Learn all about Singapore's Private Property Market

Learn all about Singapore Properties here.

With an aim to help readers understand Singapore’s property market, we’ve consolidated a comprehensive list of FAQs on Singapore Property. We narrowed down the facts that are particular to Singapore’s property market, and created this Property lesson 101 to help jump start you right in!

We are sure you’ll find some interesting facts you never knew before.

 

Without further ado, let us get up to specs on our knowledge of the private property market! :)

 

Singapore Property 101

 

Property Developers

We can buy property directly from developers, or 2nd hand through the resale market.  In 2012, 2/3 of all purchases were brought from the developers directly, and 1/3 from individual owners thru the resale market.  That also means that developers have huge control over the pricing of private housing in Singapore.

Typically developers will launch sales over the weekends, where they can attract the crowd. They will construct show flats, either on the site itself or near the site, for marketing purpose. “Previews”, “VVIP launch”, “Early bird launch”, are all terms to attract the crowds to the show flats, especially in the first week.

 

“80% sold over the weekend!”: The difference between launched units and total units

The first week makes or breaks a developer. A perceived high take up rate in the first week of launch helps sales tremendously. Nothing helps sales more than a headline title of “80% of launch property sold over the weekend”.  That keeps enthusiasm for the project for the rest of the week when people flock to see the show flat subsequently.

Note that percentage sold figure is always misleading. For example, a real headline this week (when I’m typing this) shouts that 80%, or 350 units out of 450 launched in D’nest Condominium were sold within 3 days of launch. But the truth is that the developers kept 462 more units un-launched. In actual fact they sold only 38% of the total 912 units. But facts do not push sales well. Imagine if you were to go on the second day of preview, and they told you the truth, that they had only sold 10% of the units yesterday. Would you buy it? http://www.propertyguru.com.sg/property-management-news/2013/3/35405/more-than-350-units-sold-at-d-nest-preview

Edit: How do we then know the exact sales figures and selling rate? You can check it via URA website or from our own launch list checks here: http://www.propersquare.com/upcoming-projects

 

Hyping it up: Put in cheque for pre-booking

There is also a practice of encouraging people to put in cheques before even the first launch. Despite the cheque, there are no legal obligations for the home viewer to buy. Customers can take back the cheque anything so long as they do not sign the Option to purchase.  Agents claim that by providing a cheque, those customers will get priority in choosing/buying units. That can be useful when a particular property launch is very popular with buyers, and you are vying with someone else over that choice unit on that high floor with that good view.

Since there is really nothing to lose for the customer (they can choose not to buy and take back the cheque) and everything to gain in the slight chance that they want to buy the unit, customers are normally ok to do so.  All these can be done during the prelaunch.

Agents of course do this to 1) hype up the project (“look at how much interest the project is generating even before launch!”), and 2) psychologically it helps to close the sale. Getting a cheque on hand is one step to closing the deal.

 

Tenure of property

There are generally 3 common types of lease, i) 99 years leasehold, ii) 999 years leasehold, and iii) freehold.

For 99 years leasehold, you own the property for 99 years. After the 99 years the land returns back to being government property. (There are also 30 years freehold and 60 years freehold, although these are less common)

For freehold land, you own the land forever. It is a perpetual absolute ownership. There is no expiry period to that ownership.

For 999 years leasehold, you own the property for 999 years. Since that is a very long period of time, people generally regard 999 years leasehold as freehold.

After Singapore was founded, the law states that the government authorities cannot sell land with lease more than 99years. This means that any property built on new land sold by the government has tenure of maximum 99 years.

Freehold properties are generally properties owned by private individuals before the founding of Singapore. Those days when you own a land, you own it forever. Title deeds are transferable, which means that the owner can choose to sell that freehold land to new owners, and the new owners in turn will own that freehold land.

Developers can thus have access to freehold land by buying the land from these owners. If that single land is shared by many apartments, the developer will need to get a majority of them to agree in selling their property. This process is called the en-bloc process.

