Backing Out of a Property Purchase in Malaysia: Booking Fees, SPA Default and What It Costs
What it costs to cancel an SPA in Malaysia depends entirely on how far you have gone. For a new property, regulation 11(2) of the Housing Development (Control and Licensing) Regulations 1989 bars a developer from collecting any payment outside the statutory sale and purchase agreement, so a booking fee has no legal footing at all — but once you sign the statutory SPA, Schedules G and H give a buyer no right to walk away, and the only built-in exit is a loan rejected on income ineligibility, which costs 1% of the price. In a subsale it works the other way round: back out before the SPA and you normally lose the 2%–3% earnest deposit; back out after it and you lose the full 10%. Here are both routes, clause by clause, with the numbers.
Short answer
What it costs to back out in Malaysia depends on the stage. Before a new-property SPA, the booking fee breaches reg 11(2) and is recoverable in principle. After it, Schedules G and H give no right to terminate: the only exit is a loan refused for income ineligibility, at 1% of the price with the balance refunded in 30 days; otherwise the developer annuls and forfeits 10% of the price, or 20% under Schedule H past halfway. In a subsale it is the 2%–3% earnest deposit before the SPA and the full 10% after it.
Key numbers at a glance
| Legal basis on booking fees | Reg 11(2): no payment outside the statutory contract of sale |
|---|---|
| Federal Court position | PJD Regency (19 Jan 2021): absolute prohibition; LAD runs from the booking fee date |
| Penalty for breach | Fine up to RM50,000 or 5 years' jail (reg 13(1)) |
| Only exit after the SPA | Loan refused on income ineligibility: pay 1%, balance refunded in 30 days |
| Deadline to apply for financing | Within 30 days of receiving the stamped SPA |
| Forfeiture on annulment | 10% of the price; 20% under Schedule H past 50% paid |
| Subsale buyer default | 2%–3% earnest deposit before the SPA; full 10% after |
| Subsale completion | 3 months from the SPA plus 1 month, interest commonly 8% p.a. |
Key points in 30 seconds
- A developer may not lawfully collect a booking fee at all: reg 11(2) bars any person, including a party acting as stakeholder, from collecting a payment not prescribed by the statutory contract of sale. The words covering stakeholders were added with effect from 1 July 2015.
- In PJD Regency (Federal Court, 19 January 2021) the court called it an absolute prohibition on collecting booking fees however described, and held that late-delivery damages (LAD) run from the date the booking fee was paid.
- Once the statutory SPA is signed, Schedules G and H contain no clause letting a buyer terminate. The one exit is clause 6: if financing fails because of ineligibility of income and you can prove it, you pay 1% of the price and the balance is refunded within 30 days.
- If the buyer defaults, the developer annuls: unpaid 10% per annum late charges come off first, then 10% of the purchase price is forfeited, rising to 20% under Schedule H where more than half the price has been paid. On a RM500,000 unit that is RM50,000, not a small booking fee.
- Subsale: walk away before the SPA and you normally lose the 2%–3% earnest deposit; walk away after it and the seller forfeits the full 10% as agreed liquidated damages, refunding anything paid above the deposit.
- Subsale completion is typically 3 months from the SPA plus a 1-month extension, with interest on the unpaid balance at an agreed rate, commonly 8% per annum calculated daily; for leasehold or restricted titles the clock often starts only when state consent is obtained.
Can you get a booking fee refund in Malaysia? Legally the fee should never have been taken
Start with the law. Regulation 11(2) of the Housing Development (Control and Licensing) Regulations 1989 says that no person, including parties acting as stakeholders, shall collect any payment by whatever name called except as prescribed by the contract of sale. The statutory SPA’s payment schedule has no line called “booking fee”, so under the Regulations that money has no place.
The words covering stakeholders were inserted by the Housing Development (Control and Licensing) (Amendment) Regulations 2015, in force 1 July 2015. Before that the restriction bit on developers alone, so routing the money through an agent’s or a solicitor’s “stakeholder” account was the standard workaround. That loophole is closed.
