New Launch Condo
To a lot of buyers, the process of buying a new launch condo can be rather confusing or complicated. Refer to below for a summary of the procedure and timeline for purchasing an uncompleted project (Building Under Construction) from the developer.
Fix an Appointment with the Official Property Agency
Fix an appointment with the appointed property agency and provide him with some basic information about your property preferences and budget. The representative of the property agency will then prepare the necessary materials for your consideration.
Typically, showflats will open for preview about 2 weeks before the official launch day. At this point, the developers will only provide “indicative prices” for the different unit types. Check with your property representative for the latest updates, including how well the development is being received.
visit show flat
here’s what you should look out for to determine if you’re making the right decision:
Location (accessibility and amenities)
Unit size
Facilities
Interior of the condo
Capital appreciation (based on upcoming developments)
Current market situation
Rentability
Environment (i.e. noise level)
Developer track record
Submit Letter of Authorisation (LOA)
Once you have decided on your property and is keen to proceed with the purchase, you can submit a Letter of Authorisation (LOA). This will be handed together with a blank cheque issued to the developer’s project account (Important Note: Never issue the blank cheque in anyone’s name, except the name of the developer’s project account).
The purpose of the LOA is to allow interested buyers to participate in the balloting for a unit in the development.
Property Details Information (PDI)
Once you have booked your unit, you will have to pay 5% of the purchase price with the cheque you have earlier submitted with the LOA, after which the developer will provide you with a set of Property Details Information (PDI) documents. Some of the information in the PDI will include your unit number, floor plans, rules and regulations, equipment provided and other terms relating to your property purchase. You will be asked to read and agree to the terms and details in the PDI documents by signing on all the pages.
The Option to Purchase (OTP) will be given to you at this point, which confirms your official booking of the property. Should you back out of the purchase, 25% of your booking fee will be forfeited by the developer.
Secure a Bank Loan and Hire a Conveyancing Lawyer
With your copy of the Option-to-Purchase (OTP), shop for a suitable bank loan to finance your property. The bank will do a credit assessment before granting you a Letter of Offer (LO), which basically specifies the terms and conditions of the loan. [Note: It is advisable to secure an Approval-In-Principle (AIP) before committing to your property purchase]. An AIP sets the quantum of the loan, This will give you an indication of the property you can afford.
Total Debt Servicing Ratio (TDSR) – The TDSR was introduced as part of the property cooling measures. It aims to prevent borrowers from being over-extended with their loans. The current TDSR is 55%, which means you cannot use more than 55% of your gross monthly income to service your total loans. This includes car loans, home loans, and even credit cards.
Loan-to-Value (LTV) Ratio – For your first housing loan, you can get up to 75% LTV ratio with a bank loan. However, the LTV is drastically reduced when it comes to the second housing loan.
Take note that if you have any outstanding home loans that you haven’t paid off, and you are still looking to buy your second property, the LTV limit is 45%. If you are buying your third property, the LTV limit is 35%.
For owners who are using CPF for an existing property, You are required to set aside the following before you can use the excess savings in your OA for the Multiple Property;
The latest BRS if you have at least one property bought using CPF or the property that you are buying can cover you till age 95*
The latest Full Retirement Sum (“FRS”) if you do not have any property that can cover you till age 95
As the CPF Minimum Sum will be raised in July each year, the amount you need to set aside will be adjusted accordingly. You can check the latest CPF minimum sum online.
Signing The Sales and Purchase Agreement (S&P)
within 2 weeks of obtaining your Option-to-Purchase (OTP), the developer will deliver the Sales and Purchase Agreement (S&P) to your lawyer. After you have exercised the option at your lawyer's office, you will have a further 5 weeks to endorse the S&P by paying 20% of the purchase price of the property (which will include the initial 5% booking fee). Your lawyer will help you to deliver the signed S&P Agreement back to the developer and handle all your subsequent progressive payments for the property.
