Taiwan Buyers
Malaysian Under-Construction Sales vs Taiwan's 預售屋
How Malaysia's Housing Development Act protects buyers of under-construction property differently from Taiwan's 預售屋 system — the progressive payment structure, the statutory 24-month defect liability period, and Taiwan's five performance-guarantee methods compared side by side.
Quick summary
Quick answer
Best for
Risk level
Buyer action
| Best for | Taiwanese buyers considering a Malaysian project still under construction, who naturally compare it against their own experience with Taiwan's 預售屋 system. |
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| Risk level | Medium |
| Buyer action | If you're weighing a Malaysian purchase from Taiwan, ask Lewis for current projects that fit your budget and situation — including the foreigner-eligibility check, latest packages, and a side-by-side of the areas discussed here. |
Malaysia's Schedule H: Payment Tied to Physical Progress
Malaysia's Housing Development (Control and Licensing) Act 1966 mandates a statutory sale and purchase agreement — Schedule H for strata (condo/apartment) property — that every licensed developer must use, with no room to substitute a custom payment schedule. The defining feature is that each instalment is tied to a specific, physically verifiable construction milestone: an initial deposit on signing, followed by progress payments released as piling and foundation work, the structural frame, brickwalls, roofing, and internal fit-out are each completed, with the balance due at Vacant Possession. A buyer is never asked to pay for a stage of construction that hasn't actually happened, and the developer cannot legally accelerate the payment schedule ahead of physical progress — this is a structural protection built into the mandatory contract itself, not something negotiated project by project.
The Statutory 24-Month Defect Liability Period
Once Vacant Possession is delivered, Schedule H gives buyers a statutory Defect Liability Period (DLP) of 24 months, during which the developer is legally obligated to repair, at no cost to the buyer, any defect, shrinkage or other fault that becomes apparent in the unit or common property. If a developer fails to rectify a defect within 30 days of written notice, the buyer may proceed with the repair themselves and deduct the cost from a retention sum — commonly the final portion of the purchase price — held by the developer's lawyer as stakeholder specifically for this purpose. This mechanism gives buyers actual financial leverage during the DLP: the developer has a direct incentive to fix problems promptly, since delaying means losing access to money already earned but not yet released. There is also a separate liquidated damages mechanism for late delivery of vacant possession itself, calculated against the SPA's contractual delivery date.
DISCUSS WITH LEWIS
The comparison Taiwanese buyers most often get backwards is assuming Malaysia's system leaves them exposed the way an under-protected presale purchase might — it doesn't. Schedule H's milestone-tied payments are, if anything, more buyer-protective on the pre-completion side than a purely trust-based arrangement, since you're never paying for construction that hasn't physically happened. Where Malaysia is genuinely different — and worth taking seriously — is that there's no single centralised guarantee fund equivalent to Taiwan's five-method framework; the protection is procedural (staged payments, the DLP retention) rather than a third-party guarantee sitting behind your money.
Taiwan's 預售屋: Five Performance-Guarantee Methods
Taiwan's presale (預售屋) system, regulated by the Ministry of the Interior's standard presale contract requirements in effect since 2011, requires developers to offer buyers one of five prescribed performance-guarantee mechanisms protecting the money paid before completion: 不動產開發信託 (real estate development trust, where the land and construction funds are held in trust and disbursed against project progress), 價金返還之保證 (a third-party financial institution guarantees repayment of paid instalments if the developer fails to deliver), 價金信託 (a payment trust holding buyers' instalments for dedicated use on the project), and two collective-guarantee mechanisms — 同業連帶擔保 (peer developer joint guarantee) and 公會辦理連帶保證 (trade association joint guarantee) — under which other developers or association members commit to completing the project if the original developer cannot, rather than directly safeguarding cash. A given project discloses which single method it uses in its presale contract.
The Structural Difference That Actually Matters
The two systems protect buyers at different points and through different mechanisms, which is the comparison worth understanding rather than assuming one is simply 'better'. Schedule H's protection is embedded in the payment structure itself — you structurally cannot overpay relative to construction progress, because the milestone-triggered payments make that impossible by design — plus a strong post-handover defect remedy via the DLP retention. Taiwan's five-method framework instead centres on protecting the cash itself before completion, through a trust or third-party guarantee, which is a different risk (developer insolvency mid-construction) than what Schedule H's milestone system primarily addresses. Neither approach directly replicates the other; a Taiwanese buyer shouldn't expect a Malaysian project to offer a 價金信託-equivalent named guarantee, and shouldn't assume its absence means less protection overall — the protection is just structured differently.
