
Marketing materials should be checked against the approved permit and the actual project facts before publication.
Enforcement Angle: Misleading Claims May Attract Action
Misleading advertising claims are not merely marketing issues. Where the representation is capable of influencing a purchaser’s decision, it may expose the developer to regulatory scrutiny, local authority action and purchaser complaints.
1. KPKT / Controller of Housing
KPKT, through the Controller of Housing, may scrutinise whether the developer’s advertisements, brochures and sales materials comply with housing development requirements. Any claim which is misleading, inaccurate or inconsistent with approved representations may be questioned by the authority.
2. Local Authority / PBT
The relevant PBT may take action where the advertisement involves unauthorised billboards, banners, hoardings or promotional displays. This is especially relevant where the advertisement contradicts approved plans, permits or development approvals.
3. Purchaser Claims / Tribunal / Court
Purchasers may rely on misleading advertisements as evidence in complaints or legal proceedings. This may arise where the completed development differs materially from what was promoted in the developer’s marketing materials.
For further information, please contact us at Miranda & Samuel:
- Dato’ George Miranda (george@mirandasamuel.com)
- Joy Sam Jia Qian (joy@mirandasamuel.com)
- Muhammad Amir Faiz Bin Mohd Idrus (amir@mirandasamuel.com)
🌐 Follow us for timely updates on legal news and insights:
LinkedIn: https://www.linkedin.com/company/miranda-samuel/
Instagram: https://www.instagram.com/mirandaandsamuel….
Facebook: https://www.facebook.com/mirandandsamuel…
– By George Miranda, Joy Sam Jia Qian, Amir Faiz –
This article is for general information purposes only and does not constitute legal or professional advice. It should not be used as a substitute for legal advice relating to your particular circumstances. Please note that the law may have changed since the date of this article.
