This is a Complete Guide on how to buy new launch private property, providing you the step-by-step process to secure your ideal home.
Given the flurry of private residential property launches in the last 2-3 years following aggressive bids by property developers in government land sales programme (GLS) and en-bloc sales, many exciting housing projects have been launched all over Singapore. You will be spoilt for choice! But, to buy a new launch private property requires considerable homework to find an ideal home that will satisfy three very important factors:
- Investment Potential
One of the most efficient way to find suitable property new launch is to seek advice from a property agency officially appointed by the project developer. As it has all the necessary information on hand, this will save you lots of time researching different properties yourself. (Note: For new launch private properties, you don’t have to pay any commission. So, why not take advantage of the free service!).
Process to Buy A New Launch Private Property
Fix an appointment with the official 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 to be presented to you. Besides drawing up a list of recommended properties for your consideration, he can also help to evaluate your finances and affordability, including the use of CPF savings for your property purchase. This is one of the most important steps in property investment to prevent over-stretching your finances. In addition, the property representative can also guide you through the entire buying process, including advising you on bank loans and property conveyancing.
Visit New Launch Private Property Showflats
Next, set aside time to visit the property showflats that you have shortlisted together with your property representative. 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 types of unit. These prices are usually not far off the mark and sometimes developers may provide early-bird discounts. Check with your property representative for the latest updates, including how well the property is selling.
View the Different Unit Types
View the different unit types and evaluate their sizes and layouts. There may be units of the same size but with different layouts. Some of the things to look out for are the relative size of the living room, dining room, bedroom and kitchen, as well as any odd configuration. For example, if you often cook at home, then a bigger kitchen may be preferable. Also check out the quality of the fittings and household equipment that come with the property, such as cooking stove, fridge, washing machine, etc.
Check Out the Actual Location
Very often, the showflats are not located at the actual site of the property. It’s important to check out the actual location to survey the surroundings. Some of the things to take particular note of are:
- Surrounding – Is the property located in a tranquil area with lots of greenery or is it near a busy road like an expressway?
- Facing – Is it facing the morning/afternoon sun or unsightly buildings? Is it windy and airy?
- View – Do you have a clear view in front of your property, or will there be potential new developments that may obstruct your view in the future.
- Essential amenities – Are there eateries, supermarkets, shopping centres and schools?
- Transportation and accessibility – Is the area well-served by public transportation and MRT, or will there be improvements in the near future?
Besides the above, you may also wish to check out what are the future developments in the surrounding areas to determine the investment potential of the property.
Submit Expression of Interest (EOI)
Once you have decided on your property and is keen to proceed with the purchase, you can submit an Expression of Interest (EOI). This will be handed together with a blank cheque issued to the developer’s project account. However, at this point of time, only an “indicative price” range of the different units are given. Your property representative will be able to advise you on the process. Once the actual price of your unit is confirmed, the blank cheque will be converted into a booking fee if you agree to proceed with the purchase. This will amount to 5% of the property price. (Important Note: Never issue the blank cheque in anyone’s name, except in the name of the developer’s project account).
The purpose of the EOI is to allow buyers to participate in the balloting on the day of the launch.
On Property Launch Day
You will need to be at the showflats on property launch day. A ballot number will be given to each potential buyer. The developer will randomly pick the ballot numbers to determine who will get to select their units first. The sooner your ballot number is picked, the better the chances of getting a unit of your choice. It is advisable to shortlist a few units in the event your choices are taken by those ahead of you. If you are unable to get your choice unit and decide to pull out of the purchase, the cheque will be returned to you in full without penalty.
Property Details Information (PDI)
Once you have booked a unit, you will have to pay 5% of the purchase price with the cheque you have earlier submitted for the EOI, 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 the floor plans, rules and regulations, equipment provided and other terms relating to your unit. 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 housing developer.
If you have missed or unable to secure your choice unit in the newly launched private property, don’t despair. You can either wait for the developer to release new batches for sale or look at other post-launch properties that are already on the market. Very often, especially for large projects, developers will release their units in phases. If you find a property to your liking, you simply need to put down a cash deposit (5% of the purchase price) to secure the OTP. Do take note that once signed, you won’t be getting your money back. You will have 3 weeks to exercise your OTP.
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) for a bank loan before committing to your property purchase. An AIP sets the quantum of the loan a bank is willing to lend you, and what your monthly mortgage obligations. This will give you an indication of the property you can afford).
Total Debt Servicing Ratio (TDSR)
Do take note that when taking a bank loan, you will be assessed on your total debt servicing ratio (TDSR). The TDSR is imposed by the Monetary Authority of Singapore (MAS) to prevent borrowers from over-extending their financial means. It is currently set at 60%, which means your total debt commitments (e.g. home and renovation loans, car loan, study loan, credit card debts, etc) will be capped at 60% of your total gross income. This will in effect limit the amount of loan you can borrow. More information on this can be found in “Change In CPF Usage And Housing Loan Rules”.
Engage A Conveyancing Lawyer and Sign the Sales and Purchase Agreement (S&P)
By now, you should have engaged a conveyancing lawyer as within 3 weeks of signing the Option-to-Purchase (OTP), the developer will deliver the title deed and 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 5% booking fee already paid). Your lawyer will help you to hand the signed S&P Agreement back to the developer.
Pay 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.
The BSD and ABSD rates are computed as follows:
BSD and ABSD Rates
To find out more information about property stamp duties, please refer to “How To Calculate Singapore Property Stamp Duties BSD, ABSD And SSD?”.
New Launch Private Property – Property 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 criteria as follows:
- 10%: Notice on completion of foundation work.
- 10%: Notice on completion of concrete framework.
- 5%: Notice on completion of brick walls of each unit.
- 5%: Notice on completion of ceiling of each unit.
- 5%: Notice on completion of doors, windows, electrical wiring, plumbing and internal plastering.
- 5%: Notice on completion of carparks, roads and drains.
- 25%: Notice of vacant possession or obtaining the Temporary Occupation Permit (TOP).
- 15%: On 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 the Keys and Move In
The estimated TOP date should be clearly indicated when you purchase your property. 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 the necessary funds for financing their 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.
If you are looking for a new launch private property, you may wish to check out the following projects:
- Provence Residence, an executive condo near Canberra MRT station and Canberra Plaza
- Parc Greenwich, an executive condo at Fernvale Lane, next to the Seletar Springs Estate
- Bartley Vue, a 115-unit condo development 400m from the Bartley MRT station
- The Watergardens At Canberra, a low-rise condo development near the Canberra MRT station
- Belgravia Ace, a freehold strata landed development in Seletar Hills Estate
- Canninghill Piers, an integrated development at Clarke Quay beside the Singapore River
- The Reef At King’s Dock, an exclusive waterfront development at Harbourfront opposite Sentosa island
- Midtown Modern, an integrated development to be built atop the Bugis MRT station
- One Bernam condo, a mixed-use development at Tanjong Pagar within the Central Business District
- The Atelier, a freehold condo development at Newton in Singapore’s prime District 9
- Kopar At Newton, an exclusive condo development opposite the Newton Food Centre
- Ki Residences At Brookvale, a 999-year development in the idyllic Sunset Way estate
- Parc Central Residences, the first executive condominium to be launched in Tampines in eight years
- One-North Eden, a mixed-use development in one-north, Singapore’s high-tech, research and innovation hub
- Pasir Ris 8, an integrated development beside the Pasir Ris MRT station, bus interchange and White Sands shopping mall
If you require any assistance on property investment or property-related matters, please contact us for an obligation-free consultation.
Meanwhile, you may also wish to check out the following resources: