TOPICS:
1. About Housing Developers
2. Basic Check
3. Visit Showflat
4. Option to Purchase
5. Sales and Purchase Agreement
6. Progressive Payments
7. Moving In
8. Completion of Sale
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1. About Housing Developers
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Any developer who intends to
carry out a project of more than 4 units of housing accommodation is
required to obtain a housing developer's licence from the Controller of
Housing before he commences construction of the housing project. This is
a requirement under the Housing
Developer's (Control and Licensing) Act ("the Act")
Licensed housing developers are also subject to the rules made under the
Act, namely the Housing
Developers Rules and
the Housing
Developers (Project Account) Rules.
These Rules provide a framework for fair market practice in the sale of
uncompleted private residential properties by licensed housing
developers.
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Fast Facts:
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Developers can only sell
housing units after obtaining a Sale
Licence and Building Plan
approval
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Licensed developers are
required to use the standard
form of Option to Purchase
and Sale & Purchase Agreement in the sale of housing units.
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Licensed developers are
required to deposit monies paid by purchasers up to the grant of
Temporary Occupation Permit for the unit into a Project
Account for the housing
project. Withdrawals from the Project Account can only be made for
purposes related to the housing project.
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A Licence is valid until the issue of the
Certificate of Statutory Completion and Certificates of Title or
Subsidiary Strata Certificates of Title.
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Pre-requisites
to Commence Sale
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Developers can apply for
either a "Sale" Licence or a "No-Sale" Licence
depending on whether they meet the respective
requirements.
A "Sale" licence allows a developer to sell the units in the
housing project after obtaining Building Plan Approval from the
Commissioner of Building Control under the Building Control Act.
A "No-Sale" licence only allows a developer to carry out the
construction of the housing project but not to sell the units. A
developer with a "No-Sale" licence can only sell units in the
housing project after obtaining the Temporary Occupation Permit
("TOP") for the housing project and COH's approval to convert
the licence to a "Sale" licence upon TOP.
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Every licensed housing
developer is required to use the standard form of 'Option to Purchase' and 'Sale & Purchase Agreement' prescribed under the Housing Developers Rules in
the sale of housing units. Read more about these standard contracts under
the sections on Option to Purchase and Sale & Purchase Agreement.
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Project Account
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A licensed housing developer
undertaking a housing project is required under the Act to open and
maintain a Project Account for the housing project with a bank or
financial institution. Types of monies to be deposited into and
withdrawn from the Project Account are stated in the Housing
Developers (Project Account) Rules.
The licensed housing developer must deposit into the Project Account -
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(i)
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all monies paid by a purchaser
(including the booking fee) towards the purchase of a unit up to the
issue of Temporary Occupation Permit for the unit; and
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(ii)
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all loans obtained for the
construction of the housing project.
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Monies in the Project
Account can only be withdrawn by the licensed housing developer
for purposes related to the housing
project.
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Validity
Period of Licence
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A housing developer's
licence will cease to be in force when the housing project is completed
with -
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(i)
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the issue of a Certificate
of Statutory Completion by the Commissioner of Building Control;
and
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(ii)
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the issue of Certificates of
Title or Subsidiary Strata Certificates of Title by the Registrar of
Titles.
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When a licence ceases to be
in force, the developer will no longer be subject to the Act and its
Rules in relation to the completed housing project.
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Buying
from Developers who are not Licensed
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Developers
selling units in a completed housing project with Certificate of
Statutory Completion and individual legal titles for the units issued are
not required to use the standard form of Option to Purchase and Sale
& Purchase Agreement prescribed under the Housing Developers Rules.
This is the same for developers who are not required to be licensed under
the Housing Developers (Control and Licensing) Act. Purchasers of housing
units from such developers are advised to seek professional advice on the
terms and conditions to be included in the Option to Purchase and to
understand what their rights and obligations are before paying the
booking fee.
More information on the process of buying a completed housing unit is
available from REDAS website.
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Buying a new apartment, flat
or house may probably be your single largest investment. Hence, before
you even visit a showflat or view any unit, it is important that you
familiarise yourself with some existing Government policies which may
affect you.
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If you own a HDB flat or
Executive Condominium, you have to fulfill the minimum occupation
period before you can purchase private
residential properties
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If you are a Non-Singapore
citizen, you have to obtain approval from the Controller of Residential
Property before you may buy landed
houses.
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You should consider
your finances before committing to
any property purchase, taking into consideration the limit on the use
of CPF monies for property purchase and the loan amount you can obtain.
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You can access free property
market information,
such as prices of private residential properties transacted over the
last 12 months, from URA website.
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Besides the price of the
property, other fees such as stamp duty and
property tax are payable.
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You may wish to consult a
lawyer on your rights and
obligations before signing any document.
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Check Your Eligibility to Buy
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Before you consider buying
your dream home, check whether you are eligible to buy especially if you
own a HDB flat and/or are a non-Singapore citizen (including Singapore
Permanent Resident).
If you own a HDB flat, you may wish to check whether you have fulfilled
the minimum occupation period required for your HDB flat before you can
purchase private residential properties. For more information, visit
the HDB website.
