What’s the difference between Developer and Contractor?

There was a series of news articles discussing the old story of URA’s issuance of no-sale license to Kingsford Huray Development due to its poor workmanship for Kingsford Waterbay and Kingsford Hillview Peak. This topic resurfaced in the news due to the launch of Kingsford's latest mega project, Normanton Park.

There was a series of news articles discussing the old story of URA’s issuance of no-sale license to Kingsford Huray Development due to its poor workmanship for Kingsford Waterbay and Kingsford Hillview Peak. This topic resurfaced in the news due to the launch of Kingsford’s latest mega project, Normanton Park.

There were also rumours that MCC Land Singapore is one of the developers. In fact, they are only the appointed contractor for the whole project. All these news and rumours created confusion in the market especially for normal buyers or non-seasonal property investors.

In this article, we will address these two questions:

  1. What is a No-Sale License?
  2. What is the difference between a Developer and a Contractor?

1. What is a No-Sale License?

Developers who were issued a No-Sale Licence can only commence construction but are not allowed to sell any units until:

  1. A Temporary Occupation Permit (TOP) is obtained for the project and the developer will be able to convert to a sale license.
  2. The developer is able to satisfy the criteria to qualify for a sale license.

Developers will be issued with no-sale license if they ignore safety standards, build sub-par units, deviate from requirements of BCA or receive multiple complaints from buyers.

Why was Normanton Park issued a No-Sale License?

Citing from an article on The Business Times Singapore, an URA spokesman mentioned that the no-sale license was issued to Kingsford Huray due to multiple reasons. Firstly, the Building and Construction Authority (BCA) had found that for Kingsford Waterbay, some building works such as windows, barriers and common storey shelter “had deviated from requirements under the Building Control Act and Regulations”. Secondly, they also received feedback from buyers of Kingsford Hillview Peak and they were also taken into consideration.

How does this affect the buyers and developers?

The impact on the buyers for Kingsford’s future projects will in fact be a positive one instead of a negative one. The reason is that developers who were issued a no-sale license are under the authority’s radar and will be more mindful of their future projects. They will also likely adhere strictly to the BCA regulations, and deliver quality units to prevent something similar from happening again.

However for developers, this means that they will not be able to commence sales before TOP, impacting them heavily in terms of financing. This is because developers are not able to draw down new funds from the buyers throughout the entire construction process and have to find other ways to finance the construction.

2. What is the difference between a Developer and a Contractor?

A developer is the overall in charge of the project and they own the land. They are responsible for submitting applications to the relevant authorities for approval to build the projects, and also the sales of the project following which.

A contractor on the other hand has no ownership of the land and has to be licensed with URA. Contractors are only responsible for the building and construction works. They are not involved in the sales process of the project and they report straight to the developer regarding the progress and outcome of the construction work.

Kingsford Huray appointed China Jingye Engineering Corp Ltd, which is one of the subsidiaries of MCC Land as their main contractor. MCC Land is a reputable and well-known contractor (or developer at the same time) which is likely to deliver projects with good quality and comply with the safety standards.

However, we see a lot of property websites displaying words like ‘Proudly developed by MCC Land and Kingsford’ and ‘A highly anticipated project jointly by Kingsford and MCC Land’, which could be one of the reasons why people mis-recognize MCC Land as one of the developers.

In a nutshell, we hope that this clears up the misconception between a developer and a contractor. A good track record for both the developer and contractor is also one of our key criteria when looking to purchase a new launch property. Singapore is a well-regulated country and most of the developers are reliable. However, for overseas properties, it is not uncommon to hear that developers failed to deliver or complete the projects. Hence, it is important to brush up your property knowledge to gain a better understanding before committing to any property purchase. Having a set of strict criteria and doing your due diligence will serve you well in your property journey.