Buying a new launch (EC)

What's an EC?

The Executive Condominium (EC) Housing Scheme was introduced to provide an affordable option for higher-income Singaporeans who aspire to own private housing. That is why ECs offer similar design features and facilities as private condominiums, and are treated as strata-titled private housing after ten years. 

Whats the main difference between EC and private condos?

There is a five-year Minimum Occupancy Period. During these five years, you cannot rent out the entire unit, or sell it on the open market. if you need to live somewhere else for any reason, such as working abroad, your time spent away will not count toward the MOP.

 

MOP begins from the time of the development's Temporary Occupancy Permit (TOP). For example, if your EC takes three years to complete, you'll need to wait another five years before you can resell it on the open market.

 

Should a couple break up before TOP within the MOP period, approval need to be obtained from HDB to cancel the purchase. Some of the cost incurred will be abortive charges from law firm, bank loan cancellation penalties etc.

 

Aside from that, like a private condo, Sellers Stamp Duty (SSD) applies during the first three years of sale).

Normal Payment Scheme (NPS)

Normal Payment Scheme (NPS), also known as Progressive Payment Scheme, allows you to service your loan via monthly installments progressively stage by stage as the property is being built.

StagesPayment Under a Standard Payment Scheme (% of Purchase Price)
Upon the grant of Option to Purchase5% (Booking Fee)
Upon signing of the Sale & Purchase Agreement or within 8 weeks from the Option date15%
Completion of foundation work10%
Completion of partition walls of unit5%
Completion of roofing/ceiling of unit5%
Completion of door sub-frames/ door frames, window frames, electrical wiring, internal plastering and plumbing of unit5%
Completion of car park, roads and drains serving the housing project5%
Notice of Vacant Possession (TOP)25%
On Completion date15%
 

Deferred Payment Scheme (DPS)

Deferred Payment Scheme (DPS) allows homeowners to start servicing their loan only when the EC is ready for occupation, ie; when owners receive the keys to their EC. DPS is most popular amongst buyers who currently own an HDB and have monthly installments to service. This allows them to better manage their finances as they do not have to service both loans (HDB & EC) concurrently.

StagesPayment Under a Standard Payment Scheme (% of Purchase Price)
Upon the grant of Option to Purchase5% (Booking Fee)
Upon signing of the Sale & Purchase Agreement or within 8 weeks from the Option date15%
Notice of Vacant Possession (TOP)65%
On Completion date15%

The government has put in place various measures to ensure that ECs remain affordable. For example, initial eligibility and ownership restrictions, such as an income ceiling of $16,000 and a 5 year minimum occupation period, are imposed on EC buyers. This helps to reduce the land cost of the EC projects, as well as their selling price. Currently, the prices of ECs are about 25% cheaper than private condominiums of similar size and location. EC buyers also benefit from the CPF Housing Grant when making their purchase. 

Timeline

Process

Shortlisted the projects that you like, you can visit the developer’s show flat to have a look at the mock-up unit and the project model. For new condo launches, usually there will be a preview day usually 1 to 2 weeks before actual launch day.  Potential buyers can submit their interest by filling up the Expression of Interest (EOI) form, together with a blank cheque issued to the developer’s project account.

The cheque allows the potential buyer a chance to obtain a balloting queue number on the launch day. The cheque will be returned to the buyer without any penalty eventually if the buyer does not wish to proceed with the purchase.

On launch day, the potential buyer will be given a ballot number. The buyer has to be present once the number is called or else the opportunity to select the units will be forfeited. Once the number is called, the buyer has to select a few units based on the preferred choice. Usually, there will be a queue before the selection, it is advisable to have a few choices in case the first choice is the taken up by other buyer ahead of the queue.

Once the unit is booked, the buyer will have to fill up the blank cheque the amount which is equivalent to 5 percent of the purchase price of the property. After that, the buyer will be given a set of Property Details Information (or ‘PDI)’ documents – this is a set of all the floor plans, rules and regulations, offered items and other documents related to the unit has booked. At this point in time, the buyer will be issued with the corresponding Option To Purchase (OTP) for the unit.

With the OTP, you are now ready to secure the bank loan for your property. Go to the bank with the OTP and the bank will issue you a Letter of Offer, do take note of the interest rates and the lock in period.

If you currently own a HDB you may opt for a deferred payment scheme and utilized a bridging loan.

It is a temporary loan to help EC buyers to tide over their short term financial needs. The bridging loan amount is the difference between the purchase price or valuation of the new EC, whichever is lower, and the applied home loan amount.

You’ll also have to engage a lawyer to do the conveyancing work for you, it is advisable to engage a lawyer that is in the bank’s panel of lawyers. Legal fee for conveyancing is around $2000 to $3000.

After HDB has approved your application to purchase the EC, which takes about a month, you’ll receive a Sales and Purchase (S&P) Agreement from the developer. You’ll have 21 days to exercise by signing and mailing back the S&P Agreement.

Upon exercising the S&P, you’ll need to pay the Buyer’s Stamp Duty (and ABSD if applicable) within 2 weeks of signing it.

Subsequently, within 8 weeks from the date of OTP, you’ll have to pay the 15 percent of the purchase price (which is the remainder of the downpayment) in cash or CPF monies or a combination of both.

The remaining 80% of the price of your condo will be made progressively, each time the developer completes a certain stage in construction:

Collect You Keys

And finally, after the condo TOP, it is time to collect the keys.

After you have collected your keys, it is not over yet!

You will have 12 months of defects liability period to check for all kinds of defects in your condo unit.