Buying in Singapore, Private

99.co’s guides: Executive Condominium vs Private Condominium

February 17, 2016
The Executive Condominium: an attractively priced condo, with some strings attached

The Executive Condominium: an attractively priced condo, with some strings attached

An Executive Condominium (EC) comprises a strange yet potentially lucrative option for first time home buyers. Indeed, often lauded as the perfect home for the Singaporean sandwich class – those who essentially earn too much to qualify for an HDB but not quite enough to invest in a condo – the Executive Condominium is a public-private hybrid reflecting both the attractive prices of public housing and the superior comfort of private condominiums.

The Executive Condominium becomes an obvious choice for those Singaporeans who can afford a little more than an HDB but cannot stretch to a private apartment. However, if you are in the situation where your finances allow you to make a choice between an executive condominium and a private one, then the decision is a little tougher. To this end, we shall lay out precisely in what scenario, and under what circumstances you may want to give Executive Condominiums a chance before rushing head over heels into the private sector.

Eligibility for an Executive Condominium

First off, an Executive Condominium comes with strings attached, and while a more in-depth account shall be provided later on, it is important to understand from the onset that some of the most stringent limitations ensure that a good amount of people cannot apply for this special type of flat to start with. So, before we go any further let’s see if an Executive Condominium is on the cards for you to begin with.

You can apply if you meet the following criteria:

  • Your household income must not be above $14000
  • You are a Singaporean Citizen
  • You have not owned any property, locally or overseas, in the last 30 months and you do not own any property now
  • You have not owned more than one HDB/DBSS or EC flat previously

You also have to fall under one of the following schemes:

  • Public Scheme: you apply either with your spouse (and children, if any), your parents (and siblings, if any), or solely with your children (granted that you have legal custody).
  • Orphan scheme: you are an orphan and you are applying with a sibling.

Finally…

  • If you are applying under the single scheme as detailed above you will have to be 35 years or older whilst an age of at least 21 will suffice if you are applying under any of the other schemes.
  • If you are applying for either the Orphan, the Fiance or the Public scheme, then at least one co-applicant needs to be either a Singapore Citizen or a Singapore Permanent Resident.

If you have survived the judgement above, passage is granted to apply for an Executive Condominium.

Some background

While private condo’s have been part of the Singapore landscape since the early 70s, Executive Condominiums are a relatively new invention, only joining the scene in the late 90s. Singapore has, from its inception, followed a policy favouring homeownership, and as the society developed a stronger middle class, new ways had to be found to house its increasingly affluent population. Proverbially sandwiched between the public and private sector, the hybrid that is the Executive Condominium was thought up to form a bridge, catering to the upper middle class segment of society.

Similarities

Disregarding the rules and stripped of its public characteristics, the Executive Condominium is in its physical form not just similar but absolutely identical to a condominium. It shares both in its enhanced comfort and rich variety of amenities such as swimming pools, private parks, tennis courts, 24/7 security and the like.

Differences

As for the differences, alas, you cannot have your cake and eat it too, at least not right away. While essentially synonymous in form, a framework of rules and regulations is attached to the Executive Condominium effectively differentiating it from their private counterparts.

Strings Attached

Executive Condominiums were designed to serve as homes rather than investment options. To this end, anyone who buys an Executive Condominium has to live in it for at least five years before it can be sold on, and even after half a decade has passed you are restricted in that you can only sell the flat to Singapore Citizens or Singapore Permanent Residents. Subsequently, HDB bars foreigners from buying Executive Condominiums for another five years. After a full decade has passed the Executive Condominium effectively transforms into a private condominium, and it may as such be sold to anyone on the free market.

To contextualise the measures a little, Executive Condominiums are state-subsidized and meant to enhance homeownership for Singaporeans, not the investment opportunities for real estate moguls. As such, you will not be able to profit by buying a flat from the government and then selling it on when market prices surge. While it is a constraint, the Minimum Occupation Period (MOP) does not harm anyone who primarily views an Executive Condominium as a roof over one’s head, and intends to actually live in it.

Price Discrepancy

Affordability

The major factor enticing first time buyers to opt for an Executive Condominium, rather than a private one is its relatively more attractive price tag. While it has differed considerably over time, Executive Condominiums can be as much as 25%-30% less expensive. Add to this the option to get a grant from HDB, and one starts to see why so many first timers go for an Executive Condominium before they upgrade to a private condominium.

Prospects on Capital Gains

As noted before, after 10 years the Executive Condominium effectively turns into a private condominium. Seeing the lower price at which Executive Condominiums are bought, sitting out the 10 years makes for potential of substantive capital appreciation.  

While the strings attached make it impossible for buyers to try and make a quick buck by buying and subsequently rapidly selling the flat, there is room for buyers to take advantage of long-term property appreciation. Boosted by a public-to-private property transition after 10 years, the Executive Condominium generally sees relatively more appreciation than other private property, such a private condominiums.

A Final Caveat

Comparing and contrasting the pro’s and cons of an Executive Condominium versus that of a private condo paints the picture of a pretty good deal in terms of the former. Unless you wish to sell your condo within a decade of buying it, the executive variant poises as a strong contestant, especially weighing up its attractive price and subsequent large potential for long-term capital gains. Still, there remains one last caveat: while private condominiums tend to be freehold, ECs generally come with a 99 year lease.

Seeing that Singapore is a relatively young country, no property has yet come sufficiently close to the 99 year mark for anyone to start worrying about it, and price discrepancies between free and leaseholds haven’t really appeared yet. Still, if you have long, long, long-term plans for your property than an EC may lose some of its appeal. Otherwise, and with a bit of patience, Executive Condominiums tend to be a relatively great bargain, both in terms of living and capital gains.