If you are a non-Singapore citizen (including Singapore Permanent
Residents), you have to obtain approval from the Controller of
Residential Property, Singapore Land Authority, before you may buy landed
houses. For more information, visit the SLAwebsite.
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Considering
Your Finances
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You should consider your
finances and decide on a budget that you would be able to commit towards
your property purchase. You could use the "Housing Affordability
Calculator" from CPF's website to
estimate your housing loan based on your income and ability to service
the loan.
If you decide to utilise your CPF monies, you should take note that there
are limits on their use for property purchases. Information on the use of
CPF monies and how proceeds of sale from your previous residential
property will be handled is available from the CPF website.
If you need to borrow from banks, you should familiarise yourself with
the terms of the loan and mortgage as well as the variation in interest
rates for the period of your loan. You may wish to discuss with a banker
to determine the maximum loan amount that you may obtain, the interest
rate and period of repayment for the loan. The list of local and foreign
full banks operating in Singapore can be found in MAS website.
Your application for the use of CPF monies and/or loans from banks will
take some time to be processed. Your lawyer will also need time to carry
out certain checks regarding the property to be purchased. To ensure that
you have enough funds to meet the payments required as well as a place to
stay, you should plan carefully when you should sell your existing home
and when to purchase a new home. For information on the process of sale
of HDB flats, visit the HDB website.
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Property
Market Information
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URA provides free
information on the property market, including:
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List of the launch and sale
status of uncompleted private residential projects. The list is updated
every month.
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Prices of private residential
properties that were transacted with caveats lodged over the last 12
months.
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You may want to find out more
about the other fees payable when purchasing a residential property.
Besides the following fees, you should also find out from the sales agent
or your lawyer on any other fees which you may have to pay.
For information on stamp duty and property tax payable, visit the IRAS website.
A valuation report on the value of the property to be purchased is
required by banks and the CPF Board. For a list of valuers and the fees
payable, visit the SISV website.
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You
may wish to consult a lawyer to understand better the process of buying a
property and your rights and obligations before signing any document. In
engaging a lawyer you should also clarify the scope of services to be
provided as well as the fees payable. For information on lawyers and the
legal profession in Singapore, visit the website of The Law Society of Singapore.
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At the showflat, before a
purchaser pays the booking fee and obtains an Option to Purchase the
property, he should consider the following pointers:
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Verify if the developer has
obtained a Sale Licence that allows him to
sell housing units.
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If the unit is marketed as
being suitable for other uses, e.g. office, verify with the developer
if he has obtained approval
for such use.
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The actual unit a purchaser
buys may or may not be exactly the same as what he sees at the
showflats. Purchasers should check the specifications
of the unit which are to be
described in the Sale & Purchase Agreement.
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Check with the developer
whether the housing project is affected by public schemes such as
drainage reserves and whether there are special
conditions imposed by the
relevant authorities.
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A purchaser should verify whether the developer is holding a Sale or No-Sale licence. Developers
who have been granted No-Sale licences are not allowed to sell any
residential unit in an uncompleted development.
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Past Projects of the Developer
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Check out the past projects
undertaken by the developer. Purchasers can ask the developer to disclose
their past experience in undertaking housing developments.
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Purchasers should also know
that generally, housing projects are only approved for residential use by
the competent authority under the Planning Act. If a developer markets
the project as being suitable for other uses, e.g., office use, it would
be prudent for him to check whether the developer has obtained approval
under the Planning Act for such uses.
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Specifications of the Property
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The showflats of projects
only show the interior design possibilities for the home. The actual
unit a purchaser buys may or may not be exactly the same as what he
sees at the showflats. Purchasers should check the specifications of
the unit which are to be described in the Sale & Purchase
Agreement. In some projects, the developer also describes the
specifications of the units in the housing project in their sales
brochures.
Items to take note :
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a)
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Area of the unit - the area
stated may include areas such as air-conditioner ledges, planter boxes,
private enclosed space, balconies, terraces, bay windows, etc.
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b)
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Equipment and appliances -
the showflat display may not represent that all the equipment,
appliances and fittings seen are provided. A purchaser should check the
specifications of the unit he intends to buy or clarify with the
developer.
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c)
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Car parking lots - some
projects may have less car parking lots than the total number of units.
Hence not all owners of the units in such a project will have the use
of a car parking lot. Purchasers can check with the developer on the
total number of units in the project and the number of car parking lots
provided.
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Some
projects may be affected by public schemes such as drainage reserves,
road reserves, sewage pipes, electrical cables, etc. There may be special
conditions imposed by the relevant authorities in relation to these
public schemes. The owners and the Management Corporation of projects
which are affected by such schemes are usually required to grant access
to the relevant authorities to carry out works as and when necessary and
comply with special conditions of use. Purchasers may wish to check with
the developer whether the project is affected by any such schemes and
whether there are special conditions imposed.
Purchasers may also wish to discuss with their lawyers the implications
of any such public schemes and special conditions affecting the project.
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An Option to Purchase is a
right or option given by the vendor of a property to an intending
purchaser to buy the property at a specified price within a specified
period of time (the validity period of the option). The intending
purchaser must pay a booking fee for this right or option. The intending
purchaser has to exercise the Option to Purchase within its validity
period if he decides to buy the property.
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Fast Facts:
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All intending purchasers
must be named in the Option.
