11 Factors to Consider Before Buying an Executive Condo in Singapore

According to data from the Urban Redevelopment Authority (URA), the number of Executive Condominium units sold by developers went up from 492 in March 2016, to 572 in March 2017, indicating a 16.2% increase. The demand for private housing, especially Executive Condominiums (ECs), has increased steadily, partly because of the current low interest rate climate and rising income growth in Singapore. More new ECs have been launched in recent years to cater to the demand.

condominium

First introduced by the Government in 1999, ECs are a hybrid type of housing, that fall between public and private housing. ECs resemble private condominiums with its guarded security, swimming pools, clubhouses, playgrounds and more. They are built and managed by private developers but come at a cheaper price, as the land cost is subsidized by the government. Typically, ECs are located away from the city centre and MRT stations where land is more affordable.

1. General eligibility

The first and most important factor to consider is, of course, your eligibility! Failing this will make it pointless for you to look out for other factors. To curb demand for Executive Condominiums(ECs) in Singapore, eligibility requirements set by the government are not that easy to meet. There are a few, so make sure you check all the boxes before you move on.

EC infographic

A. Age

– At least 21 years old
– At least 35 years old, if applying under the Joint Singles Scheme

B. Citizenship

– 1 Singapore Citizen
– At least 1 other applicant must be a Singapore Citizen or Singapore Permanent Resident
– All singles must be Singapore Citizens if applying under the Joint Singles Scheme

C. Family Nucleus

– Public Scheme
– Fiancé/Fiancée Scheme
– Orphans Scheme
– Joint Singles Scheme

D. Property Ownership

– You do not own other property be it locally or overseas, and have not disposed of any within the last 30 months
– You have not bought a new HDB/ DBSS flat or EC, or received a CPF Housing Grant before; or, have only bought 1 of these properties/ received 1 CPF Housing Grant thus far

2. Income eligibility

Generally, ECs are meant to cater to the needs of the “sandwich” class, whose household income exceeds the ceiling for public housing, but falls short of comfortably affording a private property. Most first-time EC buyers have a combined income of around S$10,000, and are looking to maximize the CPF grant amount.

In order to qualify for an EC, household income cannot exceed the $14,000 limit. This limit has been raised from $12,000 in August 2015.

3. Extra payment

In December 2013, HDB announced that EC buyers are subjected to the Resale Levy, where they would be required to make a lump sum payment to HDB when purchasing a second subsidized home.

condo-payment

For the uninitiated, Resale Levy is essentially a reduction of subsidies when you buy a 2nd subsidized home as outlined in HDB’s website.

Nonetheless, this is only applicable to ECs launched on or after 9 December 2013. If you are upgrading from HDB to EC and do not want to pay extra, you need to take note of the list below!

At present, there are a few ECs available that are not subjected to the Resale Levy, as follows:

Table of Executive Condominiums with No Resale Levy

EC ProjectAddressDeveloperEstimated
Completion
No. of Units

Waterwoods

Punggol Field Walk/ Punggol EastSing Holdings LimitedMar-17373
SkyPark ResidencesSembawang Crescent/ Sembawang DriveOasis Development Pte LtdJan-17506
BellewoodsWoodlands Avenue 5/ Woodlands Avenue 6Qingjian Realty (South Pacific) Group Pte LtdNov-17561
Lake LifeYuan Ching Road/ Tao Ching Road

Evia Real Estate (5) Pte Ltd

Dec-17546
BBR Development Pte Ltd
CNH Investment Pte Ltd
OKP Land Pte Ltd
BellewatersAnchorvale CrescentQingjian Realty (South Pacific) Group Pte LtdNov-17651
The TerracePunggol Drive/ Edgedale PlainsPeak Square Pte LtdMar-18747
The AmorePunggol Central/ Edgedale PlainsMaster Contract Services Pte LtdJul-17378

Keong Hong Construction Pte Ltd

Source – https://propertynet.sg/list-executive-condominiums-ec-without-resale-levy/

4. Selling your EC

As the gurus always say, “Begin with the end in mind”. When buying ECs or any other property for that matter, it is crucial to know what it entails when you are planning to sell your flat. Do note that it is different from your typical HDB.

There is a minimum occupancy period of five years for direct purchases from a developer, which means the unit cannot be sold or rented out entirely within this time frame. After five years, the unit can be sold to Singaporeans (SCs) or Singaporean Permanent Residents (SPRs). After ten years, the purchased unit can then be sold to foreigners.