You Might Also Like

12 Comments

  • Reply PropertyRocking.Sg February 23, 2016 at 8:39 pm

    Great comparison! You might want to check on the eligibility though. Singles above 35 are not eligible to purchase ECs. They can only do so with another single. I.e. the Joint Single Scheme.

    • Reply Jamal March 22, 2016 at 5:29 pm

      Hi PropertyRocking.sg, thank you for your good words 🙂 Yes, you are right, as per the HDB government website information, the minimum age for ECs is at least 35 years old, if applying under the Joint Singles Scheme. Please let us know, if you are in search of executive condominiums as our website http://www.99.co has some great listings on it!

  • Reply Catherine March 10, 2016 at 5:18 pm

    Hi.. thanks for the nice write up comparison between EC & Pte Condos. Just want to highlight 3 things you mentioned. 1) You can owned a HDB currently to buy an EC as long as you qualify as a 2nd Timer. The 30 months rule is for those who owned a private property in or out of Singapore. 2) There is no Single Scheme for EC. Only Joint Singles Scheme. Both applicants must be SC and above 35 years of age. 3) There are very limited projects or locations that offers freehold status. Mostly are 99 yrs leasehold.

    Regards,
    Catherine

    • Reply Jamal March 22, 2016 at 4:22 pm

      Thank you Catherine for taking up the time to write such a valuable comment. I will forward the add up information you provided to our author so that he can add into this article. Also, I am surprised to know how do you know a lot about properties? Do you work for an agency company or professional in this field? Hope to be in touch with you again 🙂

  • Reply Raymond March 31, 2016 at 9:54 pm

    Hi, I’m Singaporean age 43, my wife PRC not PR of Singapore. I’ve a daughter age 4 now with my wife in Shanghai. Am I eligible to buy an EC?

    • Reply Jamal April 1, 2016 at 3:55 pm

      Hi Raymond, I talked to my team regarding your case. To buy an EC, one of you should be a citizen (which you are) + PR (which I am afraid your wife is not as you said), so I don’t think you would be eligible to buy an EC. At the same time, you should be eligible for other options to buy, please search our 99.co website for properties if that’s the case. Thank you for contacting us via the comment section, feel free to reach us again.

  • Reply Fuad July 28, 2016 at 3:06 am

    What is the legality of co-applicant for E.C.? Must he or she be staying there in the E.C ? Once co-applicant had registered with the main-applicant and got the E.C unit successfully, will the co-applicant be able to move out and buy his or her own HDB ? Once the main-applicant got the E.C unit, can he or she have a foreigner spouse ? Thanks

    • Reply Adam R. August 3, 2016 at 2:17 pm

      Hi Fuad,

      The co-applicant will not be able to “de-couple” from the unit under the new regulations set by HDB earlier this year. (See https://www.99.co/blog/singapore/hdb-decoupling/). Furthermore, once you own a newly launch EC (bought from the developer), you are not able to buy another HDB at the same time. It is also advisable if one of the applicants stay in the EC during the MOP.

      Regards,
      Adam R.

  • Reply Raymond Sia August 10, 2016 at 9:02 pm

    My first property was a bto direct from hdb in 1996. Sold it in 2011 and bought another hdb from resale. Now looking to upgrade to an ec. Was told need to pay resale levy of 40k for first property. Do i need to pay the levy if i were to buy a private now (any diff if i sold my current hdb or dont)?
    Any way not to pay the levy? Why wasnt the levy paid when i sold the first property to buy the resale back in 2011?

    • Reply Adam R. August 11, 2016 at 5:54 pm

      Hi Raymond,

      The resale levy is applicable only if:

      – You dispose of your subsidised flat and then buy a second subsidised flat from HDB
      – You dispose of your subsidised flat and then buy an EC from a developer where the land sale was launched on or after 9 December 2013, including those where tenders were not closed

      You need not pay a resale levy if you are buying a Design, Build and Sell Scheme (DBSS) flat from a developer, EC from a developer (where the land sale was launched before 9 December 2013), HDB resale flat or private residential property.

      Hence, in your case, because you bought a resale after selling your 1st BTO, the resale levy wasn’t applicable. However, because you are intending to buy a new EC now, the resale levy applied given your history with the BTO flat. In short, as long as you choose to buy from HDB again, the resale levy comes into effect. You can avoid it if you purchase a private property or EC which has passed its MOP period / built before 2013.

      Hope this clarifies!

      Regards,
      Adam R.

  • Reply Ace February 24, 2017 at 12:54 am

    Hi
    Currently I’m attached with my gf who has gotten a hdb flat (she purchase under the single scheme before and this is her second hdb flat). If let say I intend to get the ec together with her, am I consider a first timer as I’ve not apply any flat from hdb. Will I be penalized?

    Thanks

    • Reply Adam R. March 8, 2017 at 6:21 pm

      Hi Ace,

      Yes, you will be considered a first timer if applying for the flat alone.

      However, in the case where you and your gf applies together, it would require both you and your gf to be listed as owners of the unit. This means that your gf has to relinquish ownership of her current HDB flat within 6 months of collection of your keys, if you choose to purchase a brand new EC.

      However, both of you can purchase a partially privatised EC (after 5 years) and still keep the HDB without penalty, provided that the MOP of the HDB has passed.

      Regards,
      Adam R.

      *A partially privatised EC means that it has reached 5 years old, and is only open to Citizens and PRs to purchase. It will fully privatize in 10 years, and is open to Foreigners. You can purchase either and still keep your HDB.

    Leave a Reply