When you buy a "New Launch" or "Under Construction" condo in Malaysia, you don't pay the full loan installment immediately. Instead, you pay according to the Progressive Payment Schedule: 10% when you sign, then the rest in stages as the developer completes the building. The last 5% is paid at vacant possession to the developer's lawyer, who holds it as stakeholder and releases it to the developer in two halves, 8 months after vacant possession and when the 24-month defect liability period ends.
This schedule is fixed by law in the standard Sale and Purchase Agreement under the Housing Development (Control and Licensing) Regulations 1989: Schedule H for strata units (condos, apartments, serviced residences and landed strata) and Schedule G for landed houses on their own title. Both were rewritten by the 2015 amendment regulations (in force 1 June 2015), and both now use the same percentages. A developer cannot change the percentages or the order of payment in a housing SPA; it can only fill in the ringgit amounts.
How It Works
The developer claims money from your bank in stages, as they complete construction milestones.
- Stage 1: Signing SPA (10% paid by you as downpayment).
- Stage 2a: Piling & Foundation (10%).
- Stage 2b: Structural Framework (15%). ...and so on until Vacant Possession.
Each claim works the same way:
- The developer's architect or engineer certifies that a stage is complete. Under clause 5(2) of Schedule H, every payment notice must be supported by that signed certificate, and the certificate is the proof that the work has been done.
- The developer sends you (and your bank) a written notice with the certificate and the amount due.
- You, or your bank on your behalf, pay within 30 days of receiving the notice.
- The money goes into the project's Housing Development Account, a controlled account the developer can only draw on for that project under the Housing Development Act.
You do not have to wait for the stages to happen in order: clause 5(1) says the developer is not bound to build in the order listed, and you pay according to the stages actually completed. If a later stage damages earlier work, the developer must repair it at its own cost before handing you the keys.
The Schedule (Third Schedule of Schedules G and H)
| Stage | Milestone | % of Price | Cumulative % |
|---|---|---|---|
| 1 | Signing SPA | 10% | 10% |
| 2a | Work below ground level, including foundation | 10% | 20% |
| 2b | Structural framework | 15% | 35% |
| 2c | Walls, with door and window frames | 10% | 45% |
| 2d | Roofing / ceiling, wiring, plumbing, telecom trunking | 10% | 55% |
| 2e | Internal and external finishes | 10% | 65% |
| 2f | Sewerage works | 5% | 70% |
| 2g | Drains | 2.5% | 72.5% |
| 2h | Roads | 2.5% | 75% |
| 3 | Vacant Possession (keys, water and electricity ready) | 17.5% | 92.5% |
| 4 | Title delivered (strata title and transfer for Schedule H; individual title for Schedule G) | 2.5% | 95% |
| 5 | Held by the developer's lawyer as stakeholder | 5% | 100% |
The final 5% is held by the developer's solicitor as stakeholder: 2.5% is released 8 months after vacant possession and the last 2.5% at 24 months, the end of the defect liability period. If defects you report are not fixed, the repair cost can be deducted from it.
Items 3, 4 and 5 all fall due on the day you take vacant possession. The 2.5% in item 4 is only payable if the developer has delivered the title at that point, which is the 2015 rule that ties the last payments to the strata title (Schedule H) or individual title (Schedule G), so a developer that hands over keys without a title has to wait for that 2.5%.
(Source: Housing Development (Control and Licensing) Regulations 1989, Schedule H clauses 5 and 30 and the Third Schedule, and Schedule G Third Schedule, as substituted by the Housing Development (Control and Licensing) (Amendment) Regulations 2015; checked 30 Sep 2026.)
Want the ringgit figures for your own unit? Our free Progressive Payment Calculator works out every stage for your price, shows which stages come from your downpayment versus your bank, and estimates the progressive interest you pay before you get the keys.
Which Stages You Pay Yourself
Your bank only pays the stages after your own share has been used up. How much you pay out of pocket depends on your margin of finance (the loan-to-value, or LTV, ratio):
| Margin of finance | Your own money | Stages you pay yourself | Bank starts paying from |
|---|---|---|---|
| 90% | 10% | Stage 1 | Stage 2a |
| 80% | 20% | Stages 1 and 2a | Stage 2b |
| 70% | 30% | Stages 1, 2a and two-thirds of 2b | Rest of stage 2b |
Banks set the margin for your first and second housing loans under their own credit policies, commonly up to 90%. Bank Negara Malaysia caps the margin at 70% for an individual's third outstanding housing loan (in force since 3 November 2010). For the difference between your downpayment and the loan, see our downpayment guide.
(Source: Bank Negara Malaysia, maximum loan-to-value ratio of 70% on the third housing loan, announced 3 November 2010; checked 30 Sep 2026.)
Progressive Interest
Since the bank releases money in stages, you only pay interest on the amount released so far. This is called Progressive Interest. During construction most banks bill you interest only on the disbursed amount; your full monthly instalment (principal plus interest) starts once the loan is fully released, usually at or soon after vacant possession.