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Option is valid for 3 weeks from
delivery of Sale & Purchase Agreement to purchaser.
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To exercise
option, Sale & Purchase
Agreement has to be signed and balance downpayment has to be paid.
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Booking Fee
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Under the Housing Developers Rules,
the booking fee payable to the licensed housing developer for an Option
to Purchase is between 5% of the purchase price of the residential
property.
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Standard
Option to Purchase
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A licensed housing developer
is required to use the standard form of Option to
Purchase prescribed under the
Housing Developers Rules in the sale of the units in a licensed housing
project. The developer is required to seek approval from the Controller
of Housing for any change to be made to the standard Option to
Purchase. The standard Option to Purchase cannot be amended even by
mutual agreement between the buyer and developer unless approval is
given by the Controller of Housing.
Some of the key things to note in the standard Option to Purchase are:
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Name of developer
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The Housing Developer's
Licence Number
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Name of project account bank
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Name of buyer
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The expiry date of the
option
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Description of the property
(address, tenure)
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Purchase price
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Payments required and the
amount to be refunded if the intending purchaser decides not to
exercise the option to purchase
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Special Conditions
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Signed by an authorized
person from the developer
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Non-assignability of Option
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The
purchaser is not allowed to assign or transfer the Option to Purchase
that has been granted to him by the developer to any other persons.
Hence, he needs to ensure that all persons who are intending to purchase
the property are correctly identified and named as the 'intending
purchasers' in the Option to Purchase. Only the intending purchasers
named in the Option to Purchase may exercise the option and sign the Sale
& Purchase Agreement for the property as purchasers.
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Validity Period of Option
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If a purchaser is granted an
Option to Purchase, the developer is required within 14 days from the
date of the Option, to deliver the Sale & Purchase Agreement in
duplicate and the original or copies of the title deeds to the purchaser
or his lawyer for review. The option is valid for 3 weeks from the date
of delivery to the purchaser or his lawyer of these documents. The
intending purchaser has to exercise the Option to Purchase within its
validity period if he decides to buy the property.
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Process
to Exercise Option
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Within the 3 weeks validity
period, the intending purchaser may exercise the Option to Purchase by
doing all of the following:
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Sign all the copies of the
Sale and Purchase Agreement;
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Return all copies of the
signed agreement to the developer; and
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Pay to the developer the
balance downpayment* (which could be 15% of the purchase price).
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The developer may, instead of
the 3 weeks mentioned above, allow purchasers to pay the balance
downpayment* within 8 weeks from the Option date. This is an amendment to
the standard Option to Purchase approved by the Controller of Housing
which all developers are free to adopt.
* The standard downpayment is 20% of the purchase price. However, if the
developer has obtained the Controller's approval to offer to purchasers
the deferred payment scheme, the downpayment required could be between 10% to
20% of the purchase price.
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If
the Option to Purchase is not exercised before it expires, the developer
will be entitled to forfeit 25% of the booking fee. The other 75% of the
booking fee will be refunded to the purchaser. Thereafter, the developer
can sell the property to any other interested party.
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5. Sale & Purchase Agreement
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A Sale & Purchase
Agreement is a private contract between the vendor and the purchaser for
the sale and purchase of a property. Licensed housing developers are
required to use the standard form of Sale & Purchase Agreement in the
sale of the units in a licensed housing project.
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Fast Facts:
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Under the Sale &
Purchase Agreement, the developer
is required to build the unit and
the housing project in a good and workmanlike manner according to the
Specifications set out in the Agreement.
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The purchaser should obtain
a written
confirmation from the developer if
there are items offered by the developer which are not stated in the
Sale & Purchase Agreement.
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A purchaser of a
strata-titled property should note the share value allocated to the unit
as this determines the maintenance charges payable.
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A purchaser must ensure
that payments due to the developer
are made promptly according to the payment schedule in the Sale &
Purchase Agreement.
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A purchaser has to inform
developer if he sub-sells the unit before
completion of the sale of the unit has taken place.
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A Sale & Purchase
Agreement is a private contract between the developer and the
purchaser. Should there be any breach or disputes, the purchaser may wish to
resolve them through mediation or seek legal advice on the appropriate
course of action.
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In mediation, an impartial third party
will help the purchaser and the developer to negotiate an amicable
settlement of the differences. Purchasers could consider the mediation
service offered by the Singapore Mediation Centre, the REDAS
Conciliation Panel or the SISV Mediation Centre.
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The developer is required to
build the unit together with all the common property, if any, in a good
and workmanlike manner according to the Specifications set out in the Schedule of the Sale & Purchase Agreement and the
plans approved by the Commissioner of Building Control and other relevant
authorities.
If in the erection of the unit, the developer has made changes from the
Specifications or approved plans with the approval of or as required by
the Commissioner of Building Control or other relevant authorities, the
purchaser is entitled to a corresponding reduction in the purchase price
or to damages if such changes involve the use of cheaper materials,
omission of any works or reduction in the scale of the works originally
agreed to be carried out by the developer.
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Specifications of Unit
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The type of materials,
finishes, fittings, appliances, furnishings, etc to be used or provided
for a unit and the common facilities are set out in the
"Specifications of the Building" in the Schedule of the Sale
& Purchase Agreement.
