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A Comprehensive Guide for buying Executive Condo

Updated: Jun 11



Executive Condo has been a trending topic among property buyers this season. This could be due to its unique properties and it’s been a long time since the market saw launches from the EC segment. This increase in interest is probably also due to the launch of Piermont Grand, OLA and Parc Canberra.


In this post I will share the following about Executive Condo (EC) and hope it will be a helpful resource for those who are looking to purchase EC. You may choose to zoom in to the section that is most applicable for you.


- What is EC and why is it special

- Who is eligible to purchase EC

- Financing EC, Things to note when Purchasing EC

- What are the existing EC launches and what are the upcoming launches in the pipelines


Let’s Dive in



What is EC and why is it Special?


Executive Condo also known as EC is a special class of property reserved for a small portion of the privileged few due to its unique restrictions. ECs are a hybrid type of housing that falls between HDB and private condo. EC has all the characteristic of a private condominium like being built by private developers and come with facilities like swimming, tennis court, clubhouses, swimming pool


The following are some unique characteristics of ECs


  • Buyer Household Income must not exceed $16k

  • Only Locals can purchase the property during its launch, however it will be privatised after 10 years and will enjoy the same status as private condos, which release it from HDB restrictions and can be sold to foreigners

  • Government housing grants can be used in the EC purchase

  • As the land cost is partially subsidized by the government the cost of EC will generally be lower than Private condo in the same location.


The Chart below illustrates the growth in psf prices of HDB and ECs



Across a 10 year period, HDB prices have grown by 11% while ECs prices have grown by 29%. This makes ECs an attractive option for HDB owners who are looking to upgrade their assets and lifestyle.


Why is it special?



EC has an inverted Funnel Effect.

Due to the nature that there is an income ceiling restriction (lesser buyers eligible) coupled with subsidized prices, it means that oftentimes, EC is very likely purchased at a lower price (limitations to price increase due to smaller pool of eligible buyers) compared to Private Condos with similar finishes and facilities offering.


This very specific restriction means that even if there are buyers who can afford to buy the EC unit may not be able to buy it as their income might exceed the income ceiling.


However, as the buying restriction is being relaxed over the years, more groups of people can purchase the unit.


How does it work?

During Launch: Only buyers who fit eligibility criteria and income does not exceed the income ceiling can purchase the EC directly from developer.


After 5 years from TOP (6th-10th year): The EC unit can be sold at market price to Singaporean and Singaporean PR.


After 10 years: All restrictions are lifted and the EC enjoys the same status as a private condo, and can be sold to foreigners. As such the property can be sold to a bigger pool of buyers.


There is a high probability for EC owners to enjoy a good profit. As shown below in the date below.




Based on URA Caveat matching of 115,610 new leasehold condo & 23,025 new EC transactions transacted from 2009-2018. EC produced the highest percentage of profitability with the lowest average losses at $20,578.


EC is a relatively safe choice for those looking to purchase for their own stay as there is a low chance of losses and good probability for profits. That saying so, you should still be sensitive with the price you enter into the project and type of unit you are buying to avoid paying a much higher price and receive relatively lower value.


Who is eligible to purchase EC


In the previous section I mentioned, local households with an income ceiling not exceeding $16,000 are eligible to purchase a Brand New EC, besides this, there are also other criteria that buyers need to meet. As ECs are basically condominiums that are governed by HDB rules, the HDB schemes for purchase will also be applicable.


The Following are an overview of eligibility conditions to purchase EC


Family Nucleus

  • Public Scheme

  • FIance/Fiancee Scheme

  • Orphans Scheme

  • Joint Singles Scheme


Age

  • At least 21 years old

  • At least 35 years old, if applying under Joint Single Scheme


Citizenship

  • Must be Singapore Citizen

  • Co applicant must be a Singapore Citizen or Singapore Permanent Resident (SPR)

  • If applying under Joint Singles scheme, all singles must be Singapore Citizens


Income Ceiling

  • Combine income not exceeding $16,000


Property Ownership

  • Do not own other property overseas or locally

  • Have not disposed of any property within last 30 months

  • Own/have owned more than 1 of the following

- Flat bought from HDB

- EC/DBSS bought from a developer

- HDB resale flat bought with a CPF Housing Grant


Other Factors to Note


  • When your current HDB/EC have not met the Minimum Occupation Period (MOP), you cannot buy an EC from a developer.


