{"id":21190,"date":"2018-11-04T11:23:17","date_gmt":"2018-11-04T03:23:17","guid":{"rendered":"https:\/\/www.99.co\/blog\/singapore\/?p=21190"},"modified":"2022-07-01T05:00:52","modified_gmt":"2022-06-30T21:00:52","slug":"developer-safeguards-buying-new-uncompleted-condo","status":"publish","type":"post","link":"https:\/\/www.99.co\/singapore\/insider\/developer-safeguards-buying-new-uncompleted-condo\/","title":{"rendered":"5 safeguards when buying a new and uncompleted condo"},"content":{"rendered":"<div id=\"bsf_rt_marker\"><\/div><p><span style=\"font-weight: 400;\">Most developers in Singapore are competent and well-capitalised. This is great of course, but it leads to one little problem: it makes Singaporean property buyers a little <\/span><i><span style=\"font-weight: 400;\">too <\/span><\/i><span style=\"font-weight: 400;\">relaxed and trusting when it comes to buying a new launch or uncompleted condo. For many people in a showsuite, the risk that a developer will delay a project \u2013 much less fail to complete it \u2014 is about as likely as a shark attack on a train. <\/span><\/p>\n<p><span style=\"font-weight: 400;\"><strong>But when it comes to new launch and uncompleted condos, the worst nightmare for property buyers does happen, and we strongly recommend a few easy steps to take, just in case:<\/strong><\/span><\/p>\n<h3><b>Forever uncompleted: the Sycamore Tree and Laurel Tree incidents<\/b><\/h3>\n<p><span style=\"font-weight: 400;\">Sycamore Tree and Laurel Tree were both supposed to get their Temporary Occupancy Permit (TOP) in 2016, but they\u2019re <\/span><a href=\"http:\/\/www.singaporelawwatch.sg\/Headlines\/no-end-in-sight-for-buyers-of-2-new-condos-still-under-construction-despite-2016-top\" target=\"_blank\" rel=\"noopener\"><span style=\"font-weight: 400;\">still under construction and completion has been indefinitely delayed<\/span><\/a><span style=\"font-weight: 400;\">. Delays like this get pricey for home buyers and investors \u2013 the investors can\u2019t rent out the non-existent units (while still paying for the mortgage and other bills), and home buyers can end up forking out mortgage payments on unfinished, unliveable concrete shells.<\/span><\/p>\n<figure id=\"attachment_21191\" aria-describedby=\"caption-attachment-21191\" style=\"width: 720px\" class=\"wp-caption aligncenter\"><img decoding=\"async\" class=\"size-full wp-image-21191\" src=\"https:\/\/www.99.co\/singapore\/insider\/wp-content\/uploads\/2018\/11\/developer-woes-buying-condos-sycamore-tree.jpg\" alt=\"developer woes buying condo sycamore tree\" width=\"720\" height=\"480\"><figcaption id=\"caption-attachment-21191\" class=\"wp-caption-text\">Sycamore Tree in Joo Chiat: a buyer&#8217;s nightmare with no end in sight.<\/figcaption><\/figure>\n<p><span style=\"font-weight: 400;\">While rare, the case of Sycamore Tree and Laurel Tree is far from being a first-time incident. Back in 2013, for example, CDL had to find another contractor to take over work at H20 Residences, after previous contractor Poh Lian Construction ran into trouble.\u00a0<\/span><span style=\"font-weight: 400;\">Thankfully, the situation was resolved, and H20 Residences is <\/span><a href=\"https:\/\/www.99.co\/singapore\/s\/sale\/condos-apartments\/h2o-residences\" target=\"_blank\" rel=\"noopener\"><span style=\"font-weight: 400;\">currently one of the better condos<\/span><\/a><span style=\"font-weight: 400;\"> in the Sengkang area.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Sometimes, the situation can be even worse than delays. In 2015, for example, there was a <\/span><a href=\"https:\/\/www.99.co\/singapore\/insider\/how-the-seaview-is-a-gigantic-warning-to-singapores-property-buyers-2\/\" target=\"_blank\" rel=\"noopener\"><span style=\"font-weight: 400;\">court case<\/span><\/a><span style=\"font-weight: 400;\"> involving The Seaview\u2019s management and its developers, when alleged defects came to light after some residents moved in. <\/span><\/p>\n<p><span style=\"font-weight: 400;\">While there\u2019s always legal recourse, the simple fact is that dragging a developer to court is expensive and time consuming. Developers can also relegate blame to their sub-contractors, which may be small companies that can\u2019t pay up anyway. Even if they declare bankruptcy and fold, you\u2019re still the one left holding the uncomplete or defective property.