The Federal Court has confirmed it. In PJD Regency Sdn Bhd v Tribunal Tuntutan Pembeli Rumah & Anor and other appeals (19 January 2021), the court held that reg 11(2) “very clearly stipulates and expressly provides for an absolute prohibition against the collection of booking fees howsoever they are called or described”, and that “any payment collected must be in accordance with the terms of the schedule of the statutory contract of sale”. The same judgment held that the LAD clock runs from the date the booking fee or initial payment was made, not the SPA date, and that the onus of complying with the regulatory scheme is on developers.
There is a penalty; there is almost no enforcement. Contravening the Regulations is an offence under regulation 13(1), punishable by a fine of up to RM50,000 or imprisonment of up to 5 years, or both (separately, reg 11B carries a fine of up to RM10,000 for executing a contract of sale with particulars left blank). The National House Buyers Association reports no known prosecution of a developer for collecting a booking fee.
So what actually happens in practice
Nearly every launch still collects one. Because the payment itself is prohibited, money taken as a booking fee is taken without lawful authority and is in principle recoverable in full — there is no statutory scale of forfeiture for it, and neither Schedule G nor Schedule H contains any clause entitling a developer to keep it. The problem is recovery: HBA reports that despite booking forms promising a “fully refundable” fee, buyers whose financing fails are often not refunded and write the money off rather than litigate, because the legal cost exceeds the fee.
How to chase a booking fee that is not being returned
- Collect the evidenceThe booking form, the official receipt, the bank transfer record, screenshots of any refund promise from the salesperson, and the bank’s rejection letter if you have one.
- Demand it in writing from the companyEmail and A.R. registered post to the developer company, not the sales gallery. State the unit, the amount and the payment date, cite reg 11(2), and set a deadline such as 14 days.
- Complain to KPKTIf the developer refuses or goes quiet, send the same bundle through KPKT’s complaint channels — the developer’s licence sits with the ministry.
- Weigh the TribunalThe Tribunal for Homebuyer Claims hears claims up to RM50,000 for a filing fee of RM10, and you must file within 12 months of termination of the contract (or of the CCC or the end of the defect liability period). See the homebuyer claims tribunal.
One honest caveat: I could not find a published Tribunal award ordering a booking fee to be refunded that I can cite by case number. Do not rely on “the Tribunal always orders it back”. What to check before you pay one is in the booking fee guide.
Can you cancel an SPA for a new property? Schedules G and H give you no right to
This is the point buyers most often get wrong. A new-property SPA is not an ordinary contract; it is a statutory form prescribed by the Regulations — Schedule G for landed property with its own title and Schedule H for strata. I have read both forms through: neither contains a clause allowing the purchaser to terminate. The buyer’s only exit is the financing clause in the next section.
So “the worst case is I lose the booking fee” stops being true the moment you sign. After signing you owe the whole purchase price. If you stop paying, the developer’s route is annulment for default, and that is priced as a percentage of the purchase price, not of the booking fee.
None of these is a way out
- Changing your mind, finding a better unit, or family disagreement.
- A loan declined because of your CCRIS or CTOS record — that is not ineligibility of income. See DSR, CCRIS and CTOS.
- A bank valuation below the selling price, leaving you to fund the differential sum.
- Never applying for the loan, or applying too late.
- Unhappiness with progress, design or the surroundings — that runs on a different track, covered in construction period, LAD and EOT.
A clause-by-clause read of the statutory form is in the Schedule G/H/I/J guide.
If the SPA is signed and the financing then fails, everything turns on how the bank words its rejection. “Ineligibility of income” puts you on the clause 6 route: 1% of a RM500,000 unit, or RM5,000. A rejection on CCRIS history or a valuation shortfall does not, and annulment forfeits 10% — RM50,000 — plus late charges at 10% per annum. See the letter of offer guide.