 

En bloc

In an old development the land maybe underdeveloped and the buildings can be old and ugly. Sold separately, that fetches a low price. The owners can do an en bloc (collective sales) instead. That normally fetches a much higher price as it unlocks the value of the land. Developers can tear down the underdeveloped building and built more units on that same land, making it worth more (individual owners have no capacity to tear down and rebuild the building)

Example: a land of 10,000 square feet (sq ft) with plot ratio 1.6 has a gross area of say, 8,000 sq ft (it is underdeveloped).  If after an en bloc the developers choose to fully develop the land, they can build 10,000 sq ft * 1.6 = 16,000 sq ft of space, effective doubling the development space (and price), unlocking the land’s value. Thus thru an en bloc, the developers are willing to pay a much higher price than what the individual are selling for separately.

Basically an aging building decreases in value over time, and it could reach a stage where the redevelopment value (and its land) is worth more than the utility of the existing building. Hence developers are willing to pay a premium for the en bloc.

 

Price Per Square Foot (psf)

PSF is a way to value the price of a development. If a condo unit is selling for $1000 per square foot, and the condo is 800 square foot in size, it will cost $1000 * 800 = $800,000.  If the same unit is selling for only $500 psf, it will cost $500 * 800 = $400,000.

The lower the PSF, the cheaper the price; the higher the PSF, the more expensive it is.

Apartments have different sizes. Some are very small (units smaller than 500 square feet, or just 5 car lot size) and some are huge (2000 square feet or even bigger). An average 5 room HDB flat is around 110 square metre, or around 1200 square feet. Looking at the PSF allow us to compare prices across different size apartments.

We compare pricing by asking how much it cost per square feet. HDB’s are typically around $400psf, a cheaper condo is currently around $900psf, average condos around $1200 psf and above, and luxury condos at $2000 psf and above.

 

Smaller apartments are more expensive

Normally within a development, smaller size apartments are more expensive psf wise, as compared to larger apartments. 

There are many reasons for this phenomenon, and one of them is that smaller unitsèaffordability in quantumèopens them to a bigger demand marketèpushing up the price per square foot (higher PSF)

In other words, buyers do not mind paying slightly more than the average PSF for a smaller unit, if buying a small unit means forking out a much smaller absolute amount.

That encourages developers to build increasingly smaller apartments since they can sell it at a higher psf.

This may not good since that causes overcrowding problems.

To counter that, the government has some since imposed limitations on the number of shoebox apartments that developers can build within each development.

 

The size (on paper) is not the size u live in

Say you purchase an apartment of size 1000 square feet on paper. However the apartment will feel much smaller than that. Truth is that the liveable area is 60% to 80% of the total area you buy. A lot of the space you bought is for areas where you have no access for, like the air condition ledge for the compressor outside your apartment. The floor plan will show the wasted areas. Normally the agents will not say explicitly exactly how much, so we have to do a rough deduction base on the floor plan images. Generally the space wastage is huge.

 

Let us take a look at some of these areas.

Planter Balcony Example

 

Planters

Planter box is a sunken in area that is about 50cm deep, meant for planting plants. In order to stand 'on' the planter box, you will need to get your contractor to plank over it. Some owners choose to plank over the planters, so as to use the space as a balcony. In the picture above, for decorative purposes, the developer had filled the planter area with grey pebbles instead.

 

Balconies

One cannot build permanent structures to enclose, as that will flout the GFA limits and rules. Residents will need to seek permission for it. This openness limits the usage of balconies to being a patio. Since that gives the apartment a sense of spaciousness, a reasonably sized balcony is still acceptable. In the same picture above, the balcony is the rest of the area where the planks are on.

 

 

 Picture APicture BPicture C

 

Void areas

Looking at the Picture A above, assuming the brown squarish area is 250 square feet, the amount of space that you have to pay for is double of that, at 500 square feet. Void areas are found in properties with very high ceilings. To understand it simply, imagine you paid for a condo with 2 levels, but the top level is torn away for that high ceiling look.

Thus a property of 1000square feet with void area will yield just 500 square feet of space floor space. This is an absolute waste of huge amount of space. The only benefit is your unit is almost twice the height of normal apartment. Basically you trade space that you can use (a second storey) for height space that you cannot use.

(Since we’re on this topic, imagine an apartment with height around 1.5 to 1.8 times the normal apartment height.  While it is not enough to build a full 2nd level, you can build an intermediate floor in it. That is called a Mezzanine.)

