Construction Stages and the Progressive Payment Schedule

When you buy a landed home that has not been built yet, you do not pay the price in one go. The price is paid bit by bit, following the progress of work on site. Each time a stage is completed, the developer sends a payment notice, and you (or your bank or LPPSA on your behalf) pay the percentage set for that stage.

This guide explains each stage of building a landed home, the percentage the law sets for each stage, how the architect’s certificate triggers each billing, how banks and LPPSA release money, and how much interest you might pay while the house is still being built. General information only, not legal/financial/tax advice.

Key terms

• SPA: the sale and purchase agreement between you and the developer.
• Schedule G: the statutory SPA form for a landed home (land and building) under the Housing Development (Control and Licensing) Regulations 1989. The developer cannot change its main terms.
• Third Schedule: the part of the Schedule G SPA that lists the schedule of payment of the purchase price.
• Progressive payment: payment according to the stage of work completed.
• Architect’s certificate: a certificate signed by the developer’s architect or engineer confirming that a piece of work is complete.
• VP: vacant possession, the handover of the home and keys to you.
• CCC: Certificate of Completion and Compliance, which states that the home is complete, safe and fit for occupation.
• Progressive interest: interest on a bank loan charged on the amount already released to the developer before the home is complete.

Overview: from SPA to keys

Payment for a home under construction follows the same cycle each time. The diagram shows the cycle for each stage.

1. 1Work completed on siteFor example the foundation
2. 2Architect's certificateThe developer's architect or engineer inspects and signs a certificate
3. 3Payment noticeA written notice to you, together with that certificate
4. 4Payment within 30 daysYou, your bank or LPPSA pay that stage's percentage
5. 5Next stageThe cycle repeats until VP, the title and the end of the retention period

1. Work completed on site The developer's contractor completes a stage, for example the foundation.
2. Architect's certificate The developer's architect or engineer inspects and signs a certificate that the work is complete.
3. Payment notice The developer sends you a written notice, together with that certificate.
4. Payment within 30 days You, your bank or LPPSA pay that stage's percentage within 30 days.
5. Next stage The cycle repeats until VP, the title and the end of the retention period.

The law sets several important points in this process:

• Every claim must be certified. Clause 5(2) of Schedule G requires every payment notice to be supported by a certificate signed by the developer’s architect or engineer in charge of the development. That certificate is proof that the work has been completed.
• You pay for completed work, not in order. Clause 5(1) says the developer is not bound to build in the order of the Third Schedule. If later work damages completed work, the developer must repair it at its own cost before VP.
• The payment period is 30 days. The Third Schedule requires payment within 30 days after you receive the developer’s written notice.
• Late payment charges. If an instalment is unpaid after 30 days, clause 10(1) allows late payment charges at 10% a year, calculated from day to day. Clause 10(2) says the charge cannot be imposed if the delay is caused by a payment notice that is incomplete or not supported by the certificate.
• Apply for your loan early. If you want a loan, clause 6(1) requires you to make a written application within 30 days after receiving the stamped copy of the SPA.

Construction stages and payment percentages

The table maps each stage of building a landed home to its item in the Third Schedule of the Schedule G SPA. These percentages are set in the statutory form, so they are the same in every Schedule G SPA.

What happens at each stage

Site preparation. The site is cleared, levelled and the position of the houses marked out. The Third Schedule has no payment item for this work. The first 10% is paid when the SPA is signed, regardless of progress.

Foundation. The foundation carries the weight of the house into the ground. For most landed homes this involves piles or pad footings, ground beams and the ground floor slab. Once the foundation is complete and certified, the developer may claim 10%.

Structure. Columns, beams and upper floor slabs are built. This is the largest percentage in the construction phase, 15%.

Walls. Brick or block walls go up, and door and window frames are fixed in position. Payment of 10%.

Roof and M&E. The roof goes on, and the hidden work is put in: electrical wiring, water piping (without fittings such as taps and sinks), gas piping if any, and internal telecommunication cabling. Payment of 10%.

Finishes. Plaster, paint, tiles, ceilings and external finishes. Payment of 10%.

External works. The sewerage (5%), drains (2.5%) and roads (2.5%) serving your home. This work is usually done for the whole estate, not house by house.

VP, title and retention. The remaining 25% is paid on the date of VP: 17.5% when the home is handed over with water and electricity ready for connection, 2.5% linked to the title, and 5% held by the developer’s solicitor as security for the defect liability period. For VP, the developer must also obtain the CCC first (clause 26). Read what is a CCC for the full explanation.

How long does each stage take?

No official source sets a duration for each stage. Actual durations depend on the size of the project, the soil, the construction method, the weather and approvals. What the law does set is the overall period: clause 24(1) of Schedule G requires VP to be delivered within 24 months of the SPA date. If it is late, clause 24(2) requires the developer to pay liquidated damages (LAD) at 10% a year of the purchase price, calculated from day to day.

The payment timeline in one diagram

This diagram shows the main events in order and the cumulative percentage paid.