Ask Louis directly
Send me a photo of your booking form, offer or SPA default clauses and I'll tell you which stage you're at and roughly what getting out would cost.
I'll go through your actual contract clauses for free and give you the exit cost at your current stage, plus the document list you'll need — receipts, rejection letter, and what a written demand should say.
What if the loan is rejected? The one lawful exit costs 1% of the price
Both post-2015 Schedules G and H contain a financing clause, generally cited as clause 6. It works like this: the purchaser must apply for end financing within 30 days of receiving the stamped SPA. If the purchaser fails to obtain financing because of ineligibility of income and produces proof of it, the purchaser pays the developer 1% of the purchase price, the agreement is terminated, and the developer refunds the balance within 30 days.
| Condition | What it requires |
|---|---|
| A signed statutory SPA | The clause lives in the Schedule G/H form; there is nothing to invoke before the SPA |
| A timely application | Apply to the bank within 30 days of receiving the stamped SPA |
| The right reason for rejection | It must be ineligibility of income; other grounds are outside the clause |
| Written proof | The bank’s rejection letter must state the reason — being told verbally is no use |
Worked example: on a RM500,000 unit, if three banks decline you on income and you hold the letters, you pay RM500,000 × 1% = RM5,000, and what you have already paid comes back within 30 days. Compare that with the 10% forfeiture in the next section — RM50,000 on the same unit. The gap is tenfold.
What does the developer forfeit if it annuls? 10% of the price, 20% past halfway
The statutory SPA states that time shall be the essence of the contract in relation to all its provisions — clause 9 in the post-2015 Schedules G and H (clause 8 in the older Schedule H text). That is not boilerplate: it makes lateness itself a breach.
Layer one is the late-payment charge: 10% per annum on the unpaid instalment, calculated daily. Under the post-2015 schedules it starts 30 days after the due date; the pre-2015 Schedule H text used 21 working days, which the 2015 amendments turned into 30 calendar days.
Layer two is annulment: where an instalment is more than 30 days late (28 days in the older text), or on material breach, bankruptcy or liquidation, the developer may terminate — but only after written notice by A.R. registered post, not less than 30 days under the post-2015 Schedules G and H (14 days under the pre-2015 Schedule H text).
| Situation | Forfeited | Basis |
|---|---|---|
| Strata, up to 50% of the price paid | 10% of the purchase price | Schedule H clause 11 (post-2015 form); clause 10(1)(ii)(b) in the 2002 form |
| Strata, more than 50% of the price paid | 20% of the purchase price | Same clause — the schedule sets out both tiers expressly |
| Landed property (Schedule G) | 10% of the purchase price | The REHDA copy of Schedule G clause 11 gives only 10%; I found no 20% tier in that text |
The deductions run in order: (1) any unpaid late-payment charges; (2) the forfeiture above; (3) the remainder is refunded to the buyer.
Worked example: a RM500,000 strata unit on which you have paid the first 10% (RM50,000) and then stopped. On annulment the developer forfeits 10% of the price — RM50,000 — plus accrued late charges at 10% per annum. Everything you paid is effectively gone, and you may still owe interest. On the same unit with 60% paid (RM300,000), the forfeiture jumps to 20% — RM100,000 — and RM200,000 less late charges comes back.
Subsale buyer backs out: is it the 2%–3% earnest deposit or the full 10%?
A subsale has no statutory form, so everything depends on the SPA you sign. Market practice is consistent, though: an earnest deposit of 2%–3% of the price on the offer to purchase or letter of offer, topped up to 10% on signing the SPA (some practitioners use 3% plus 7%). This is convention, not statute.
| How far you have gone | What you normally lose | Basis |
|---|---|---|
| Offer or letter of offer signed, earnest deposit paid | The 2%–3% earnest deposit | The terms of the offer/booking form |
| SPA signed, 10% paid | The full 10%, as agreed liquidated damages | The default clause in the SPA |
| SPA signed, more than 10% paid | The deposit is forfeited; sums paid above it are normally refunded | Most subsale SPAs provide expressly for the refund of the excess |
Conveyancing firms put it bluntly: if the purchaser fails for any reason to pay the balance on the completion date or the extended date, the vendor has a right to forfeit the deposit as liquidated damages, while the SPA normally provides for the vendor to refund money paid in excess of the deposit. Another firm writes that where the purchaser has not completed after the extension, the seller “can even terminate and forfeit the purchaser’s 10% deposit”.