 

Bay window

Looking at Picture B and Picture C. That elevated flat area in front of the window is the bay widow. It used to be the government do not consider bay windows as space. So in practise the developers can build that area for free, and charge the customer for it.

For example: Government sold development A a site that can build into an area of 100,000 square feet. Development A decides to build 5000 square feet of bay windows.  End of the day development A can sell to the public 105,000 square feet of space, even though they pay only 100,000 square feet of space, as the government previously did not consider bay windows as part of the space that was sold.

End of the day every developer started to take advantage of building as much bay window as possible. The rules were changed last year to account for that and to stop that loophole.

Bay windows are normally wasted space. You can add a cushion on it and use it as a sofa, or a reading corner, or you use it as a display shelf for your items, but when the entire house is full of bay windows, what else can you do with it?

 

Question: What incentives do developers have in building these “wasted areas”? They can easily just build a home that has less of these “space wastage”.

Actually a lot of these are due to government policies. URA feels that having balconies and planters enhances the garden city ambience and promote greenery in the sky. As such they actively encourage the building of such space.

The GFA of the balconies is allowed to be computed over and above the Master Plan control, subject to a cap of 10%. So the developers have incentives to build the balconies and planters, as they can get that 10% more (unpaid and free) space from URA. The developers than charges the customer that extra space for more profit.

http://www.ura.gov.sg/circulars/text/dcdgfahb_d0e180.htm      

http://www.ura.gov.sg/circulars/text/dcdgfahb_d0e4.htm

 

Speaking of incentives...

Green Mark

There are more and more developers selling condos that have the “green mark”, innovative environmentally friendly designed condos. While part of the reason of being eco-friendly is to help save the earth, the more important reason is that it helps them make more money.

How? Just like balconies and planters, URA encourages environmentally friendly buildings and dangles a nice GFA reward to encourage more developers built eco-condos.

Green Mark Rating

GM GFA Incentive Scheme

Platinum

Up to 2% additional GFA beyond Master Plan GPR
(subject to cap of 5,000sqm)

Goldplus

Up to 1% additional GFA beyond Master Plan GP

The green mark endorsements --> free unpaid GFA to sell to consumers --> bags of cash for developers

http://www.ura.gov.sg/circulars/text/dc09-04.htm

 

Night lighting

For some reason, it is deemed beneficial to have night lighting (makes the skyline look more attractive, defray the cost of government paying for such lightings). Just like the building of balconies and eco-friendly condos, URA encourages and reward developments around CBD/marina area to have such lightings.

http://www.ura.gov.sg/circulars/text/dc09-05.htm

 

Speaking of space…

URA have gross plot ratios (GPR) to determine how much developers can build on the land. They can be 1.4, 1.6, 2.1, 2.8, etc.

The Gross Plot Ratio (GPR) in the Master Plan prescribes the maximum Gross Floor Area (GFA) allowed for a site.

GPR * size of site = GFA

How it works is assuming the gross plot ratio is 1.4, and the developer bought a land of size 100,000 square feet. They can thus build up to a maximum of 1.4 * 100,000 = 140,000 square feet worth of apartments to sell. (That total figure of 140,000 square feet is called the gross floor area, GFA)

Say a developer decides to build a 5 story complex. Hence each level can be of size 28,000 square feet.

The bigger the Plot Ratio is, the more units that can be built on it.

The plot ratio is determined every 5 years in accordance to the URA Master Plan, and is readily available online. 

 URA Concept Plan

Coincidentally, the concept plan (the previous one was in year 2001) was what caused the whole 6 to 6.9million is too much population debate recently.

 

Question: can we build a 100 storey apartment on that same plot of land, with each level being just 1400 square feet?

No.

Each plot ratio has a maximum height to prevent the above case from happening. For a Plot Ratio of 1.4, maximum height is at 5 storeys. 

 

Plot ratio to Storey Height

Plot ratio 1.4 = max height at 5 storeys

Plot ratio 1.6 = max height at 12 storeys

Plot ratio 2.1 = max height at 24 storeys

Plot ratio 2.8 = max height at 36 storeys

 

Interesting facts

There is no estate duty and capital gains tax in Singapore. This encourages the wealthy to invest and build up their wealth here.

 

Learn more about Show Flats

Show flats: What you see is never what you get.