The purchaser should obtain a written confirmation from the developer if
there are any other items offered by the developer which are not stated
in the specifications, e.g. free washing machine, cooker, etc.
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A purchaser of a unit in
strata-titled housing projects (includes apartments, condominium and
strata landed housing with common property) should note the share value
that has been allocated to the unit in relation to the whole housing
project. The share value of a unit determines a purchaser's share in the
housing project and is used to compute his share of contribution for the
recurrent maintenance fees and charges for the common property.
The purchaser should also note that there could be some restrictions on the use and enjoyment of the unit and common
property by the purchaser in the Sale & Purchase Agreement. These
restrictions are intended to facilitate the developer in managing the
common property before the formation of the Management Corporation and
the first annual general meeting is held. For more information on the
duties and responsibilities of the developer, please refer to BCA's
publication "Strata
Living in Singapore".
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The purchaser must ensure that
all payments due to the developer are made promptly according to
the payment schedule in the Sale & Purchase Agreement.
The purchaser will be liable to pay interest in accordance with the
formula set out in the Sale & Purchase Agreement if any amount of
purchase price due is not paid by the deadline specified in the payment
schedule of the Sale & Purchase Agreement.
If any payment of the purchase price and interest remains unpaid for more
than 14 days after it is due, then the developer has the right to treat
the Sale & Purchase Agreement as having been repudiated by the
purchaser and may take steps as specified in the Agreement to annul the
Sale & Purchase Agreement. Once the Sale & Purchase Agreement is
annulled, the developer has the right to forfeit 20% of the purchase
price, recover all outstanding interest owing and unpaid by the
purchaser, and to resell the unit to any other person or otherwise dispose
of it.
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Amend
Terms of Sale & Purchase Agreement
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All changes to the terms and
conditions in the standard Sale & Purchase Agreement have to be
approved by the Controller of Housing. This is so even if the changes
have been mutually agreed to by both the purchaser and developer.
The developer is required to list all the changes to the Sale &
Purchase Agreement which have been approved by the Controller of Housing
in a separate schedule in the Agreement (usually referred to as The
Second Schedule).
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If the purchaser wishes to
sub-sell the unit after signing the Sale & Purchase Agreement with
the developer and completion of the sale of the unit has not taken place,
the purchaser will have to inform the developer of the proposed sub-sale.
The developer will, at the request of the sub-purchaser, enter into a new
Sale & Purchase Agreement with the sub-purchaser on such terms and
conditions as shall place the developer and the sub-purchaser in the same
position as if the sub-purchaser were the original purchaser in the
original Sale & Purchase Agreement.
If a purchaser has purchased the unit under a deferred payment scheme, he
should note that the developer may or may not extend the deferred payment
scheme to the sub-purchaser. The purchaser should ensure that the
sub-purchaser is aware of the possible variation to the payment scheme
when they enter into the sub-sale agreement.
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Both the purchaser and
developer will need to meet their respective obligations specified in the
Sale & Purchase Agreement. If there is any breach by either party,
the parties should follow the steps specified in the agreement to seek
remedies.
In the event of a dispute, the purchaser is advised to initiate
discussions with the developer to resolve the differences. The purchaser
may wish to consider engaging professional mediators to reach an amicable
solution or seek legal advice on the appropriate course of action to take
should the need arises. As the Sale and Purchase Agreement is a private
agreement between the developer and the purchaser, the Controller of
Housing would not be able to adjudicate on the dispute between the
parties.
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In
mediation, an impartial third party, called a mediator, will help the
purchaser and the developer to negotiate an amicable settlement of the
differences. The mediator does not adjudicate on the dispute, but rather
helps to facilitate both parties to reach an agreement on how to solve
the problem. Mediation is likely to be less costly than litigation or
arbitration and may help the purchaser resolve disputes more
quickly.
Under the Sale & Purchase Agreement, it is provided that the
developer and purchaser should, before referring any dispute or
difference relating to the Sale & Purchase Agreement to arbitration
or court proceedings, consider resolving the dispute or difference through
mediation at the Singapore Mediation Centre in accordance with its
prevailing prescribed forms, rules and procedures.
If the purchaser has entered into a Sale & Purchase Agreement with a
developer which is a member of REDAS and there is any dispute between the
purchaser and the developer in relation to defects in the housing unit or
obligations of the parties which arise during the defects liability
period of the Sale & Purchase Agreement, the purchaser may bring the
dispute before the REDAS Conciliation Panel for adjudication. Purchasers
should note that a number of conditions have to be satisfied before the
dispute will be adjudicated upon by the REDAS Conciliation Panel.
The purchaser may also wish to consider engaging the service of the SISV Mediation Centre, which is set up by the Singapore Institute of
Surveyors and Valuers to resolve disputes relating to the construction
and real estate industry.
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Under the standard Sale &
Purchase Agreement, purchasers are required to make instalment payments
of the purchase price, typically referred to as progress payments, as and
when the developer completes the different stages of construction of the
housing project. All instalment payments up to the issue of Temporary
Occupation Permit are to be paid into the Project Account which the
developer is required to maintain with a bank or financial institution.
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Fast Facts:
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A Deferred
Payment Scheme is
a payment scheme whereby developers allow purchasers to defer the due
date for the progress payments under the standard payment scheme to a
later date.