Worked example: a RM600,000 subsale apartment. Pull out before the SPA, having paid a 3% earnest deposit, and you lose RM18,000. Pull out after signing the SPA and the exposure is 10% — RM60,000. The RM42,000 difference turns on one signature.
Want to see what you can actually buy?
The rules are above; these are the actual homes. Each page lists the projects I am tracking, with published price ranges and the date each figure was checked. Tell me the area on WhatsApp and I will send the current list.
What if the seller backs out? Refund, caveat, injunction and specific performance
When a seller pulls out — most often because prices moved during the completion period — the buyer’s first entitlement is a refund of the deposit: a buyer will usually receive a full refund where the seller changes their mind or sells to someone else. But a refund is not the only remedy.
- Damages for the loss the breach actually caused you.
- An injunction restraining the seller from selling the same property to a third party.
- A private caveat (Form 19B) registered on the title, which blocks further dealings. How they are entered and removed is in the caveat and perfection guide.
- Specific performance — a court order compelling the seller to complete — under the Specific Relief Act 1950.
Specific performance is the strongest of these, but it is a discretionary remedy. A specific-performance clause in the SPA “helps your case but does not bind the court”. The usual argument is that land is unique and damages are inadequate, and the buyer must show they have been ready and willing to complete throughout. Having the money in place, the documents in order and every payment made on time is itself the evidence.
The 3 + 1 month completion, 8% late interest, and what 'time is of the essence' means
Subsale completion is normally 3 months from the date of the SPA, with the seller granting a 1-month extension (sometimes longer). The extension is not free: the seller charges interest on the unpaid balance at an agreed rate, commonly 8% per annum, calculated daily. Some SPAs use up to 10%.
The clock often does not start on signing. For a leasehold title, or one carrying a restriction in interest, the completion period usually runs only from the date state consent is obtained. Practitioners put a straightforward subsale at 3–4 months and add 1–2 months where consent is needed. The sequence is in the subsale SPA and completion guide and the state consent and transfer guide.
What 'time is of the essence' means in practice
In the HDA statutory SPAs it is a statutory term (clause 9 of the post-2015 Schedules G and H). In a subsale SPA it is a negotiated clause. Where it is present, missing the completion date is itself a repudiatory breach, and the extension-plus-interest mechanism is the only cushion. Where it is absent, or has been waived by a course of conduct — a seller who keeps accepting late payment, for instance — the general understanding is that a party must first serve a notice making time of the essence before terminating.
I should flag that last part: I did not find a Malaysian court decision or law-firm publication stating the waiver and notice-to-complete rule specifically for Malaysian subsale SPAs. Treat it as how the clause is generally understood, and rely on the words of your own contract and your solicitor’s view of your facts.
| Item | New property (Schedule G/H) | Subsale (negotiated contract) |
|---|---|---|
| Money paid before the SPA | Booking fee breaches reg 11(2); recoverable in principle | Earnest deposit 2%–3%; normally forfeited |
| Can the buyer terminate? | No — the schedules contain no such clause | No, unless the contract gives you an exit |
| The one statutory exit | Loan refused on income: pay 1%, balance refunded in 30 days | None; everything is contractual |
| Cost of buyer default | Developer annuls: 10% of the price forfeited (20% under Schedule H past 50% paid) plus 10% p.a. late charges | Full 10% deposit forfeited |
| If the other side defaults | LAD at 10% p.a., running from the booking fee date | Refund, damages, injunction, caveat, specific performance |
| Completion deadline | Vacant possession in 24 months (G) or 36 months (H) | 3 months plus a 1-month extension, interest commonly 8% p.a. |
Three things to check before you pay anything
This is the most useful section on the page. Almost all of the cost of backing out is fixed at the moment you pay, so the money-saving moves are all upstream.