Show flats sole purpose is to sell units. They are to make the development look good. As a rule, what you see is NOT what you get. They are generally a very unreliable account of what the finish product would look like many years later. There are numerous complains that the finished product looks nothing like the show flat picture. There are many legal ways to trick the home buyers. To give a false illusion of space, Doors are removed, mirrors are placed, and Walls are removed (or made thinner, or replaced with glass). The bed mattresses used in the bedrooms are not of standard sizing. Often they are constructed slightly smaller to make the room look more spacious in comparison.

Rooms and space that are oddly shaped or generally unusable in real life are designed very nicely with furnishings. For example, bomb shelters, which are generally waste space, are being marketed as a maid’s room.  Ceilings are made very high in show flat to give a sense of space (authorities are increasingly clamping down on show flats that have ceiling heights not being indicative of the true height). Expensive furnishing are used (that you may not get) to beautify the place.

The only legal representations are those facts included in the brochure/fact sheet/Sales &Purchase agreement. Even then some specifications are not included in it, like how thick the walls are. Check with the agents and get them to write it down if possible.

Things that are unstated are the most important things. Recently there is a case where the condominium is enclosed with... Green wire mesh! That is pretty shocking for a million dollar home purchase. The developer did not explicitly state what kind of wall they are building, and those facts are of course omitted in the show flat/brochures.  As such even though the buyers felt cheated, it was perfectly legal.

We need to ask plenty of questions that are not in the brochures.

 

What should we look for in a well-built property?

Preferably good views! If not then at least unblock views! If the view cannot be unblock, make sure the building that is blocking your view is located further away (The worst case is Hong Kong claustrophobic style- I look at your underwear drying view).

North-facing windows that avoid the afternoon sun are good. Nice squarish useable home layout that has no bay windows and no bomb shelters are good too (Developments nowadays have bomb shelters built into common areas, freeing your apartment from it). 

Having plenty of facilities (enough treadmills and big enough swimming pool) to share around is always a plus.

The devil is in the details. Larger pieces of marble looks better than smaller pieces for flooring as there are less breaks in the lining of the floor (although larger pieces cost more, due to increase difficulty in transport).

Air-condition vents that hides the air condition unit makes the place look cleaner and more modern.

Anti slam cabinets are becoming the de facto standard these days.

Fixtures are important. These include the built in wardrobe and cabinets. We can inspect these fixtures in the show flat to assess the overall workmanship. The brands and companies that make the fixtures are important as well. Increasingly, a lot of developers are using cheaper local/Asian companies, as generally homebuyers do not seem to mind since the brand names are usually not indicated, and sometimes the workmanship can be lacking.

Brands of taps and kitchen appliances can be a quick useful gauge on how much the developers are willing to spend on quality.

Increasingly, developments are providing inbuilt appliances with aesthetically better looks. These include hidden fridges and customized stoves/induction hubs. Those are more expensive and generally preferred, but do take note whether those are of a standard size. If/When it breaks down, the replacement appliance may leave an odd gap in the structure.

When in the show flat always consider if the unit layout make sense. Whether there is enough space for a shelf or a shoe rack or whether the corridor is overly narrow. It is pretty much an exercise of common sense. Have fun!

 

Ceiling heights: i) Floor to Ceiling and ii) Floor to Floor

Be careful to differentiate between i) Floor to Ceiling height, and ii) Floor to Floor height.

The one that is important to you is the i) Floor to Ceiling height, since that is the actual height you get to experience. That is the amount of space between the ground you are stepping on, and the ceiling.

ii) Floor to Floor height is the space in between two levels, and houses the concrete structure, the electric cablings, air condition ducting (especially for commercial buildings), etc.

Since Floor to Floor height is always > Floor to Ceiling heights, some developers like to quote the floor to floor height. Again, we should compare between developments using floor to ceiling heights.

http://www.propersquare.com/reviews/details/hillview-peak

 

SO... How much did this show flat cost?

Good question since the buyers are essentially paying for the show flat to get sold on the project. Always good to know how much marketing is costing you.

 

“Specifications of the building” in the Sales and Purchase Agreement

The types of materials, furnishing, fitting, appliances, etc. to be used or provided are provided in this list in the S&P agreement. Anything more that you managed to bargain from the developer (good job) should be in the form of a written confirmation. 

