Singapore New EC Launch
Executive Condos Vs Private Condos
A financially beneficial option for Singaporean first time home buyers in the increasingly popular Executive Condominium (EC). The public as a whole has really taken to Executive Condominiums as they are the perfect solution for what’s known locally as the “Sandwich class”. For those who earn less, they qualify for the HDB system, for those who earn more will have the finances available to invest in a condo. For the middle category of Singaporeans, they have the EC options available.
Looking into this a little deeper. For those who have finances that fall between possibly using the HBD system and the Executive Condo option, the choice is straight forwards. The EC offers a lot more quality and you have the option to invest in a home that’s going to be worth a lot more over the 5 or 10 years. However, for those future homeowners who earn more money and are in the position to consider either an EC or private Condo then the decision is a little more complicated. We’re going to explore the option a little more to help those people who are considering the two options make an informed decision.Click Here To Read More
The Foundations of the Executive Condominium
There are some requirements you need to meet to qualify for an Executive Condominium, it does have some strings attached. We’ll go into detail shortly but initially, it’s important to understand that a large proportion of potential applicants don’t meet the requirements to successfully apply for an Executive Condominium.
Here are some of the more important requirements you need to meet to be eligible:
- Total household income should not exceed $14,000.
- You are required to be a Singaporean citizen.
- You can be the owner of property
- You are not allowed to have owned property over the last 30 months, either in Singapore or abroad.
- You can’t have owned more than one HDB or DBSS property. Additionally, you are only allowed to have owned 1 Executive Condo previously.
There are 4 schemes available and you need to meet the requirements of one of these themes to be eligible The first is the Public Scheme: It takes a variety of forms, you can apply for your spouse and any children you may have. Additionally, you can apply with your parents or just your children, depending on your current family situation.
There are 2 variation schemes called the Single Scheme and the Fiance Scheme. Both are pretty clear if you are single or you are engaged to get married then these are the right schemes for you. The final scheme is Orphan Scheme. There is a scheme if you’re an orphan and you’re applying with a sibling, aptly named Orphan Scheme.
Within these schemes, there are some additional requirements that include the need to be 35 years older when applying for the Single Scheme whereas for other schemes the age requirement starts at 21 years old. When making an application for the Orphan, fiance and Public scheme the co-applicant also needs to be a Singaporean citizen or a permanent resident at a minimum.
Some background information on Executive Condos There have been high-quality private condos making up the Singapore skyline for well over 45 years. In fact, since the early 70’s there have been private condos available offering world class amenities to its residents.
On the other hand, Executive Condominiums are pretty new to the Singapore scene. They started appearing on the skyline from the 90s.
The Singaporean government has adopted a policy that favours home ownership. At the same time, they had the policy to develop a strong middle class and needed a strong foundation of housing for the increasingly affluent Singaporean middle class. This was how the Executive Condominium strategy was born, to bridge the divide between the public and private sectors property options.
How are Private condos and Executive condos similar?
There are similarities between private condos and ECs. Most of them are related to the build quality and amenities and features that both offer. They are both built to an extremely high standard. They both have facilities that include swimming pools, private parks, tennis courts, security around the clock and manicured landscaping. They have to. The process is to give up and coming Singaporeans a mini step onto the private condo property ladder.
There are some strings
There are some major strings attached once you’ve met the requirements needed for a successful application for EC.
Executive Condos are both an option to own a high quality and an opportunity to get on the property ladder, but they are not a quick route to an easy return on investment. You have to own and live in the Condominium for a minimum of 5 years before you can sell the property and even then there are some restrictions. For example, you are only allowed to sell the property to a Singaporean or a permanent resident.
How Executive Condos are made to be affordable
If you’re new to Executive Condos, or you’ve never really taken the time to dissect how they work, then you might have pondered how developers are able to build a condo with the same build quality and level of finishing as you’d find with private developments, but sold at a significantly lower price.
They work because the sale of land is subsidized by the government. They plan and tender the land to developers that are aware the land is to be sold at a reduced price and the whole process is controlled.
The Financial Incentive
Although ECs are protected against becoming a short term investment opportunity, they do offer a significant opportunity for investment in the long term. After 10 years they become private condos and as such as subject to market prices. In other words, you get to buy it at a drastically reduced price, live in high-quality accommodation for 10 years, and then sell the condo at a later date for a significant profit.
In other words, for professionals looking to get on the property market, they can qualify for and purchase a property that allows them to make that first step onto the property and as they develop in their career, they are in a great position to make the step onto the private condo market.
There are a lot of significant advantages for choosing to take the Executive Condominium route onto the property market. Assuming you meet the criteria to be allowed to purchase an EC then you get to live in a condominium that has all the same facilities you’d expect to find in a high-quality private condo. 24/7 security, swimming pool, fitness facilities like tennis courts and a gym. All for a significantly lower price.
After 5 or 10 years, you are able to sell the property at the current market price for private condos which represents a significant return on your investment. Being restricted for possibly 10 years is not something some potential home buyers would be interested in committing to, however, if you are, it’s the ideal pathway onto the Singapore property market.