- 1. Who is being paid, and under what name? For a new property, pay only into an account in the developer company’s name; for a subsale, only into the solicitor’s stakeholder account. Never a personal account, a salesperson’s account or an agent’s own account. The receipt must show the project and unit, the amount, the date and the full name of the company receiving it.
- 2. Are the refund terms in writing? In what circumstances the money comes back, within how many days, and whether anything is deducted — all of it on the booking form or offer. “You can get it back if you change your mind” on WhatsApp is not a term of the contract unless you put it in the contract.
- 3. Is the loan already cleared? This is the single most effective step. Get pre-assessed and hold the bank’s letter of offer before you sign the SPA, and you never need the narrow clause 6 exit. See the home loan process, and size the loan first with DSR.
Related questions
How much does it cost to back out of a RM500,000 new property?
Two very different outcomes. Through clause 6 — a loan refused for income ineligibility, with the bank’s letter to prove it — you pay 1%, or RM5,000, and the balance is refunded within 30 days. Through developer annulment, unpaid late charges at 10% per annum come off first and then 10% of the price, RM50,000, is forfeited; past 50% paid under Schedule H it is 20%, or RM100,000. The tenfold gap turns on that rejection letter.
Does it matter whose account I paid the booking fee into?
Yes, on two levels. The 2015 amendment wrote “parties acting as stakeholders” into reg 11(2), so collecting a booking fee through an agent’s or a solicitor’s stakeholder account is caught by the same prohibition. And when you come to recover the money, you have to show where it went: a payment into a personal or agency account makes that much harder to prove. Pay a developer company account for a new property, a solicitor’s stakeholder account for a subsale.
Can I sell the unit on instead of defaulting on the SPA?
Sometimes, but it is not a free exit. Statutory SPAs generally restrict assigning your rights before the full price is paid or without the developer’s written consent, subsale SPAs often carry similar restrictions, and an assignment triggers stamp duty and possibly real property gains tax. It can beat forfeiting 10%, but have your solicitor read the assignment clause in your own contract and price the tax before you commit.
The seller missed the completion date — can I walk away?
Possibly, but the contract decides. In a subsale SPA “time is of the essence” is a negotiated clause: where it is present, missing the date is itself a repudiatory breach; where it is absent or has been waived by conduct, the general understanding is that you must first serve a notice making time of the essence before terminating. Termination is not the only option — damages, specific performance and a private caveat are also on the table.
Frequently asked questions
Can I get my money back if I change my mind about buying a property in Malaysia?
It depends on the stage. For a new property before the SPA, the booking fee breaches reg 11(2), the developer has no clause entitling it to keep the money, and it is recoverable in principle — though you will have to demand it in writing and may need to complain to KPKT. After the SPA, the only exit is a loan refused for income ineligibility, at 1% of the price. In a subsale, before the SPA you normally lose the 2%–3% earnest deposit; after it, the full 10%.
What is the penalty for cancelling an SPA in Malaysia?
Neither Schedule G nor Schedule H lets a buyer cancel. If you stop paying, the developer annuls: unpaid late-payment charges at 10% per annum come off first, then 10% of the purchase price is forfeited, rising to 20% under Schedule H where more than half the price has been paid. On a RM500,000 unit that is at least RM50,000. In a subsale the SPA governs, and the usual outcome is forfeiture of the full 10% deposit.
Is a booking fee refundable in Malaysia if the developer says no?
