INSOLVENT DEVELOPERS OF NEWLY LAUNCHED PROPERTIES (Protection of purchasers' interest)

Mr Chiam See Tong asked the Minister for National Development, in the light of the slowdown in the economy resulting in the inability of developers to sell their newly launched properties, whether there is any danger of some developers becoming insolvent, and, if so, whether the Government will be taking steps to protect the interest of Singaporeans who have purchased properties from such developers.

Mr Lim Hng Kiang: Mr Speaker, Sir, like other sectors of the economy, the real estate industry has been affected by the current economic slowdown. Weak property sales will affect the bottom line of developers, and we cannot rule out the possibility that some could become insolvent, as in any other business.

To safeguard the interest of property purchasers, the Housing Developers (Control and Licensing) Act requires every licensed developer to deposit all the sale proceeds of a building project into a project account. The moneys in the project account can only be withdrawn for authorised purposes - such as payment of building works and architect's fees - for the completion of the project. In the event that the developer becomes insolvent, all the moneys in the project account will be deemed not to form part of the property of the developer. They will instead be vested in the official receiver, trustee in bankruptcy or the liquidator, as the case may be, and continue to be used only for the authorised purposes for the completion of the project. The Government may also direct a company or statutory board to assume control and carry on the development of the insolvent developer.