Worked Example: The Median SuperHomes New-Project Price
The median listed price of new-project listings on SuperHomes is RM311,300 (SuperHomes new-project listings, Sep 2026, n=339; middle half between RM248,500 and RM420,000). The table below runs that price through the Schedule H stages with a 90% loan (RM280,170) at an assumed 4.0% a year. The rate is an illustration only: your bank's rate depends on its base rate and your profile, and the Overnight Policy Rate that banks price from was held at 2.75% by Bank Negara on 3 September 2026.
| Stage | Payment (RM) | Paid by | Loan released so far (RM) | Approx. monthly progressive interest (RM) |
|---|---|---|---|---|
| 1 Signing SPA | 31,130 | You | 0 | 0 |
| 2a Foundation | 31,130 | Bank | 31,130 | 104 |
| 2b Structural framework | 46,695 | Bank | 77,825 | 259 |
| 2c Walls, door and window frames | 31,130 | Bank | 108,955 | 363 |
| 2d Roofing, wiring, plumbing | 31,130 | Bank | 140,085 | 467 |
| 2e Finishes | 31,130 | Bank | 171,215 | 571 |
| 2f Sewerage | 15,565 | Bank | 186,780 | 623 |
| 2g Drains | 7,783 | Bank | 194,563 | 649 |
| 2h Roads | 7,783 | Bank | 202,345 | 674 |
| 3 + 5 Vacant possession (incl. 5% to stakeholder) | 70,043 | Bank | 272,388 | 908 |
| 4 Title delivered | 7,783 | Bank | 280,170 | 934 |
Monthly interest = loan released x 4.0% / 12, rounded to the nearest ringgit. Payments rounded to the nearest ringgit.
- Early construction (stages 2a-2b): roughly RM100-RM260 a month, because only 10-25% of the price has been released.
- Late construction (stages 2e-2h): roughly RM570-RM675 a month, with 55-65% released.
- Completion: once the whole RM280,170 is out, the full instalment on a 35-year loan at 4.0% is about RM1,241 a month.
The total progressive interest you pay depends on how long each stage takes, which is why a project that stalls between stages costs you more even though your monthly bill stays low. For the loan itself, see our home loan guide.
(Source: SuperHomes listings query, 30 Sep 2026, publicly visible new-project listings with a listed price; Bank Negara Malaysia Monetary Policy Statement, 3 September 2026; checked 30 Sep 2026.)
Why Is This Good?
- Easier Cash Flow: You don't have the burden of full rental + full mortgage at the same time while waiting for the house to be built.
- Safety: The developer only gets paid if they actually do the work.
The standard SPA adds several protections on top of the payment stages. All of them are fixed terms of Schedules G and H, so a developer cannot water them down in a housing SPA.
Deadlines the Developer Must Meet
| Protection | Schedule H (strata) | Schedule G (landed) |
|---|---|---|
| Vacant possession | Within 36 months of the SPA date, or of an earlier booking-fee payment (see below) | Within 24 months of the SPA date, or of an earlier booking-fee payment |
| Late delivery | Liquidated damages at 10% a year of the price, calculated daily | Same: 10% a year, calculated daily |
| Common facilities | Completed within 36 months; late = 10% a year on the last 20% of the price | Not applicable |
| Defect liability period | 24 months from vacant possession | 24 months from vacant possession |
| Defect repair | Within 30 days of your written notice | Within 30 days of your written notice |
If you paid a booking fee before signing the SPA, the delivery period for LAD purposes runs from the date you paid it, not from the SPA date. The Federal Court decided this in PJD Regency Sdn Bhd v Tribunal Tuntutan Pembeli Rumah & Anor [2021] 2 MLJ 60 (judgment of 19 January 2021), so keep the booking-fee receipt. (Source: PJD Regency [2021] 2 MLJ 60, as reported by EdgeProp and StarProperty in January 2021; checked 1 Oct 2026.)
If the developer is late, it must pay the liquidated damages when it calls you to take possession; if it does not, you can deduct them from the instalments you still owe. Our guide to claiming LAD for a late project walks through the calculation and the claim. For defects, see the defect liability period guide.
If Your Loan Is Rejected
Under clause 6(3) of Schedule H, if you fail to get a housing loan because your income does not qualify, and you show proof of that to the developer, you only owe the developer 1% of the purchase price. The SPA is then terminated and the developer must refund the rest of what you paid within 30 days.
What Happens if You Pay Late
You are the one with deadlines too. Each instalment is due within 30 days of the developer's notice. After that, the developer can charge late payment interest at 10% a year, calculated daily (clause 10). If an instalment stays unpaid for more than 30 days after its due date, the developer can terminate the SPA and forfeit 10% of the price if you have paid up to half, or 20% if you have paid more than half, refunding the rest (clause 11). There is no late payment charge if the developer's claim notice is incomplete or lacks the architect's certificate, or if the delay comes from the developer's own lender not issuing the redemption statement your bank needs (clause 10(2)). Buyers financed by a government housing loan also get six months from the SPA date without late charges (clause 10(3)).