What I'd Verify Before Acting
Every licensed Malaysian housing developer must use the Schedule H (or Schedule G for landed property) statutory contract without material deviation — ask to see the actual SPA and confirm the payment schedule matches the statutory template rather than a custom developer schedule, which would itself be a red flag. Confirm the developer's HDA licence (Advertising Permit and Developer's Licence, commonly abbreviated APDL) is current before signing anything, since this is the credential that confirms Schedule H protections legally apply to your purchase. This post explains the general statutory frameworks on both sides; specific project terms, guarantee arrangements and defect-remedy processes should be confirmed against the actual signed contract with a lawyer, not assumed from this comparison.
Buyer checklist
Both systems protect a buyer paying before construction is finished, but the mechanisms are structurally different. Malaysia's Housing Development Act ties every payment to a physical construction milestone under the statutory Schedule H contract (developers can't simply ask for money on a schedule of their choosing), and gives buyers a statutory 24-month defect liability period after handover with a retained sum the developer's lawyer holds as security. Taiwan's 預售屋 system instead relies on one of five prescribed performance-guarantee mechanisms — most commonly a trust arrangement (價金信託) or a bank/insurer guarantee (價金返還之保證) — that protects the deposits and instalments paid before completion, a different point in the process than Malaysia's defect-period protection.
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| 1 | Confirm the SPA follows the statutory Schedule H (or G) template rather than a custom developer payment schedule |
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| 2 | Check the developer's HDA licence (APDL) is current before signing anything or paying a booking fee |
| 3 | Understand the 24-month DLP retention mechanism and how to invoke it if defects appear after handover |
| 4 | Ask which of Taiwan's five performance-guarantee methods you're used to, and don't expect a Malaysian project to name an equivalent |
| 5 | Get a lawyer to confirm the actual payment schedule and defect-remedy clauses in your specific SPA |
Common questions
Is Malaysia's under-construction system as risky as an unprotected Taiwan presale?
No. Schedule H's milestone-tied payment structure is a statutory protection every licensed developer must use — you're structurally unable to pay ahead of physical construction progress, and a separate 24-month defect period follows handover.
Does Malaysia have a trust mechanism like Taiwan's 價金信託?
Not as a directly named equivalent. Malaysia's protection is built into the mandatory Schedule H payment structure itself rather than a separate trust product — a different mechanism addressing a similar underlying concern.
What happens if a Malaysian developer goes bankrupt mid-construction?
This is a genuine risk not fully addressed by Schedule H's milestone structure alone, which is why checking a developer's track record, financial standing and current HDA licence status matters as much as the statutory contract itself.
How long is Malaysia's defect liability period?
24 months from the date of Vacant Possession (handover), during which the developer must fix defects at no cost, backed by a retention sum held by the developer's lawyer.
Lewis Chong
REN 69566 · IQI GlobalProperty advisor helping KL, JB, and Penang buyers make data-backed property decisions.
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Lewis Conclusion
I show Taiwanese clients this comparison first because it does more work than any sales pitch: a Xinyi 2-room budget in Taipei can buy a full KLCC unit with room to spare, or several units in Klang Valley suburbs or Johor Bahru. But price-per-area alone doesn't tell you about rental yield, holding cost or exit liquidity — a cheap ping doesn't automatically mean a good investment. Use this as the opening number, then look at yield and title type before deciding where.
Taiwan's Minimum Tax on Overseas Income
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Lewis Conclusion
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Taiwan's CFC Rules: What Happens If You Hold Malaysian Property Through a Company
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Lewis Conclusion
I steer most individual Taiwanese buyers away from a company structure for a single Malaysian property. The 2023 CFC rules were written specifically to close the offshore-holding-company loophole, and for one condo generating modest rental income, the compliance burden of tracking CFC earnings and the NT$7 million de minimis threshold usually outweighs any benefit. A company structure can still make sense for a genuine multi-property portfolio, estate planning, or a joint venture with other investors — but that's a decision to make with a cross-border tax advisor, not a default choice for a single unit.
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Confirm the SPA follows the statutory Schedule H (or G) template rather than a custom developer payment schedule
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Check the developer's HDA licence (APDL) is current before signing anything or paying a booking fee
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Understand the 24-month DLP retention mechanism and how to invoke it if defects appear after handover
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Ask which of Taiwan's five performance-guarantee methods you're used to, and don't expect a Malaysian project to name an equivalent