 

Discounts

There are many types of discounts. “early bird discounts”, “stamp duty discounts”, “additional buyer stamp duties discounts”, etc. At the end of the day, we have to take note of all the different names of discounts and add them up to see how much discount we can get. The discounts easily add up to above 20% to entice buyers.

Buy this now and get a discount of 20%. A $200,000 discount sounds fantastic doesn’t it... and gimmicky.

Developers normally quote outrageous prices only to mark it back down with discounts.

 

At the end of the day, just remember that the final price is the only thing that matters.

 

Special mention: furniture vouchers

It is to developer’s interest to keep unit prices high on paper. Sometimes to do so they give furniture vouchers.

For example:

A property of $1M is sold with furniture vouchers of $20,000 (2% vouchers). The government records will record the property selling price of $1M. However in reality the buyers paid only $0.98M.

The developers have thus, on official records, managed to artificially inflate the price sold.

Most of the time the developers do not even need to give actual vouchers. They simply pay the buyer back in cash (on a pretext that it enables the buyer to choose from any furniture shop they want)

It is good for the developer (as it gives an impression of a higher average price and is good for the next sale) and good for the current buyer (since they pay less than what was reflected on paper). It is bad for the future buyers though (in the resale market). If they paid exactly the amount it was stated in the records, they will be paying $1M for a $0.98M property.

The loser is the one who bought without complete information.

http://forums.condosingapore.com/showthread.php?t=13168

 

Edit (8 April 2013): Parliament passes the Amended Housing Development Act: Private residential developers have to disclose and publish all rebates and benefit (including the Furniture vouchers now). The Controller of housing will publish this data to give an accurate version of the net selling price.

http://www.channelnewsasia.com/news/singapore/developers-required-to/631600.html

 

Question: what are Maintenance Costs?

These are fees collected from the buyers to maintain the upkeep of the condo. It pays for the cleaners, the common electricity bill, the cost of employing the security guards, as well as other general fees from maintaining the facilities (swimming pool, gym, etc.) to yearly external painting of the buildings.

It may/ may not include car parks. We need to ask how many car parks are given per apartment, as it varies from development to development. Normally 1 car park lot is included in the maintenance fees. Do ask if it is possible to increase the number of lots if you have more than 1 cars.

Some condominiums even charges money for the facilities on a per use basis (not common). Again, it is wise to ask what is included in the fees, as it differs from property to property. They are normally paid quarterly to MCST (Management Corporation Strata Title). $300 per month is the average these days.

Some developments have private lift, lifts that serves only your unit on that level. Those will easily add $200-$300 to your maintenance charges monthly since the cost of elevator is shared by very few people.

One caveat: Some developers deliberately charge extremely cheap maintenance fees, even at a loss, for the first few years. They absorb the loss to entice people to buy the development.

However, the losses are not absorbed indefinitely. When the condominium is completed and handed over to the residences via the MCST (after a few years), the residents may find themselves in a situation where they have to top up the losses in the form of increased monthly maintenance.

It is always good to consider whether the maintenance charges are reasonable, with it being neither too high nor too low.

 

The crowd may be your future neighbours!

Are they predominately AhKongs and coffee shop uncles, are they mainly young families with kids, are they the working crowd, are they the hippies and nudies? Each development has its own concept and attracts its segment of the market. Be sure that you are ok with it.

 

Hey... Why are the show flat agents so eager to sell me??

The property developers do not normally sell the properties themselves. They get agents to market it and push it for them. Developers only pay the agents if the units are sold (hence they normally get many agencies to push sales... more agents, sell faster, but cost remains the same since on commission basis).

And do not worry about the agents... Some of them earn a lot. For example D’leedon is selling right now and they are paying the agents 1.5% of selling price. Since the average selling price for that is 2Million dollars each... The agent gets $30,000 for every apartment sold there! Wow!

Some developments even offer the agents 2.5% commission!!! 50k to 60k commission for just one deal.

The best thing is if the agents want, they can just wait in the show flat to get the customer. Serve the random customer that walks in. One closed sale is sufficient earnings for the entire year le.

 

Away from the show flat now, just a question, how expensive is the property anyway?Singapore Property PricesVery Expensive.

 

What makes a good property?