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">So it\u2019s best to pre-emptive and take the following steps when buying an uncompleted condo in Singapore:<\/span><\/p>\n<ol>\n<li>\n<h3><b> Always have a financial buffer that lasts at least six months<\/b><\/h3>\n<\/li>\n<\/ol>\n<p><span style=\"font-weight: 400;\">There\u2019s something that has to be made very clear to you, before you buy an uncompleted property:<\/span><\/p>\n<p><i><span style=\"font-weight: 400;\">There is very little you can do if things DO go wrong, and you face delays, defects, or other issues<\/span><\/i><span style=\"font-weight: 400;\">.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">No amount of legal threats or writing to newspapers will fix the problem. If the developer cannot complete the project, it\u2019s usually for reasons such as the main contractor going bankrupt, or some form of litigation. Much like an oncoming tsunami, it\u2019s too late to run or stop it by the time you see these coming \u2014 all you can do is hope to survive.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">That\u2019s why you should always build a financial buffer before you buy an under-development property. Ensure that you have sufficient savings to service costs such as temporary accommodation and the property loan, for at least six months if something goes wrong. <\/span><\/p>\n<p><span style=\"font-weight: 400;\">(You don\u2019t need to have it right at the beginning, but make efforts to start building this buffer as soon as you\u2019ve committed to buying.)<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Six months will buy you time to make alternative plans, in the event the planned TOP date is missed.<\/span><\/p>\n<ol start=\"2\">\n<li>\n<h3><b> Ask about what happens if there\u2019s a delay<\/b><\/h3>\n<\/li>\n<\/ol>\n<p><span style=\"font-weight: 400;\">Always demand to know what the developer will do, if there\u2019s a delay to the uncompleted condo project. <\/span><\/p>\n<p><span style=\"font-weight: 400;\">The developer should present to you a clear contingency plan; knowing this plan will allow you to plan your finances accordingly. For example, you\u2019ll want to check if the compensation in any form \u2014 such as liquidated damages \u2014 will offset costs such as the mortgage repayments, and to what extent.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">After that, work out whether the financial cost to you is sustainable after receiving compensation. If it&#8217;d push you to breaking point, it may be a good idea to look for a safer prospect (e.g. a resale condo instead).<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Again, remember there\u2019s little you can do <em>after<\/em> you sign on the dotted line. Your subsequent demands for more compensation are almost certain to be declined.<\/span><\/p>\n<ol start=\"3\">\n<li>\n<h3><b> Look up the main contractor as well, not just the developer<\/b><\/h3>\n<\/li>\n<\/ol>\n<p><span style=\"font-weight: 400;\"><strong>Don\u2019t assume that, just because the developer is big and reputable, nothing can go wrong.<\/strong> It\u2019s true that developers with a better track record are safer; but remember that developers also depend on the main contractor, as well as many sub-contractors, to get the condo up and running.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">In fact, it\u2019s usually a failure of one of the contractors that causes issues (and again, the developer will likely tell you to sue the contractor instead<\/span><i><span style=\"font-weight: 400;\">\u00a0<\/span><\/i><span style=\"font-weight: 400;\">if something goes wrong). This is especially the case with defects, such as a swimming pool that\u2019s always clogged, or bad plumbing across an entire block.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Start by googling the names of the contractors and sub-contractors, and look out for any previous lawsuits or forum complaints. Also look up the contractors\u2019 websites \u2014 it\u2019s usually quite apparent if they\u2019re fly-by-night companies as their background information will be as barren as the Sahara Desert.<\/span><\/p>\n<ol start=\"4\">\n<li>\n<h3><b> Carefully check what is, and isn\u2019t, covered under the defects-free period<\/b><\/h3>\n<\/li>\n<\/ol>\n<p><span style=\"font-weight: 400;\">The defects-free period is the time in which the developer is obliged to fix defects at no cost to you. This should be at least 12 months from the TOP date. <\/span><\/p>\n<p><span style=\"font-weight: 400;\">Always read the terms carefully and look for exemptions. There are cases where certain features, such as devices used with Smart Home apps, are <em>not<\/em> covered under the defects-free agreement.