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Besides the progress
payments, other
payments which a purchaser is
required to make under the Sale & Purchase Agreement include
property tax and maintenance charges.
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Standard Payment Scheme
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The time for payment and the
amount of purchase price payable under the standard payment scheme is
shown in the following table:
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Stage
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Payment under a standard payment scheme ( % of
purchase price )
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Upon the grant of Option
to Purchase
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5% (booking
fee)
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Upon signing of the Sale
& Purchase Agreement or within 8 weeks from the Option date
*Stamp Duty (3%*Purchase Price -$5400)
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15% less booking fee
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Completion of foundation
work
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10%
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Completion of reinforced
concrete framework of unit
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10%
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Completion of brick walls
of unit
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5%
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Completion of
roofing/ceiling of unit
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5%
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Completion of electrical
wiring, internal plastering, plumbing and installation of door and
window frames of unit
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5%
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Completion of car park,
roads and drains serving the housing project
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5%
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Notice of Vacant
Possession
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25%
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On Completion Date
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15%
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A
Deferred Payment Scheme is a payment scheme whereby developers allow
purchasers to defer the due date for the progress payments under the
standard payment scheme to a later date. The developer is required to
seek the approval of the Controller of Housing before offering any form
of deferred payment scheme to purchasers.
On 26 Oct 2007, the Government withdrew the deferred payment scheme,
i.e. applications from developers to offer deferred payment scheme for
new housing projects will not be approved. However, developers who have
already obtained the Controller’s approval to offer a deferred payment
scheme may continue to offer it to purchasers after 26 Oct 2007.
Purchasers are advised to check with the developers on the payment scheme
being offered.
There are various combinations of deferred payment scheme, 2 examples of
such schemes are illustrated in the following table.
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Stage
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Payment under a deferred payment scheme A( % of
purchase price )
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Payment under a deferred payment scheme B( % of
purchase price )
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Upon the grant of Option
to Purchase
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5%(booking fee)
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5%(booking fee)
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Upon signing of the Sale
& Purchase Agreement or within 8 weeks of Option date
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20% less booking fee
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10% less booking fee
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Notice of Vacant
Possession
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65%
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75%
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On Completion Date
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15%
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15%
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Besides the purchase price,
there are other payments which a purchaser is required to make under
the Sale & Purchase Agreement, such as the following:
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all property tax levied in
respect of the unit after the purchaser receives from the developer the
Notice of Vacant Possession.
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•
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if
the unit is in a strata-titled housing project, maintenance charges for
the maintenance of the common property and the provision of cleaning
and other services from the date the purchaser actually takes
possession of the unit or the 15th day after the purchaser receives the
Notice of Vacant Possession in respect of the unit, whichever is the
earlier. More information on maintenance charges can be found in BCA's
publication "Strata Living in Singapore".
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When the developer is ready to
hand over the unit, the developer will issue a Notice of Vacant
Possession to the purchaser. You may want to make a thorough inspection
of the unit upon taking vacant possession to ensure that there are no
defects. If you discover any defects, you should follow the procedure set
out in the Sale & Purchase Agreement to rectify the defects.
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Fast Facts:
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The developer is required
to deliver
vacant possession of
the unit to the purchaser by the date specified in the Sale &
Purchase Agreement. The date specified is an expected date and actual
delivery of vacant possession may occur earlier.
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Under the Sale &
Purchase Agreement, a defect is defined to mean any
fault in the unit or common property which is due to defective
workmanship or materials or to the unit not having been constructed
according to the Specifications in the Agreement.
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During the defects
liability period,
which is 12 months from date of Notice of Vacant Possession, the
developer is obliged to rectify any defect which becomes apparent in
the unit, common property or housing project.
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Purchasers should follow the procedure in the Sale &
Purchase Agreement for the rectification of defects and making claims
for the cost of rectification works.
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Delivery
of Vacant Possession
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The developer is required to
deliver vacant possession of the unit to the purchaser by the date
specified in the Sale & Purchase Agreement. Please note that this
is an expected date and that the actual delivery of vacant possession
may be earlier or later.
Before delivering vacant possession, the developer must ensure that the
unit has been completed so as to be fit for occupation. When the
developer is ready to hand over the unit, the developer will issue a
Notice of Vacant Possession to the purchaser. The developer must at the
same time also deliver to the purchaser a copy of the following:
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•
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The Temporary Occupation
Permit or Certificate of Statutory Completion issued by the
Commissioner of Building Control for the unit, and
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•
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A certificate by an architect/professional
engineer that the unit and the housing project (and all the roads,
drainage and sewerage works) have been completed according to the plans
and specifications approved by the Commissioner of Building Control and
that all water, gas and electricity supplies have been properly
connected to the unit.
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What
is meant by a defect?
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Under the Sale & Purchase
Agreement, the term "defect" is defined to mean any fault in
the unit which is due either to defective workmanship or materials or to
the unit not having been constructed according to the Specifications set
out in the Sale and Purchase Agreement.
For units in a strata subdivided housing project, the term
"defect" in the Sale and Purchase Agreement covers defects in
the common property and housing project as well. Purchasers are advised
to seek clarifications from the developer or seek professional advice if
they are unsure whether there are defects in the unit, the common
property or housing project.