Location

Location is the single most important factor in choosing a property. A property is always priced in relationship to its neighbouring properties. URA has (as of master plan 2008) categorized Singapore into 55 areas, each with its own vision and planning proposals.

Singapore 55 areas

Singapore 55 areas grouping

 

CCR, RCR, and OCR

The locations can be further broken down to Core Central Region (CCR), Rest of Central Region (RCR), and Outside of Central Region (OCR).

CCR: District 9, District 10, District 11, Downtown core planning area, and Sentosa

RCR: Bishan, Bukit Merah, Bukit Timah, Central Area, Geylang, Kallang, Marine Parade, Novena, Queenstown, Southern Islands, Tanglin, and Toa Payoh.

OCR: other areas not included in CCR and RCR.

 

Generally for pricing:

Core Central Region (CCR) > Central (or RCR, Rest of central region) > Rest of Singapore (or OCR, Outside Central Region)

The more centralized it is, the better it is, and the more expensive it becomes.

Of course it depends on the quality and age of the development too. Recently, new “designer” condos like Sky Habitat in Bishan cost more than old condos (pacific mansions) in river valley.

 

Location- Proximity to MRT station

Easy access to public transport is always a plus (especially since owning a car is so expensive in Singapore). Right now 57% of all household live within a 10mins walk to a train station. By 2030, 80% of all household will be within a 10 minutes’ walk to a train station. While proximity to an MRT station now is a huge plus to many people now, there will come a time that it will become a commonplace for all. You’ll be the odd one out if your property is not within walking distance from a train station.

 

Location- Proximity to Good schools

Since students that live within 1km or 2km to a school gets entry priority to that school, proximity to good schools adds to the value of the development.

 

Guide to the buying process

Guide me through the process of buying completed properties (condo/property already built liao). I want to have at least an idea of it!

 

1. Pay 1% for Option to Purchase

If you’re set to buy a property, all you need is to issue a check of 1% of the selling price to make an offer to purchase. Within a period of 3 days, the owner can choose to decline your offer or accept your offer. If the owner accepts your offer, your 1% $ buys you an Option to Purchase, which entitles you to buy the property at the agreed price (remember to always fight for discounts for the best possible price). This option normally is valid for 14 days. Within this time period, you can still change your mind on buying the property, and can choose not exercise the option. But you will lose that 1% you gave them.

 

2. Pay 4% to exercise Option to Purchase

Assuming you are firm in buying the property, you must exercise the option by paying another 4% in cash. How do you exercise that option? You do so through a lawyer. You should use that 14 days option period to find a good lawyer (banks normally have a list of lawyers they worked with before). The lawyers will take your cheque of 4% and exercise the option for you. (The lawyers will also lodge a caveat with the Singapore Land Authority, which serves as a notice to any 3rd party of your interest as purchasers in the property)

 

3. Pay government Buyer’s Stamp Duties (BSD), and Additional Buyer’s Stamp Duties on top of it (if applicable)

The lawyers will also ask from you a payment for the stamp duties, which is needed to be paid within 14 days of exercising the option.

Buyer’s Stamp Duties:

3% of purchase price minus $5400

 

Additional Buyer’s Stamp Duties (ABSD):

Part of the government’s measure to stop the rise of property price is by imposing additional stamp duties on top of the normal stamp duties. This is the 7th round of measure that the ABSD’s rate has been adjusted. As per the table below, there are different stamp duties rate for Singapore citizens, Singapore permanent resident, and foreigners/companies.

 http://www.iras.gov.sg/irashome/page04.aspx?id=12832

 

Profile of buyer

BSD rates

 ABSD rates (new) from 12 Jan 2013

Foreigners and entities buying residential property

            3% of purchase price  

                  minus $5400

15%

PR buying 1st residential property

5%

PR buying second and subsequent residential property

10%

Singapore Citizen buying the first residential property

Nil

Singapore Citizen buying second residential property

7%

Singapore Citizen buying the third and subsequent residential property

10%

Wow that is a lot of duties!!