(Source: Schedule H clauses 6(3), 10, 11, 25, 29 and 30; Schedule G clauses 24 and 27; regulation 11(2) as amended by P.U.(A) 106/2015; Housing Development (Control and Licensing) Regulations 1989 as amended 2015; checked 30 Sep 2026.)
Progressive Payment vs Other Payment Schemes
Progressive payment is the default for "sell-then-build" housing in Peninsular Malaysia, but it is not the only structure you will see:
| Scheme | How you pay | Who pays interest during construction |
|---|---|---|
| Progressive payment (Schedule G/H) | 10% at SPA, rest by stage | You, on the amount released |
| Build-then-sell (10:90) | 10% at SPA, 90% on completion | Nobody: the bank releases the loan only at completion |
| Developer Interest Bearing Scheme (DIBS) | Developer absorbs the construction-period interest | Developer, usually priced into the unit |
DIBS was prohibited from 1 January 2014 under the 2014 Budget measures: projects with DIBS features can no longer be offered, and banks may not finance them, because Bank Negara found the scheme inflated prices and encouraged speculation. If a sales agent offers "no interest until completion", ask whether the developer is simply paying your progressive interest as a rebate, and get it in writing: it is not part of the statutory SPA.
A "developer bears the legal fees" or "free SPA fees" package is a separate promotion and does not change the payment schedule. Our SPA guide explains what else to check in the agreement.
What Might Change
The Housing and Local Government Ministry (KPKT) is drafting a Real Property Development Act to replace the Housing Development (Control and Licensing) Act 1966 and extend regulation to some commercial projects; on 31 July 2026 the minister said the draft was in its final stage, with stronger rules on how payments are collected among the proposals. Until a new Act and new regulations are passed and in force, Schedules G and H as amended in 2015 are the forms every licensed housing developer must use.
(Source: Budget 2014 measures on DIBS, effective 1 January 2014; Bernama, "Draft Real Property Development Act in final stage, says Nga", 31 July 2026; checked 30 Sep 2026.)
Check New Projects
Looking for new launch properties with progressive payment schemes?
To compare new launches with completed homes in the same area, browse Petaling Jaya or KL City Centre, where you can see projects still under construction next to subsale units. Before you book, run through our new launch checklist.
FAQs About Progressive Payment
Q: What is progressive interest?
Progressive interest is the interest you pay on a housing loan for an under-construction property while the bank is still releasing the loan in stages. You are charged only on the amount released so far, so the monthly bill starts small (about RM104 a month after the foundation stage on a RM311,300 unit with a 90% loan at 4.0%) and grows as construction progresses. Your full instalment of principal plus interest starts once the loan is fully released.
Q: How is progressive interest calculated?
Multiply the amount the bank has released by your annual interest rate and divide by 12. For example, if RM108,955 has been released at 4.0% a year, the monthly progressive interest is RM108,955 x 4.0% / 12, or about RM363. Your bank recalculates it each time it pays another stage claim.
Q: What is the difference between Schedule G and Schedule H?
Schedule G is the standard SPA for landed houses sold with their own land title, such as terraces, semi-detached houses and bungalows. Schedule H is for strata property, such as condominiums, apartments, serviced residences and landed strata. Both use the same payment percentages, but Schedule G gives the developer 24 months to deliver vacant possession while Schedule H gives 36 months, and only Schedule H has a separate deadline for common facilities.
Q: What is stage 2a in construction?
Stage 2a is the work below ground level, including the foundation of the building (piling and foundation works). It is worth 10% of the purchase price and is usually the first stage your bank pays if your loan is 90%. With an 80% loan, you pay stage 2a yourself.
Q: How long do I have to pay each progressive payment?
You must pay within 30 days of receiving the developer's written notice, which has to include the architect's or engineer's certificate that the stage is complete. After 30 days, the developer can charge late payment interest of 10% a year, calculated daily. It cannot charge interest if its notice was incomplete or missing the certificate.
Q: Can the developer ask for a booking fee or more than 10% when I sign the SPA?
No. Under Schedules G and H you pay 10% on signing and every other payment is tied to a completed construction stage certified by the developer's architect or engineer. Since the 2015 amendments, regulation 11(2) of the Housing Development (Control and Licensing) Regulations 1989 says no one, including a stakeholder, may collect any payment "by whatever name called" except as the SPA prescribes, which rules out a separate booking fee. If you are asked for money ahead of the SPA or the certified stages, get a receipt and raise it with KPKT.
Q: What happens if my housing loan is not approved?
If your loan is rejected because your income does not qualify and you give the developer proof, you only have to pay 1% of the purchase price. The SPA is then terminated and the developer must refund the balance of what you paid within 30 days. This protection is in clause 6(3) of Schedule H.
Q: When does the final 5% get paid to the developer?
The final 5% is paid on the day you take vacant possession, but to the developer's solicitor as stakeholder rather than to the developer. The solicitor releases 2.5% to the developer eight months after vacant possession and the last 2.5% at 24 months, when the defect liability period ends. If you have served notice of defects that the developer has not fixed, the cost of repairs can be paid to you from this sum.