To contextualise the measures a little, Executive Condominiums are state-subsidized with the intention to enhance homeownership for Singaporeans. ECs are not meant as investment opportunities for real estate moguls. As such, you will not be able to make a huge profit by buying a flat from the government and then selling it quickly when market prices surge. While it is a constraint, the Minimum Occupation Period (MOP) has no bearing on anyone who primarily views an Executive Condominium as a roof over one’s head, and intends to actually live in it.

5. Priority of queue

Yes, all developers have to ensure that 70% of the units are allocated for first timers during the initial EC launch period.

When it comes to ECs, first time home owners form the majority of the buyers, followed by upgraders and second-time owners. The second group usually comprises of families with kids who are transitioning to private housing. They will have to choose between an EC and a condominium, and the former will usually entice them more.

6. Executive condo prices

ECs are considered private developments with condominium facilities, albeit with a more attractive price tag. The price for an EC unit can be as much as 25% – 30% lower than that of a private condo. And after taking into account the housing grants available, it makes sense for first timers to go for an EC before making their way to a private housing. Executive Condominium ranges from $700- 900psf. This translates to a price of around $650k for 2 bedroom unit to $800k for a 3 bedder.

7. HDB concessionary loan or bank loans?

Since ECs are considered semi private properties, buyers can only finance their EC units with a bank loan. However, just like HDB owners, EC owners are still subjected to Mortgage Servicing Ratio (MSR). The difference between both types lies mainly in interest rates and loan amounts. Read more about our home loan guide here.

When availing yourself a bank loan, remember to do your due diligence. As there are more than 120 bank loan packages in Singapore, be sure to have an understanding of what you want before committing. Alternatively, talk to a mortgage advisory such as Redbrick to get the best financing option for you.

8. How to calculate my loan amount for an EC?

First, buyers need to calculate MSR, whereby the amount required to service the monthly instalment cannot be more than 30% of the borrower’s gross monthly income. Then there’s also TDSR, whereby the borrower’s total commitments and liabilities cannot be more than 60% of their gross monthly income.

calculate

9. How many payment schemes are there for ECs?

Currently, there are two payment schemes:

A. Deferred Payment Scheme (DPS)

Stage

Payment Required
Upon the grant of Option to Purchase5% Booking Fee

Upon signing S&P Agreement or within 8 weeks from Option Date

15%
Temporary Occupation Permit (TOP)65%
Upon Completion

15%

This scheme allows owners to start paying their loans only when the ECs are ready for occupation (i.e., when the property has been granted TOP). However, buyers will need to pay a higher price for the property.

B. Normal Payment Scheme (NPS)

Stage

Payment Required
Option to Purchase

5%

Upon signing S&P Agreement or within 8 weeks from Option Date15%
Completion of foundation work10%
Completion of reinforced concrete framework of unit10%

Completion of partition of 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 carpark, roads and drains serving the housing project5%
Temporary Occupation Permit (TOP) of Certifiication of Statutory Completion (CSC)25%

On Completion Date

15%

10. Private or Public ?

The biggest advantage of purchasing an EC is that while the property starts out as a HDB unit, it will privatise eventually. After which, the owner will not be restricted by HDB rulings and is able to sell the property to Singaporeans, Permanent Residents or foreigners for investment purpose. However, once the property has been privatised, prospective buyers will not have access to CPF Housing Grants.

All these factors will come into play when you are going to sell the flat. So don’t get caught off guard by these surprises then!

11. Maintenance fees

For most condos (including ECs), maintenance costs are shared through the management committee and they are usually higher than HDB flats. Typically, the amount is around $200. However, ECs with fewer residents have maintenance fees that can go up to S$400 or above per month. Some people might think it is not worth the money, for the facilities that they hardly use in a year. All pleasures come with a price and everything is possible, if you pay for the price.

Generally, ECs is considered a privilege for the locals. If you are able to meet the criteria, especially the income factor, it is always a good idea to buy, be it for staying or investment. However, it is definitely not recommended to stretch beyond your means just to move into a more luxurious place. Make sure you do your sums and have your finances planned out before making the next step. If you are unsure, always seek professional help!

Justin Koh

Before joining Redbrick, Justin first established a career within the local banking industry. As a commercial banker with OCBC and UOB, he oversaw both secured and unsecured lending facilities. Additionally, Justin holds a degree in media and communication which allows him to build strong interpersonal relationships with his clients and help resolve their concerns.
Justin Koh

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