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Within a period of 12 months
from the date the purchaser receives the Notice of Vacant Possession
(this period is known as the defects liability period (DLP) in the Sale
& Purchase Agreement) the developer is obliged to rectify any defect
in the unit, the common property or the housing project which becomes
apparent.
The purchaser may want to make a thorough inspection of his unit as soon
as he takes over possession to ensure that there are no defects. If the
purchaser discovers defects at any time during the DLP, he should follow
the procedure set out in the Sale & Purchase Agreement to get the
developer to rectify the defects or bear the cost and expense of the
necessary rectification works.
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Procedure
to Rectify Defects
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Purchasers may wish to follow
the steps set out below (which are in line with the procedure set out
in the Sale & Purchase Agreement) :
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1)
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Inform the developer in
writing specifying details of the defect and request the developer to
make good the defect.
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2)
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The developer may wish to
conduct a joint inspection of the defect (optional) with the purchaser
but in any event should carry out necessary repairs within 1 month of
receiving notice of the defect from the purchaser.
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3)
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If the developer fails to
rectify the defect within 1 month, the purchaser may notify the
developer in writing that he intends to engage another party to rectify
the defect and the estimated cost for carrying out the rectification
works. The purchaser should obtain a written quotation on the estimated
cost.
This notification should only include the defects which the purchaser
has earlier notified the developer and which the developer has failed
to rectify. The purchaser should follow step 1 of this process if any
new defect is found.
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4)
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The purchaser should then
give the developer an opportunity to carry out the rectification
works.
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5)
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If the developer still fails
to rectify the defect within 14 days after the date of the notification
in step 3, the purchaser may carry out the repairs and claim for the cost
and expense of the repairs from the developer.
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Facilitating Rectification of defects
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To ensure that the
rectification works are carried out smoothly, the purchaser should take
note of the following:
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Be specific on the defects
which the developer is asked to rectify.
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Be present for the
appointments with the developer or contractors.
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Inform the developer before
hand if any new defects which have not been mentioned in the original
notification are to be discussed.
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Ensure that the affected
areas are free from obstruction like furniture and appliances to
facilitate the rectification work and prevent damage to your
belongings.
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The
purchaser and the developer should acknowledge and agree in writing the
list of defects that have been rectified. To find out more about
defects, visit the BCAwebsite.
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*Stamp Duty:
Stamp duty is a tax on executed
documents relating to properties or interest in properties and shares or
interest in shares. Stamp duty is payable only on documents described in the
First Schedule to the Stamp Duties Act (Cap 312). These documents include a
lease, sale and purchase, gift or mortgage of property. It is not a tax on
transactions. If the agreement is verbal and no document is executed (signed)
for that agreement, then no stamp duty is payable.
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Completion of the sale and
purchase of a unit takes place when the developer conveys legal title of
the unit to the purchaser.
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Fast Facts:
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When the developer is ready
for completion, the developer will issue a
Notice to Complete to the purchaser. The Notice to Complete must be
given by the date specified in the Sale & Purchase Agreement or 3
years after the date of delivery of vacant possession of the unit,
whichever is earlier.
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The purchaser has a right to
claim for liquidated
damages if the developer fails
to deliver the Notice to Complete on time.
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Procedure for Completion of Sale
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When the developer is ready
for completion, the developer will issue to the purchaser a Notice to Complete
which must be given by the date specified in the Sale & Purchase
Agreement or 3 years after the date of delivery of vacant possession of
the unit, whichever is earlier.
The Notice to Complete must be given to the purchaser together with a
certificate by an architect/professional engineer that subdivision
approval for the housing project has been granted by the relevant
authority.
Completion must take place within 14 days after the purchaser receives
the developer's Notice to Complete. It is to take place at the office of
the developer's solicitors.
On completion, the developer must execute a proper conveyance to the
purchaser of the unit and also hand over to the purchaser a duplicate of
the title to the unit, namely, the Duplicate Subsidiary Strata
Certificate of Title (for strata subdivided property) or the Duplicate
Certificate of Title (for non-strata subdivided property). These
certificates are official documents issued by the Registrar of Titles
stating that the person named in the certificate is the legal owner of
the property described in the certificate.
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The
purchaser has a right to claim for liquidated damages according to the
formula specified in the Sale & Purchase Agreement if the developer
does not issue to the purchaser the Notice to Complete by the deadline
specified in the Sale & Purchase Agreement.
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FAQ (Frequent Ask Questions)
What
are new property launches in Singapore about?
In
Singapore, a developer who wishes to sell units in an uncompleted development,
such as one that has just started construction, must first obtain a Sale
License to do so.
After
obtaining a Sale License (subject to government conditions meant to protect
people buying property in Singapore), he may proceed to sell units in his
development.
He
will then officially launch the development for sale, usually with publicity
and ads in the major newspapers. A large development may even merit a media
campaign. There is also usually a showroom, with models and showflats, where
the preview takes place.
What
is a VIP or VVIP Preview?
Usually
even before official launch of the development for sale, the developer will
soft launch it with a preview, called a VIP Preview, where buyers are invited
to buy units first.
