Executive Condo Singapore – Step by step buyer guide

Most Singaporeans are familiar with HDBs and private properties. But mention Executive Condo in Singapore and you will realise that less of us are familiar with them. This is partly due to the smaller quantity of Executive Condo compared to HDBs or private residential properties. The hybrid nature of Executive Condo also makes explaining it a tad more difficult. Executive Condo in Singapore are considered HDB flats at the point of purchase and they somewhat follow HDB financing and affordability rules. After 5 years, Executive Condominiums become quasi-private residential condominiums whereby Singaporeans and Singapore PR can buy and sell as though they are private condominiums. After 10 years, executive condominiums will be considered full pledge private residential condominiums and can be bought and sold to Singaporeans, Singapore PR as well as foreigners.

iCompareLoan noticed this phenomenon and we decided to write a guide to teach our readers all there is to know about Executive Condo in Singapore. This guide is here to answer all the questions you have about Executive Condo, from what it is to whether you are eligible to why you should buy one and how to buy one.

Image Credits: The Scala, https://commons.wikimedia.org/wiki/File:The_Scala_Condo,_Singapore.jpg

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What Is an Executive Condo in Singapore?

An Executive Condo is a hybrid type of housing under Singapore’s public housing scheme. In the past, Executive Condo was better known as Housing and Urban Development Company (HUDC) flats. The HUDC system was later overhauled and replaced with Executive Condo.

Singapore Executive Condo vs HDB (Housing Development Board Flats)

In the first 10 years of ownership, an Executive Condo takes the properties of an HDB. It is considered as a public housing, which means that the unit can only be sold to Singapore citizens or permanent residents. Furthermore, an Executive Condo will need to fulfil the 5-year minimum occupation period (MOP) before it can be sold on the secondary market, just like any HDB.

Executive Condo Singapore vs Private Condo Singapore

Both private condos and Executive Condos look very similar on the exterior. There are nice amenities like gyms and swimming pools in both types of condos. It is almost impossible to tell them apart based on their exterior. However, the devil lies in the details.

As mentioned above, an Executive Condo takes on the characteristics of an HDB in the first 10 years. But once an Executive Condo hits the 10-year mark, it will become fully privatised. A 10-year old Executive Condo will then take the properties of a private condo. As a privatised condo, there is no ownership restriction when it comes to selling on the open market. The Executive Condo can be owned by both Singaporeans and foreigners, regardless.

Who Is Eligible To Buy An Executive Condo in Singapore?

In order to be eligible to buy an Executive Condo, the usual eligibility criteria for a HDB applies. For instance, you need to be at least age 21 and qualify under one of the 4 eligible schemes (Public Scheme, Fiancé/Fiancée Scheme, Orphans Scheme or Joint Singles Scheme). You also need to have zero interest in an overseas property

Apart from those usual eligibility criteria, there is an added income ceiling criterion. Your average gross monthly household income cannot exceed $14,000.

Can You Still Buy An Executive Condo in Singapore If You Already Own A HDB, DBSS Or Another Executive Condo?

If you are in ownership of a HDB or DBSS flat, you are still eligible to apply for an Executive Condo. The caveat is that you need to fulfil the MOP of 5 years for your current HDB or DBSS. You can even apply for another Executive Condo if you are in ownership of an Executive Condo if your current Executive Condo has met the 5-year MOP but not yet reached the 10-year fully privatised mark.

Why Should You Consider Buying An Executive Condo in Singapore?

1. You Belong To The Sandwiched Class

Executive Condo was introduced to cater to the needs of the sandwiched class. The sandwiched class refers to the group of Singaporeans who exceed the household income ceiling for HDB ($12,000) but falls short of being able to afford a private condo. As a result, you have no choice but to make an Executive Condo your first choice.

2. Executive Condos Are Eligible For CPF Housing Grants

Since Executive Condos are classified in the same class as HDB when it is sold, you will be eligible to apply for CPF Housing Grants. You can get around $10,000 – $30,000 worth of CPF Housing Grants for first-time applicants. While it might not be a huge sum, it can easily cover the renovation cost of your new home.

3. Executive Condo Are Value Buys

Getting an Executive Condo in Singapore allows you to get the same range of amenities as a private condo. However, you do not need to pay the same price as a private condo. Instead, you get to buy it at a fraction of the cost. According to past transactions, an Executive Condo is around 20-25% cheaper than private condos of similar size and location. Even ex-National Development Minister Khaw Boon Wan said that “buying an Executive Condo is like buying a Lexus at (Toyota) Corolla price”. As bargain-sensitive Singaporeans, it is no wonder why we are all rushing to get Executive Condos.

4. Executive Condos Fetch Better Rent

Executive Condos not only serves the purpose of being a good shelter, it also serves the purpose of being a good investment. For the investment savvy Singaporeans, getting an Executive Condo makes perfect investment sense. Since it is almost like a full-suite private condo, Executive Condos can fetch higher rent in the open market than a HDB of similar size.

What Types of Loan Can An Executive Condo Qualify For?

You might have guessed it but let us confirm it for you. Just like an HDB, an Executive Condo will be eligible for both HDB loan and private bank loan. So, you have the flexibility of choosing between forking out more down payment and borrow at a lower interest rate or pay less down payment and borrow at a relatively higher interest rate.

One important point to note is that the mortgage servicing ratio (MSR) will apply for Executive Condo instead of the total debt servicing ratio (TDSR). This is because MSR applies to HDBs while TDSR applies to private properties. Since Executive Condo is HDB-like in the first 10 years, MSR of 30% will apply. Thus, the maximum loan amount you can apply for will be limited by the 30% MSR.

Where Can You See The Executive Condo Launches?