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">You can also speak to your conveyancing lawyer and ask them if there are any red flags in the terms of your agreement.<\/span><\/p>\n<p>[<em>Recommended article<\/em>:\u00a0<a href=\"https:\/\/www.99.co\/singapore\/insider\/property-conveyancing-singapore\/\" target=\"_blank\" rel=\"noopener\">Property Conveyancing in Singapore: What You Need to Know<\/a>]<\/p>\n<ol start=\"5\">\n<li>\n<h3><b> Check if the discount for an uncompleted condo is really a discount<\/b><\/h3>\n<\/li>\n<\/ol>\n<p><span style=\"font-weight: 400;\">To entice you to buy a new launch or uncompleted condo, most developers offer an early bird discount. <\/span><\/p>\n<p><span style=\"font-weight: 400;\">Remember, you <\/span><i><span style=\"font-weight: 400;\">should <\/span><\/i><span style=\"font-weight: 400;\">be paying less as you\u2019re taking a much bigger risk. This is because by buying an uncompleted property, you\u2019re speculating on how well the development will turn out, as well as its yield and future price (you have no transaction history to research). Without a decent balance of risk-to-reward, you\u2019re better off just buying resale.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">One possible trick developers can use is to jack up the price of the unit, and then offer an impressive looking discount. For example, pricing the unit at 10% higher than it should be, and then offering a 10% discount \u2014 so it\u2019s not exactly cheaper, if at all.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">So if you&#8217;re buying a new launch condo and want to remain savvy, forget the impressive percentages. Simply compare the price of the unit with the median prices of surrounding properties, and work out the <\/span><i><span style=\"font-weight: 400;\">real<\/span><\/i><span style=\"font-weight: 400;\"> discount yourself (it\u2019s very seldom as high as 10%, but 3-5% is possible). You can <\/span><a href=\"https:\/\/www.99.co\/?utm_source=blog%20main%20site%20conversion\" target=\"_blank\" rel=\"noopener\"><span style=\"font-weight: 400;\">check the prices<\/span><\/a><span style=\"font-weight: 400;\"> of nearby units on 99.co. <\/span><\/p>\n<p><em>Is buying an uncompleted condo worth the risk? Voice your opinion in our comments section or\u00a0on\u00a0<a href=\"https:\/\/www.facebook.com\/groups\/yourpropertycommunity\/\">our Facebook community page<\/a>.<\/em><\/p>\n<p>&nbsp;<\/p>\n<p>If you found this article helpful, 99.co recommends\u00a0<a href=\"https:\/\/www.99.co\/singapore\/insider\/new-launch-condo-q4-2018\/\" target=\"_blank\" rel=\"noopener\">4 new launch condo projects to watch in Q4 2018<\/a>\u00a0and\u00a0<a href=\"https:\/\/www.99.co\/singapore\/insider\/guide-buying-new-launch-condos\/\" target=\"_blank\" rel=\"noopener\">[Sep 2018 Update] Eight-step guide to buying a new launch condo in Singapore<\/a><\/p>\n<p>Looking for a property? Find the home of your dreams today on Singapore\u2019s largest<a href=\"https:\/\/www.99.co\/?utm_source=blog%20main%20site%20conversion\">\u00a0property portal 99.co<\/a>!<\/p>\n","protected":false},"excerpt":{"rendered":"<p>Most developers in Singapore are competent and well-capitalised. This is great of course, but it leads to one little problem: it makes Singaporean property buyers a little too relaxed and trusting when it comes to buying a new launch or uncompleted condo. For many people in a showsuite, the risk that a developer will delay&hellip;<\/p>\n","protected":false},"author":59,"featured_media":54885,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"_relevanssi_hide_post":"","_relevanssi_hide_content":"","_relevanssi_pin_for_all":"","_relevanssi_pin_keywords":"","_relevanssi_unpin_keywords":"","_relevanssi_related_keywords":"","_relevanssi_related_include_ids":"","_relevanssi_related_exclude_ids":"","_relevanssi_related_no_append":"","_relevanssi_related_not_related":"","_relevanssi_related_posts":"","_relevanssi_noindex_reason":"","_lmt_disableupdate":"","_lmt_disable":"","_genesis_hide_title":false,"_genesis_hide_breadcrumbs":false,"_genesis_hide_singular_image":false,"_genesis_hide_footer_widgets":false,"_genesis_custom_body_class":"","_genesis_custom_post_class":"","_genesis_layout":"","footnotes":""},"categories":[53593,57131],"tags":[53684,55165,53739],"persona":[],"class_list":{"2":"type-post","12":"entry","13":"has-post-thumbnail"},"acf":[],"yoast_head":"<!-- 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