The Regulations give a developer no right to keep a booking fee and neither Schedule G nor H contains such a clause, so “non-refundable” is the developer’s position rather than a legal basis. Gather the receipt, booking form, transfer record and any bank rejection letter, demand the money in writing from the developer company with a deadline, and complain to KPKT if it refuses. Below RM50,000 the Tribunal for Homebuyer Claims charges RM10 to file.
If I paid a 2% earnest deposit on a subsale and pull out, do I only lose 2%?
Usually yes, as long as the SPA has not been signed — what is forfeited is the earnest deposit on the offer, subject to the offer’s own wording. Once the SPA is signed and the deposit is topped up to 10%, the exposure is the full 10%. On a RM600,000 property that is the difference between RM18,000 and RM60,000, which is why the period before signing is the last cheap moment to stop.
Do I really have to pay 1% if my home loan is rejected?
Only the clause 6 route costs 1%, and it requires four things at once: a signed statutory SPA, an application made within 30 days of receiving the stamped SPA, a rejection based on ineligibility of income, and written proof of that reason. Meet them and you pay 1%, the agreement ends, and the developer refunds the balance within 30 days. A poor CCRIS record, a valuation shortfall or never applying all fall outside the clause.
What can I do if the seller backs out of a subsale in Malaysia?
Besides recovering the deposit, a buyer can claim damages, seek an injunction to stop a sale to a third party, lodge a private caveat (Form 19B) on the title to freeze further dealings, and apply for specific performance under the Specific Relief Act 1950 to compel the seller to complete. Specific performance is discretionary: the court will expect you to show that you were ready and willing to complete throughout.
Can a developer terminate my SPA over one late progress payment?
Not immediately. Under the post-2015 Schedules G and H the instalment must be more than 30 days overdue before the developer can start, and it must then give not less than 30 days’ written notice by A.R. registered post (14 days under the pre-2015 Schedule H text). Until then the unpaid sum accrues late-payment charges at 10% per annum, calculated daily. Deal with the notice the day it arrives rather than letting it run.
Sources & verification
- Federal Court of Malaysia — media summary, PJD Regency Sdn Bhd v Tribunal Tuntutan Pembeli Rumah & Anor (19 Jan 2021)
- Housing Development (Control and Licensing) Regulations 1989 — regulation text (reg 11(2), 11B, 13(1))
- Gan & Zul — Impact of the Housing Development (Control and Licensing) (Amendment) Regulations 2015
- REHDA Melaka — Schedule G (substituted 2015 form): clause 6, clause 9, clause 11
- REHDA Melaka — Schedule H (substituted 2015 form): clause 6, clause 9, clause 11 (10%/20% forfeiture)
- HBA — Schedule H (2002 form), clause 10(1)(ii)(b) forfeiture tiers
- EdgeProp / Datuk Chang Kim Loong (HBA) — Legalising booking fees: a case for reform and its limits (14 May 2026)
- Donovan & Ho — Cash flow and timing of a sub-sale property purchase in Malaysia (updated 22 Mar 2024)
- Y P Cheong & Co — Understanding the sub-sale contract (16 Mar 2018)
- CY Wong Ng & Partners — What happens if a property seller breaches the SPA in Malaysia? (29 Mar 2025)
- PropertyGuru Malaysia — What is an earnest deposit in Malaysia
- KPKT — Tribunal Tuntutan Pembeli Rumah (homebuyer claims tribunal)
Verified: 2026-09-20. This guide is general information, not legal, tax or financial advice. Rules and rates change — confirm in writing with your lawyer, bank or the relevant authority before you sign.
More in this stage
Louis Koh
11 years in Malaysian property · Johor Bahru & Kuala Lumpur · English & 中文
I help local buyers and cross-border buyers from Singapore with new and subsale property. Every figure in these guides is sourced; when a rule changes, I update the page and date it.
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Send me your situation — new or subsale, budget, state, and where you are in the process — and I will tell you what to do next and what to watch for.
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Louis Koh · 11 years in Malaysian property · +60 10-906 6685 · replies 9am–10pm MYT