If you are shopping around for new Executive Condo launches, then you must keep a look out for new developments on HDB’s website. Under the ‘Upcoming EC Development’ tab, you can view a list of Executive Condos that are slated to launch. You can also find out the list of Temporary Occupation Permit (TOP) dates of Executive Condos under the same page.

Executive Condo Singapore – Steps to Buy one

This is probably the only difference between an Executive Condo and a regular HDB flat. Instead of buying through HDB, an Executive Condo is bought directly from the developer. Thus, you need to get in direct contact with the developer to understand more about the flat types and submitting an application.

1. Shop For Around For Your Desired Executive Condo Development

The process of buying an Executive Condo starts with shopping for one. Unlike HDB where you get all the flat models in a central location (i.e. HDB Hub @ Toa Payoh), each Executive Condo has its own showroom. You need to visit the physical showroom to check out the flat models from the developer. The showroom is usually located in the vicinity of the land plot.

Increasingly, developers are moving towards a digital process where you need to apply for an e-application before you get invited to the showroom.

2. Submit Your Application For Executive Condo

Once you have confirmed your desired Executive Condo unit, the next step is to submit your application. The application process varies depending on whether the development has officially launch or not.

If the developer hasn’t officially launched the development, you can indicate your interest with an electronic application. Once the development is launched, you will be given priority for viewing and booking a unit. If the development has already launched, you can make an application on the spot at the showroom during viewing.

3. Awaiting Your Fate

This step is very similar to the HDB application process. You and your spouse will need to anxiously wait for the outcome.

4. Booking An Executive Condo Unit

If you are lucky enough to be invited for booking of an Executive Condo unit, congratulations. Similar to the HDB application, you will be given a ballot number. The lower your ballot number is, the more priority you get to choose your Executive Condo unit. Most buyers will shortlist a few units in mind in case their desired unit gets picked up by a ballot number before them.

With a ballot number, you can head down to meet your developer to select the Executive Condo unit. You will be asked to sign an Option To Purchase (OTP) to ‘chope’ your Executive Condo unit. Upon signing the OTP, you will need to pay a 5% option fee, either by Cashier’s Order, cheque or cash. You will also need to bring along the following items:

1. Proof of identity/citizenship
2. Proof of relationship/marital status
3. Income statement
4. CPF Housing Grant application form (if eligible). Submission of CPF Housing Grant needs to be done within one week of signing the OTP.

Your developer will then pass you a set of Property Details Information. This contains the floor plans, rules and regulations, offered items and other documents relating to your unit. You will be asked to read every single document and sign on each of the page to indicate that you have read through them. After which, you will …. wait again …. for HDB’s approval of your purchase.

5. Prepare The Necessary Loan And Solicitor Arrangements

The process for HDB’s approval usually takes 4-5 weeks. While you are waiting for HDB’s approval, use the time to source for your loan. If you want to get a bank loan, make sure you source for a competitive rate using iCompareLoan’s loan comparison tool. Don’t spend unnecessarily on interest rate payment.

Concurrently, you should be appointing your solicitors (aka lawyer). He/she will represent you in the Executive Condo purchase and liaise with the bank to iron out details of your loan if you are taking one from the bank.

6. Executive Condo Affordability in Singapore

As Executive Condominiums in Singapore are considered HDB flats at the point of purchase, they are subjected somewhat to HDB financing rules. Buying a HDB flat is subjected to: –

• Mortgage Servicing Ratio (MSR) of up to 30% of your gross salary and on top of that;
• Total debt servicing ratio (TDSR) of no more than 60% and;
• Subjected to tenure cap of 25 years.

The executive condominium will be subject to: –

• Mortgage servicing ratio (MSR) of up to 30% and;
• TDSR of up to 60%, but the executive condominium and;
• Subjected to a longer tenure cap of 30 years.

You can find out about your loan affordability here.

7.Exercise Your Sales and Purchase Agreement

After HDB has approved your purchase, you will receive the Sales and Purchase Agreement from the developer. You need to sign the agreement and return to the developer 3 weeks from the receipt date to exercise your OTP.

At the same time, you will need to pay the 15% balance of the down payment and buyer’s stamp duty (if applicable). You need to pay the 15% down payment balance within 9 weeks from the date of signing the OTP either through cash or CP. If you are taking a HDB loan, HDB will pay a portion of it by disbursing your loan. The buyer’s stamp duty is due within two weeks of signing the Sales and Purchase Agreement.

8. Decide Between NPS Or DPS

At this point, your choice of Executive Condo is confirmed. But this doesn’t mean that you can stay in it yet. You need to first decide whether you want to start instalment payments for your Executive Condo or choose to defer it till the development is completed.

• Normal Payment Scheme (NPS)

Under the Normal Payment Scheme (NPS), you will make payment to your developer each time a pre-set milestone is completed. You can expect a payment of around 5 – 10% of the purchase price every 6 months.

• Deferred Payment Scheme (DPS)

You also have the choice for the Deferred Payment Scheme (DPS) where you only start paying once the project is completed. The average time taken for the Executive Condo to obtain Temporary Occupation Permit (TOP) is 3 years. One thing to take note is that DPS comes with a 2-3% premium on the purchase price.

9. Collecting The Keys To Your Executive Condo Unit

Finally, after a long process, your developer informs you of the good news. Your Executive Condo is now complete, and the TOP has been issued. You can now pick up your keys and start letting your interior designer carry out the renovations.

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List Of Executive Condominium In Singapore 1999 through 2018

Table 1: List of Executive Condominiums in Singapore from 27 Jan 1999 till 14 Sep 2018, Collated by iCompareLoan.com

Table 2: List of Building Under construction Executive Condominiums in Singapore, iCompareLoan.com