(On top of the BSD and ABSD, the government implemented measures to limit the bank loan you can obtain too. The banks will lend you a smaller amount now, and you must come up with more upfront cash, thus generally making it more difficult to finance for new properties)  http://www.propwise.sg/7th-round-of-cooling-measures-the-anvil-to-smash-the-camels-back/ and http://www.crei-academy.com/what-does-the-8th-cooling-measure-mean-technically-for-you-as-a-borrower/

(Also take note before you purchase that there is now a seller’s stamp duty too, which will be levied if you sell within 4 years of buying the property. If you sell within the first year, the tax rate is a whopping 16%! If sold between Year1 and Year2, the tax rate is at 12%, if between Year2 and Year3; it is at 8%, if between Year3 and Year4; it is at 4%. So plan your holding timeframe accordingly!)

 

4. Find a mortgage (this step can be done anytime actually)

You’ll need to find a banker since you’ll need financing (unless you’re really rich and plan to pay fully out of your own pockets). It is recommended to start the search for a banker very early, preferably before you even pay/exercise the option. (All good banks give mortgage approval in principle, so that you know whether you can get that loan/ how much loan you can get, and that helps you in your property buying decision.)

The worst case scenario is that you sign for the option (and paid that 1%), or that you had exercise that option (and paid that 5% in total), only to find out afterwards that no bank is willing to lend you the money. That will land you in knee deep shit.  

If you have not started your search for a bank, it is time to start it now!

Anyway find that banker (early or late) and get that mortgage. Once you sign the mortgage forms, you can pass it to your lawyers where they can continue to do the legal documentations.

 

5. Legal Completion! O$ P$ (owe money pay money)

Legal completion is normally around 8 weeks to 10 weeks of exercising the OTP (it can be longer if mutually agreed). You’ll have to pay the outstanding amount owed. For example, if you had already paid 1% cash (option price) + 4% cash (exercise option), and had taken a 80% loan from the bank, you’ll have to pay the balance amount of 15%.

That can be in cash or from your CPF ordinary account contributions.

Again it is done through your lawyers.

 

6. You’re mostly done

Most of the work is done by now, and the lawyers will do the rest of the documentations. Yay! Wait to get the keys to your new property!

 

Too long didn’t read? Ok to summarise the buying process.. Here is the recommended process sequence:

 

Pay 1% OTP --> find lawyer and banker --> get mortgage approval from banker --> exercise OTP thru lawyer by paying the exercise fee (4%) --> within 2 weeks pay stamp duties thru lawyer --> pay the rest of the 20% --> end

OR BETTER STILL

Find banker and get mortgage approval in principle --> pay 1% OTP --> find lawyer --> exercise OTP (4%) + pay stamp duties + sign actual mortgage --> pay the rest of the 20% --> end

 

The process stated above is for completed properties/projects.

 

Finally.. What about those uncompleted properties (still unbuilt) sold in show flats?

Normally for new launches, buyers (and their bankers) do not pay 100% of the price at one go. The reason being the property is still not built/ or being built halfway, and it doesn’t make sense for buyers to pay full for a property that they can only get many years later. Hence there is a standard payment scheme that is progressive in nature, i.e. where you pay in stages, as the development’s building progresses. 

 

Standard Payment Scheme

If you managed to get a bank to loan you that mortgage, the bank will be the one paying these fees in the schedule below, progressively disbursing the loan accordingly. The time for payment and the amount of purchase price payable under the standard payment scheme is shown in the following table:

 

Stage

Payment under a standard payment scheme ( % of purchase price )

Upon the grant of Option to Purchase

5% - 10% (booking fee)

Upon signing of the Sale & Purchase Agreement or within 8 weeks from the Option date

20% less booking fee

Completion of foundation work

10%

Completion of reinforced concrete framework of unit

10%

Completion of partition walls of unit

5%

Completion of roofing/ceiling of unit

5%

Completion of door sub-frames/ door frames, window frames, electrical wiring, internal plastering and plumbing of unit

5%

Completion of car park, roads and drains serving the housing project

5%

Temporary Occupation Permit or Certificate of Statutory Completion

25%

On completion date

15%

 

There is also a slight difference in the option amount/figure. Intending buyers need to pay around 5% of the purchase price for the option (booking fee). Normally the option is valid for 3 weeks. If you choose not to exercise the option, you get back 75% of the booking fee, and forfeit the remaining 25%.

I.e. If the booking fee is the standard 5%, and if you do not exercise the option, you will lose 1.25% (25% of that 5% booking fee).

 

END


 

Updated on 13/08/2013
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