The
advantages of buying at this point are a) first pick of units & b) usually
lower prices, as developers normally price to stimulate demand at this point.
They may give a discount known as the Early Bird Discount, of typically up to
10 to 11%. (Subsequently developers remove the discount to maintain their
profitability.)
Usually
attended by savy investors & experienced property buyers, as this is where
the most value-for-money choicest picks are to be had. The "early bird
gets the worm".
The
moment the developer removes the discount, their unit is automatically worth
more. Maybe 10% more. Some investors sell or flip their buys for a quick
profit, in a sub-sale. So for an outlay of $200,000 on a $1,000,000 unit in a
rising market, he could be looking at $100,000 profit within a couple of
months. (The reverse happens in a falling market.)
If
you are interested in buying property in Singapore, previews are a good place
to be at.
The
good news is, while the first preview is private and normally reserved for
directors, business associates, and even shareholders of the developer, the
first public preview is open to just about anybody with the means and desire to
buy a unit. But you'd usually need to pre-register for it.
To sign up for
the preview,
just call up one of the developer's designated marketing team
members,
who will then brief you on the details of the project, preview date, floor
plans, pricing, etc, and get your particulars to register you with the
developer's office.
Who
or What is a Marketing Team Member?
Developers
may conduct property launches in Singapore through an in-house marketing team,
or more likely (to minimise staffing), by appointing external real estate
agencies to do the marketing.
Agents
from these agencies call themselves the Developer's Sales Team or Office, or
similar terms, which can be kind of confusing to a lay person, who tends to
mistake that to mean someone from the developer's office itself.
So
if you've ever wondered why there seem to be so many "developer's
team" sales staff around in such Singapore property sales, well, that's
why.
Processing
of any sale continues to be handled by the developer itself. The job of agents
from the appointed agencies is to get buyers in and to clinch sales.
Any
cheaper to go direct to the Developer than thru' a Marketing Agent?
No.
For the simple reason that if developers allowed that to happen, agencies would
not take on the job, as they would have difficulty getting buyers to come
through them.
Do
Buyers buying property in Singapore have to pay Agents?
No.
As in all Singapore property sales, buyers do not pay fees. The developer (as
seller) pays the agency for each successful sale, and the agency splits that
with the agent.
Buyers
do NOT, and should NOT, have to pay any agent any fee, when buying property in
Singapore.
Do
Buyers Pay to Sign Up for a Preview?
No.
Attending a preview is free.
How
to Sign Up for a VIP Preview
Thinking
of buying property in Singapore and want to know more about specific property
launches in Singapore, or to attend their VIP Previews?
The
simplest way is to contact a real estate agent who is a Marketing Team
Member.
The agent will likely meet to show you details of the project provided by the
developer.
You
will also be registered for the VIP Preview if you so request. That typically
involves submitting a form listing your particulars & preferred units, with
your cheque. The agent will normally take care of most of the paperwork.
It's
always a good idea to have several units in mind before the preview, especially
if the market is hot or the project very popular. That's because savy investors
snap up the best units very quickly, so you'd want to have fall-back options
ready in case your first choices are no longer available.
In
fact, things can get pretty chaotic, with buyers clamouring to be the first to
book their units. For some Singapore property sales, there might even be
overnight queues. To avoid that, developers may choose to use balloting instead
of queueing for determining who gets to go into the showflat first.
Attending
a preview doesn't mean you are obliged to buy a unit. You can choose not to and
your cheque will be returned to you. No charge involved.
How
to pre-register for Singapore property sales previews on my own?
Alternatively,
here are the steps if you'd like to do it on your own. It won't make the
purchase cheaper, but if you prefer not to talk to an agent...
- Contact the agent to email
you the necessary documents.
- Look through the unit
plans and decide what unit type you'd like. A price psf (per square foot)
range is usually provided so you'd be able to estimate a rough cost for
each unit type. (You might want to use the mortgage calculator on the
right of this page to figure out the instalments payable for buying
property in Singapore.)
- Look through the site plan
to determine which stacks (blocks) contain the unit type you've chosen.
Decide the stacks, facings, and floor levels you like. Shortlist your
preferred units. The higher you go, the more expensive it gets, as much as
$3,000 to $20,000 more for each floor. Generally small units cost more per
square foot than large ones. And obviously those with a view command a
premium.
- Fill in the Authorization
& Purchaser's Particulars Forms, including your preferred units in
order of preference.
- Write out and sign the
cheque, which will be used for the option fee (typically 5% of the
purchase price). However, as the exact unit price is not known yet at this
point, the amount has to be left blank. Cross the cheque
and make it payable to the project
account.
(Do NOT leave the payee line blank; by making it payable to the project
account and crossing it, you safeguard yourself.)
- Print out a photocopy of
your NRIC (front & back) or Passport (details page).
- Call the agent to collect
the documents for priority booking.
Why
submit cheques to register for new property launches in Singapore?
This
is a standard developer's requirement. It helps ensure that serious buyers can
pick their units without being crowded out by mere sight-seers, especially at
previews where it can get rather packed.
If
you're concerned that someone might use your cheque for a spending spree,
there's really no cause to worry. So long as you've made out the cheque to the
developer's project account, and crossed it, that can't happen.
