Executive Condominiums (EC) is a hybrid housing type that is built and sold by private developers with private condo facilities. There are eligibility conditions and certain restrictions for purchase by home owners and subsequently on its sale. These ECs are made available at affordable prices within the reach of middle-income Singapore families who aspired to upgrade from their HDB flats. Brand new EC units are usually sold at approximately 20-30% discount compared to nearby new private condominiums. Executive condominiums (ECs) in recent years have gain popularity among young working professional and first-time homeowners. One of the key factor for the rising demand is can be attributed to the growing of the “sandwich class”.
The tangible difference between the prices of resale HDBs and mass-market condominiums located in the heartlands have increased over the years. Thus, there will be a growing number of homebuyers who aspire to own a private residential property yet financially are unable to own a unit.This class of housing was created to cater to Singaporeans, especially young graduates and professionals whose finances are stretched and feel that private property to be out of their reach.
As ECs fall out under the category of HDB housing, you are eligible for CPF Housing Grants of up to $30,000 depending on their finance status, while still enabling you to afford the EC.
To be eligible to apply an Executive Condominium, HDB takes consideration based on your family nucleus and household income. There is a prescribed monthly household income ceiling of $14,000 and a family nucleus is required which comprise of two Singapore Citizens (SC) or one SC and one Singapore Permanent Resident (PR).
From the 6th to 10th year after the EC is completed the development is partially privatised). From 11th year onwards where Singaporeans or PRs with no family nucleus requirements can purchase the units. A quota is imposed on every EC development where 30% of the units are made available and allocated to second-time HDB applicants.
There are 2 types of payment schemes. First time buyers typically will make their purchase under the Normal Payment Scheme (NPS). in this scheme, the buyers make installment payments based on the stage of completion whee the developer hits certain milestones in the EC’s construction. The second scheme Deferred Payment Scheme (DPS) are used by HDB upgraders where the buyers need only pay the 20 percent down payment of the purchase price at the outset (5% the Booking Fee and 15% downpayment), while the remaining 80 percent of the purchase is to be paid once the construction of the project is completed. While the DPS looks attractive, the developers usually charge a 2 – 3 percent premium on the purchase price.
For 2nd timers who currently own a HDB or have owned a HDB directly brought from HDB or through the use of CPF housing grants, resale levy are to be paid to HDB. Such payments to HDB are applicable as an executive condominium is classified under subsidised public housing.
ECs have a lower purchase price due to the subsidies offered by the government. ECs also possess a higher margin of safety and greater capital appreciation potential for home owners. To maximise the substantive capital appreciation, home owners have choose to sit out the 10 years as from 11th year onwards, the EC will turn into a private condomnium which can be sold to foreigners and corporate entities. From historial records, the price gap of resale ECs and resale condos tend to narrow from 9% and 5% respectively when the restrictions on ECs are lifted after the 5 year minimum occupancy period and at 10th year privatisation mark.
ECs are considered semi-private homes in Singapore. As such, financing EC units can only be made through the application of mortgage loan. An bank loan of up to 80 percent can be granted, depending on your finance credit rating and combined. In addition, after the approval by HDB on your eligiblity to purchase the EC, you will need to appoint solicitors to act for you in your purchase. There is a Minimum Occupation Period (MOP) of five years before a EC owner can sell it in the open market to Singapore Citizens or Singapore Permanent Citizen without family nucleus.