Stamp Duties
Within 14 days of signing the Sales and Purchase (S&P) Agreement, you will also need to pay the relevant property stamp duties. They are the Buyer’s Stamp Duty (BSD) and the Additional Buyer’s Stamp Duties (ABSD), if applicable. These stamp duties are applicable regardless whether you are buying a new launch private property or a resale.
Buyer’s Stamp Duty (bSD)
| Price or Market Value of Property | BSD Rates for residential properties | BSD Rates for non-residential properties |
|---|---|---|
| First $180,000 | 1% | 1% |
| Next $180,000 | 2% | 2% |
| Next $640,000 | 3% | 3% |
| Remaining Amount | 4% | |
| BSD is rounded down to the nearest dollar, subject to a minimum duty of $1 | ||
Additional Buyer’s Stamp Duty (ABSD)
| 1st Property | 2nd Property | 3rd Property | |
|---|---|---|---|
| Singaporean | NA | 17% | 25% |
| Permanent Residents | 5% | 25% | 30% |
| Foreigners | 30% | 30% | 30% |
| Entities | 35% | 35% | 35% |
Progressive Payments
For the remaining 80% of the price of the new launch property, you will have to make progressive payments according to a set of construction stages as stipulated below:
10%: completion of foundation work.
10%: completion of concrete framework.
5%: completion of brick walls of each unit.
5%: completion of ceiling of each unit.
5%: completion of doors, windows, electrical wiring, plumbing and internal plastering.
5%: completion of carparks, roads and drains.
25%: Notice of vacant possession or obtaining the Temporary Occupation Permit (TOP).
15%: obtaining the Certificate of Statutory Completion (CSC), which is the completion date.
These progressive payments can be made via CPF, cash or a bank loan.
If the developer fails to deliver vacant possession of your property by the stipulated date, it is liable to pay liquidated damages amounting to 10% p.a. on the total instalments already paid.
Collect Keys and Move In
After you have moved in, there is a 12-month Defects Liability Period where the developer must make good any defects found. The developer must rectify the defects within 1-month of your notice.
However, should the developer fail to rectify the defects, you can take the following actions:
Notify the developer of your intention to initiate rectification works to be done and provide the estimated cost of carrying such work.
Give the developer an opportunity to carry out the proposed rectification works within 14 days after the date of notice, failing which, you may proceed to rectify the defects yourself and claims compensation.
In addition, should you find the area of your property smaller than what is stipulated in the Sales and Purchase (S&P) Agreement, you can demand a reduction in the sale price. However, developers are given a buffer of 3%. In other words, you can only claim compensation for the difference of the area above the 3% buffer, calculated at the rate of what you have paid per square metre.
An advantage of buying a new launch private property compared to a resale is that home buyers are able to stretch their payments over a longer time period. This means taking up a smaller bank loan while building up their necessary funds to finance the property.
In contrast to resale properties, full payment is required on completion of the property transaction in about 12 weeks. After exhausting your cash and CPF monies, the balance will have to be financed by a bank loan straightaway.
Summary Table
| Stage | Timeframe | Description | Payment |
|---|---|---|---|
| Stage 1 | Day 1 | Issue Option to Purchase (OTP) | 5% Booking Fee |
| Stage 2 | Within 2 weeks | Sales & Purchase Agreement (S&P) to be sent to Law Firm, or sent to Buyer if no Law Firm is appointed | -- |
| Stage 3 | Within 3 weeks from delivery of S&P | Buyer to exercise the OTP and sign the S&P at Law Firm | -- |
| Stage 4 | Within 2 weeks of Signing S&P | Buyer to pay all Stamp Duties | Buyer Stamp Duty (BSD) & Additional Buyer Stamp Duty (ABSD) |
| Stage 5 | Within 8 weeks from Day 1 | Buyer to pay remaining downpayment (Cash / CPF / Both) | 15% Downpayment |
| Stage 6 | Thereafter | Progressive Payments | 80% Progressive Payment Breakdown |