Your
cheque will be returned to you if you decide not to proceed to buy.
But
if you're still worried, pick an agent you can trust for buying property in
Singapore, to register you.
What
if I want to see the showflat without pre-registering?
The
first preview day is usually reserved for those who pre-register, but
thereafter you can visit the showflat without registering. However the best
units are typically taken up first, and the best prices are usually found at
the first preview too.
Will
there be any penalty if I decide not to buy?
No.
For new Singapore property sales, you can withdraw at any time before booking
the unit, without penalty. At the preview, the agent will let you know the
exact price for you to decide whether to proceed or not. Only when you decide
to proceed will the agent book the unit for you.
Typical Sequence of a Project Preview
Here
is a typical scenario of new property launches in Singapore:
- First preview session:
Bookings by the Developer's VIPs & invited guests such as directors,
business associates and shareholders.
- Preview opened to
registered buyers: Bookings by buyers who pre-registered. Buyers are not
obliged to purchase if they don't like the price or the showflat, or for
any other reason. However pre-registration gives buyers priority to go
into the showflat and select a unit before walk-in customers.
It is therefore a good idea to be in this group, ie. to pre-book, as:
. You get better choice of units.
. Prices can be lower than after the showflat is opened to walk-ins.
. You are not obliged to proceed to buy.
- Subsequently, the public
get to go into the showflat to purchase units, on a
first-come-first-served basis.
It
can get pretty chaotic at a project preview, especially for very popular
projects, with buyers jostling to book units first. Developers may therefore
adopt a balloting system to determine order of entry into the showflat.
How
to get discounts at new property launches in Singapore
Developers
may give a discount in the following cases:
- Early bird discount (up to
10%) at the preview before the official launch. The purpose of this is to
stimulate demand and to create a buying momentum. Once this purpose is
achieved, the developer would then remove the discount so as to maximize
his profitability.
- To clear remaining stock
when a development is almost completely sold. Though the perception is
often that the last few units must be the least attractive, you could
actually get some pretty good bargains sometimes.
- To stimulate demand in a
sluggish market. When the market is down is probably the best time to ask
the developer for a discount. He may entertain your request then. As in
all investments, the best time for buying property in Singapore is when
others are not.
So why was my request for a special discount turned down?
Other
than the above scenarios, developers do not normally entertain individual
requests for discounts. That's because it sets a precedent which is to their
detriment. If they accede to one set of buyers, then they have difficulty
saying no to others who may ask for even bigger discounts.
In
a hot market, they would sooner run the risk of losing a customer (after all,
another one will probably come along) than risk their bottomline. In a slow
market of course, it's another story. That's when they might be amenable to
offering sweeteners.
Is it safe to buy uncompleted property in Singapore?
If
you've ever had the experience of paying for an uncompleted property elsewhere
only to see the developer vanish halfway through construction of the project,
you'd be glad to know this is not something that is likely to happen if you're
buying property in Singapore. That's because new Singapore property sales are
very high regulated.
A
developer who undertakes a project of more than four units must comply with
stringent government conditions before he can start to sell units in his
project.
On
top of that, all monies for a project including loans and payments by buyers
must be deposited into a project
account at a bank or
financial institution. The developer can only withdraw money from the project
account to pay for costs related to the project.
All
contracts with buyers in new Singapore property sales, such as the Option Form
and Sales & Purchase Agreement, are standard forms mandated by the
government, ie. the developer cannot use his own version that might be skewed
in his favor.
The
buyer pays for his unit progressively, depending on progress of construction.
This is known as the Normal Progressive Payment Schedule, and is also mandated
by regulation. The project must complete ie. get its Temporary Occupation
Permit (popularly shortened to TOP), and subsequent Certificate of Statutory
Completion (CSC), within an approved timeframe.
Even
upon TOP when the unit can be occupied (vacant possession), a percentage of the
purchase price is withheld by Singapore Academy of Law as stakeholder to ensure
that any defects the buyer finds during the first 12 months, known as the
Defects Liability Period, are corrected at the developer's expense.
For
all new Singapore property sales, legal completion, ie. when legal titles are
conveyed to buyers buying property in Singapore, must take place within three
years of delivery of vacant possession.
If
the developer fails to deliver vacant possession or legal completion by dates
stipulated in the agreement, he has to pay liquidated damages to the buyer,
calculated from day to day, at 10% per annum of whatever total sum the buyer
has paid so far.
Where
there are no such rules, projects could drag on indefinitely.
The
developer also has to compensate the buyer if there is more than 5% shortfall
in floor area of his unit.
What is the Project Account? What does it do?
The
developer must open a Project Account with a bank or financial institution for
each housing project he undertakes, before he is issued with a Sale License
(license to sell units in his development). All payments from buyers before
completion of the project, and construction loans, go into the project account.
Money
in the project account can only be withdrawn to pay for the project. Requests
for release of funds must be supported by proper documentary proof, or
certification by the architect upon completion of each stage. An auditor must
certify that the money has been withdrawn according to the rules.
This
rule, which applies to all new Singapore property sales, is to ensure that
monies for a project, whether loans or sale proceeds, only be used for the
project and not diverted to other uses, or worse, absconded with.
It's
another measure to safeguard those buying property in Singapore.
*Source: URA
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