1. SPA signed: 10% The first payment. The 24-month period for VP starts running.
2. Foundation and structure: 35% Two certified claims, 10% and 15%.
3. Walls, roof and M&E: 55% Two claims of 10% each.
4. Finishes and external works: 75% Finishes 10%, sewerage 5%, drains 2.5% and roads 2.5%.
5. CCC issued A precondition for VP under clause 26.
6. VP and keys: 95% 17.5% on VP, and 2.5% linked to the title. The 24-month defect liability period starts.
7. 8 months after VP The developer's solicitor releases 2.5% of the retention, unless a defect notice is still unresolved.
8. 24 months after VP: 100% The final 2.5% retention is released, on the same condition.

How the bank and LPPSA release payments

If you finance the home with a loan, you usually pay the first 10% from your own money (or according to your financing margin), and the balance is paid by the bank or LPPSA directly to the developer, stage by stage.

Bank loan

Banks release money progressively. For example, RHB states that for properties under construction, the bank releases the progressive payment to the developer based on the claim made upon completion of each construction stage, as certified by the Architect’s Certificate.

The usual flow is: the developer sends the payment notice and architect’s certificate to you and the bank; you (or your lawyer) check the documents are complete; the bank releases that stage’s amount to the developer. Check with your bank whether it needs your signature or confirmation for each release.

LPPSA

For Type 3 financing (buying a home under construction from a developer), LPPSA’s Housing Financing Guideline Bil.1/2026 says the financing is released up to 100% to the developer, and LPPSA accepts progressive payment claims and Architect’s Certificates from the developer. For the full application steps, read how to apply for LPPSA for a developer home.

Interest during construction (bank loans)

With a bank loan, you usually do not pay the full instalment while the house is being built. Instead, you pay interest only on the part of the loan already released to the developer. The more stages are completed, the more has been released, and the higher the monthly interest. The full instalment (principal and interest) starts once the loan is fully released, under the terms of your letter of offer.

A simple way to estimate it is:

Monthly interest ≈ amount released × annual interest rate ÷ 12

Banks may calculate by the number of days in the month, so your bank’s figure will differ slightly.

Hypothetical example: monthly interest on a RM400,000 home, RM360,000 loan and an assumed rate of 4% a year

Example: interest during construction on a bank loan

Hypothetical figures, for illustration only, not a RumahHQ price. The home costs RM400,000. You pay 10% (RM40,000) at the SPA from your own money, and the bank finances 90% (RM360,000). The assumed interest rate is 4% a year. This rate is an example assumption, not a market rate.

After the foundation is complete, the bank releases 10% of the price (RM40,000). Monthly interest ≈ RM40,000 × 4% ÷ 12 = RM133.33. After the structure, the total released becomes RM100,000, so interest is about RM333.33 a month. The table shows each stage.

The total interest you pay during construction depends on how long the released amount stays at each level. If the project moves quickly to the later stages, more months are paid at the higher interest; if the early stages take longer, the monthly interest stays low for longer. Budget for interest that rises month by month, not a fixed amount.

Hypothetical example: checking a payment notice for item 2(b), the structural framework

Example: checking a payment notice

Hypothetical figures. Encik Hafiz buys a home at RM400,000. He receives a payment notice for item 2(b), the structural framework. He checks three things: (1) the notice comes with a certificate signed by the developer's architect or engineer; (2) the amount claimed is 15% × RM400,000 = RM60,000; (3) the date he received the notice, because the 30-day period starts from that date. Everything is correct, so he forwards a copy to his bank straight away so the release is not late.

What to check at each stage

At RumahHQ, each project’s progress is published on public progress pages, so buyers can see for themselves which stage has been reached. Read more on the Transparency and How We Build pages.

Common mistakes

• Not recording the date a notice was received. The 30-day period runs from the date you receive the notice, so keep the envelope, email or delivery receipt.
• Forwarding the notice to the bank late. A late release can lead to late payment charges of 10% a year under clause 10(1), unless the notice itself was incomplete.
• Not checking the architect’s certificate. A notice without a certificate does not meet clause 5(2).
• Assuming full instalments start at the SPA. With a bank loan you usually pay interest only on the amount released during construction. For LPPSA Type 3 on a landed home, the 25th-month or 95% rule applies.
• Not budgeting for rising interest. Monthly interest goes up each time a stage is paid.
• Forgetting the 5% retention. It is held by the developer’s solicitor and helps protect you during the defect liability period.

Quick checklist

• I understand the 12 payment items in the Third Schedule and the amount for each.
• I keep one file for every payment notice, architect's certificate, receipt and date received.
• I know who pays each stage: me, the bank or LPPSA.
• I have a budget for interest during construction (if I have a bank loan).
• I know the VP deadline: 24 months from the SPA date.
• I know the CCC must be issued before VP.

Next step

Once the home is complete, the next important step is the inspection at handover. Read the handover inspection guide and the Quality & Handover page. If you have not checked your financing eligibility yet, read check eligibility before buying your first home, then Register Interest for upcoming RumahHQ projects. Registration of interest is free and non-binding.