So you want to buy an Executive Condominium (EC), but you need to move in right away. Or perhaps you know ECs will be fully privatised from the 11th year onwards, so you want to cut down on that waiting time. In that case, it’s a resale EC you should be looking at, versus a new launch.
Before you take the plunge, make sure you know what buying a resale EC unit entails:
What’s unique about a resale EC?
The main differentiating factors of a resale EC are:
- Closer to full privatisation
- Don’t need to dispose of your existing flat
- No MOP
- No CPF Housing Grant
- Different payment scheme
- Usual advantages of resale vs. under-construction projects
#1: Closer to full privatisation
One advantage of buying a resale Executive Condominium, rather than a brand new one, is that an EC is fully privatised after 10 years. Crossing this milestone allows you to sell it to foreigners and entities in five years’ time or less, depending on when you buy the resale EC.
This is unlike a resale HDB flat, which can only ever be sold to another Singapore Citizen or Singapore Permanent Resident, even after the Minimum Occupancy Period (MOP) is over.
If you buy a new EC, you’d also need to wait a full 10 years after moving in, before the development gets fully privatised.
However, note that being closer to full privatisation is considered to be a much smaller advantage than before.
That’s because foreigners face an Additional Buyers Stamp Duty (ABSD) rate of 20%, which dampens their buying power. As such, it’s likely you won’t encounter many of them after the EC is fully privatised.
#2. Don’t need to dispose of your existing flat
As Eexecutive Condos are subsidised housing by the HDB when bought from the developer, you cannot move into a new EC and keep your existing HDB flat. If you have an existing HDB flat and buy a new EC, you’d be required to dispose of your previous flat within six months of getting your keys to the EC.
If you buy an EC that is past its MOP however, you can still retain your old flat, while also owning the resale EC.
Note that you still need to meet the MOP for your previous flat, before you can invest in a second property. This is regardless of whether it’s a resale EC, private condo, etc. Also, you still have to pay the Additional Buyer’s Stamp Duty (ABSD) for the second property: 12% of the price or value (whichever is higher) for Singapore Citizens, and 15% for Singapore PRs.
#3. No MOP
An Executive Condominium’s Minimum Occupation Period (MOP) only really applies to the first batch of buyers. When you buy a resale EC from a first owner, it would be in its 6th year.
While it’s still not fully privatised, you have the opportunity to sell your EC unit on the open market or rent out the whole unit anytime after your purchase.
Of course, if you’re selling the unit within three years, you’ll be subject to the Sellers Stamp Duty (SSD) on the sale price or valuation, whichever is higher: 12% if selling within the first year, 8% during the second year and 4% during the third year.
If you buy a new EC, you’ll still need to wait out the five-year MOP for it. As such, investors who aim to maximise rental yield and income by renting out the whole unit typically prefer resale ECs over new ones.
#4. There’s no CPF Housing Grants
There are some grants for new ECs, although they’re nowhere near what you’d get for a flat. These are the Family Grant (up to $30,000), and Half-Housing Grant (up to $15,000). You can see the exact grant amounts on the HDB website.
Given the small size of the grants, it’s hard to say new ECs have an advantage. A $30,000 or $15,000 grant seldom makes up for the opportunity to move in immediately, for example.
#5. Different Payment Scheme
New ECs will usually use the Progressive Payment Scheme (PPS). This means the monthly home loan starts out lower, and increases as each phase of the development is complete. This is a slight advantage for new ECs, as the loan is more affordable in the early stages.
For resale ECs, you use the standard payment scheme for private property. If you’ve no outstanding home loans, you pay 25% in downpayment (5% in cash) and may get up to 75% financed by the bank. This is a much heftier outlay for buyers.
We’ve written about private property payments schedules here.
Also, bear in mind that HDB loans are not applicable for new or resale ECs. Buyers must take a bank loan.
#6. Usual advantages of resale vs. under-construction projects
As is the case with all resale properties, there’s an advantage in that you can physically inspect the actual unit. There’s no guesswork regarding floor plans nor would you get blindsided by defects that arise from shoddy workmanship.
This is similar to the advantages of resale condos over new ones, which we’ve covered in an earlier article.
There is, however, one other quirk to note. When an EC has freshly crossed its five-year MOP, it comes on the market with almost no transaction history (as the units haven’t been available to sell on the open market before then). This can result in a brief period when prices—and even rental income—are more volatile, compared to resale ECs that have been around much longer.
Some ECs that are reaching the end of their MOP, or have just reached it:
- Waterwoods (Punggol), TOP in December 2015
- Heron Bay (Hougang), TOP in October 2015
- 1 Canberra (Sembawang), TOP in September 2015
- Twin Waterfalls (Punggol), TOP in Jun 2015
- The Rainforest (Choa Chu Kang), TOP in March 2015
- The Tampines Trilliant (Tampines), TOP in February 2015
As for full privatisation, ECs have been around since January 1999 (the oldest is Eastvale in Pasir Ris Drive). And to date, 23 EC developments have been fully privatised. Some of the more recent ones to reach this point include The Quintet (Choa Chu Kang), White Water (Pasir Ris), and Nuovo (Ang Mo Kio).
Would you buy a resale EC? Share your thoughts in the comments section below!
If you found this article useful, 99.co recommends 4 sneaky ways a bank can exploit you when taking a home loan and Why are Executive Condos located so far away?
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Whether your HDB apartment is reaching the end of its Minimum Occupation Period (MOP) or your condo has crossed its Seller Stamp Duty (SSD) window, it is always good to know how much you can potentially gain if you were to list and sell your property. Not only that, you’ll also need to know whether your gains would allow you to right-size to the dream home in the neighbourhood you and your family have been eyeing.
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