  • For EC unit purchased from developer you have fulfil MOP of 5 years + sell your EC for more than 30 months before you can apply for a New EC




Financing


HDB loans cannot be used for financing EC purchase, you will have to take bank loans.

The maximum loan banks will grant is usually up to 75%, the rest of the 25% payment can in in cash or cpf where minimum 5% have to be cash.


There 2 ways you can finance your EC purchase,

  • Normal Payment Scheme (NPS)

  • Deferred Payment Scheme (DPS)


The Normal Payment Scheme (NPS)


The normal payment scheme also known as progressive payment scheme) is spread out across 10 stages. This is a preferred scheme for buyers who want to enjoy the best price.


Buyers who opt for NPS usually enjoy more discount compared to buyers who opt for DPS

The Stages are as follows:


Stage 1: Option to Purchase

You will pay 5% booking fee and receive An Option to Purchase


Stage 2: Exercise of Sale and Purchase and Stamp Duties

Within 9 weeks from the date of Option to Purchase, you will confirm your purchase by endorsing the Sales & Purchase agreement (also known as exercise of Sales and Purchase) and pay another 15% , this payment can be in cash/cpf.


Buyer Stamp Duty will be payable within 2 weeks of the exercise of the Sales & Purchase agreement, you may use CPF to pay for stamp duty however you will need to pay in cash first and apply for refund later.


Stage 3: Completion of Foundation Work

Payment of 10%

5% can be cash/cpf and 5% disbursed from your home loan (where monthly mortgage payment will begin)


Stage 4: Completion of reinforced Concrete Framework of the unit

Payment of 10%


Stage 5: Completion of Brick Walls of the Unit

Payment of 5%


Stage 6: Completion of Ceiling and Roofing

Payment of 5%


Stage 7: Completion of Door and Windows Frames are in position. Completion of Electrical wirings, internal plastering and plumbing of the unit

Payment of 5%



Stage 8: Completion of Car park, drainage, and roads with serve the condo

Payment of 5%


Stage 9: Temporary Occupancy Permit (TOP)

This is the time you will receive the keys from the developer and can start to move in.

Payment of 25%


Stage 10: Completion of Sales & Purchase | issuance of Certificate of Statutory Completion (CSC)

- Payment of final 15%


Below is an example,

if you purchase a 3 bedroom EC from a developer at

$900k,

with 75% loan at 1.8% interest

the payment schedule and payment will be as follows.




Deferred Payment Scheme (DPS)


The DPS involves lesser steps.

As the name suggests, the bulk of payment can be deferred till after the EC receives it’s TOP.


This is how it works


Step 1: Option to Purchase

Pay 5% cash to get the OTP

Exercise the Sale and Purchase agreement (S&P) and pay 15% (cash/cpf)

Stamp duties will be payable within 2 weeks of exercise of the S&P


Step 2: Upon EC TOP

Pay 65%


Step 3: Upon issuance of Certificate of Statutory Completion (CSC)

Pay remainder 15%



If the EC TOP 3 years from the date that you commit your purchase, it means after you paid the first 20% you won't have to pay anything else after 3 years later till the EC TOP

This payment method is beneficial for buyers with existing home loans who may find servicing an additional home loan via NPS too much of a stretch. However choosing the DPS will also result in a higher purchase price, compared to purchasing under the NPS.


Resale Levy


As EC is a form of subsidised housing, Resale Levy is imposed to ensure a fair allocation of public housing subsidies. In simpler terms, you can see resale levy as a payment to buy a second subsidized property.


The following is a list of subsidized property according to HDB’s guidelines


  • BTO flat purchased from HDB

  • sales of balance flat purchase from HDB

  • EC purchase from a developer

  • Resale flat purchase with CPF Housing Grants


You will need to pay resale Levy when you purchase an EC if you own any of the property listed above.


The table below illustrate the various Resale Levy which is applicable when purchasing EC



When,How and Where to Pay Resale Levy when you Purchase EC


Buyers who own an existing subsidized property at point of exercising Sale and Purchase of EC


When to Pay?

Upon the sale of the subsidized property, after signing the EC Sale and Purchase Agreement


How to Pay?

Resale Levy will be deducted from the cash proceeds upon the completion of the resale transaction. Any shortfall will be made good in cash.



Buyers who belong to any of these categories

(i) Sold subsidized flat before 19 May 1997

(ii) Sold subsidized flat between 19 May 1997 to 2 Mar 2006

(iii) Sold subsidized flat on or after 3 Mar 2006 and before signing the EC sale and Purchase Agreement


When to Pay?

Before you sign the sale and purchase agreement


How to Pay

  • For (i) The Developer will collect Cashier Order in favour of HDB form you and forward it to HDB as payment for premium

  • For (ii) and (iii) You will make payment to the HDB branch by cash or cashier order. (no personal cheque or CPF money can be used for the payment of resale levy)


In summary, when purchasing a EC you have to prepare to pay for the following

  • EC unit(can be financed by bank loan)

  • Buyer Stamp Duty

  • Legal Fees

  • Resale Levy (if you already own a subsidized property)



What are the existing EC launches and what are the upcoming launches in the pipelines


EC already Launched

  • Piermont Grand (TOP Feb 2023)

  • OLA (TOP Dec 2023)

  • Parc Canberra (TOP 2023)


Upcoming Launches

  • Parc Central ( Estimated Launch Q3 2020)

  • Canberra Link (Estimated Launch Q4 2020)

  • Fernvale Link (Launch TBA)

  • Tampines Street 62 (Launch TBA)

  • Yishun Ave 9 (Launch TBA)



Some Quick Facts of Already Launched ECS


Piermont Grand

Location: Sumang Walk

Developer: CDL

Number of units: 820

Number of carparks: 820 + handicap lots

Unit Mix: 3 bedrooms - 5 bedrooms Penthouse

Price range: $899,100 - $1,759,320



OLA


Location: Anchorvale Crescent

Developer: EVIA + GAMUDA

Number of units: 548

Number of carparks:548

Unit Mix: 2 bedrooms - 5 bedrooms Penthouse

Price range: $878K - $2mil



Parc Canberra


Location: Canberra Link

Developer: Hoi Hup Sunway

Number of units: 496

Number of carparks: TBA

Unit mix: 2-5 bedroom penthouse

Price range: $867k - $1.5mil



Upcoming Launches





Parc Central

( Estimated Launch Q3 2020)

Location: Tampine ave 10

Developer: Hoi Hup Sunway

Maximum Dwelling Units: 695







Canberra Link

(Estimated Launch Q4 2020)

Location: Canberra Link

Developer: MCC Land

Maximum Dwelling Units: 385








Fernvale Link (Launch TBA

Location: Fernvale Link

Developer: FCL Lodge Pte Ltd

Maximum Dwelling Units: 480









Tampines Street 62 (Launch TBA)

Location: Tampines Street 62

Developer: TBA

Maximum Dwelling Units: 595











Yishun Ave 9 (Launch TBA)

Location: Yishun Ave 9

Developer: TBA

Maximum Dwelling Units: TBA






It’s been a while since the market saw such a vibrant stream of EC Supply, if you are looking to purchase an EC, this is an opportune time for you to get hold of this interesting class of asset.


Have a question related to ECs? Like how to pick a good unit that is of good value with good exit strategy?

Hit me up at the comment section or contact form!

Having done my fair share of homework, I will be happy to share my notes with you :)








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About The Author

Chantel Teo is fiercely loyal, insatiably curious and always hungry.


A licensed real estate broker based in Singapore.

She has transacted properties with a combined value of more than $60 million, from Tanjong Pagar to Orchard to SengKang to Bukit Panjang. In the journey of helping her clients, buy, sell, lease and manage their properties, she has collected many stories and life lessons.


She writes as a form of catharsis and connection. Through her writing she hopes to share practical and useful insights as well as stories that can enrich her readers.


Buildings and houses is her passion and she has a special love for walk-up apartments and buildings built before the 90s, probably because of the character, charm and history that comes with these buildings. Besides buildings that can stand the test of time, she also appreciates the cultivation of personal substance and character that endures.


One of her favourite quotes goes

“Character, in the long run, is the decisive factor in the life of an individual and of nations alike” - Theodore Roosevelt. Her belief is that good character will be a solid foundation in which she builds her career and the people around her.


When she is not hustling at work, she enjoys nice coffee, hearty meals, long walks and a good read. She also has a soft spot for all things furry.



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Chantel Teo

SG Realtor | Property Wealth Planner

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