In this blog series, we invite real estate industry professionals to share their personal experiences. Names and identifying details have been changed to protect the privacy of individuals.
In December 2017, I received an enquiry from a client by the name of Claire.
She and her husband had just met their 5 year minimum occupancy (HDB) at their HDB in Fernvale and wanted to upgrade from their HDB to a condo. Eventually after much deliberation, they decided to try for Rivercove Residences.
Eligibility of application
In the context of Singapore public housing, an executive condominium caters to a “sandwiched class” of families who wish to stay in condominium but find private condominiums too expensive.
First introduced in 1999, an EC is a hybrid of public and private housing.
They resemble private condominiums and are enclosed within a gated compound with security, amenities like swimming pools barbeque pits, a clubhouse with a function room, a playground and so forth.
Is Claire eligible since they had bought a BTO previously? The answer is: Yes.
They are deemed as “second timers” as they had already purchased a Built to Order flat directly from the government previously.
How do I tell if I am a first or second timer?
All Singapore citizens are eligible to apply for up to 2 new flats direct from the government.
You will be considered a first-timer applicant if you have not received any housing subsidy from HDB. This means that you have not:
- bought from HDB directly eg a Built to Order flat
- Have taken the CPF Housing Grant to buy an Executive Condominium (EC), Design, Build and Sell Scheme (DBSS) flat or an HDB resale flat, or taken over ownership of such a flat or EC
- Have transferred the ownership of a flat bought directly from HDB, or an HDB resale flat bought under the CPF Housing Grant Scheme
- ever taken other forms of housing subsidy, such as Selective En bloc Redevelopment Scheme benefits or HUDC estate privatisation
In Miss Claire’s case, she is a second timer, and she is eligible for an EC. This will be her final “time” as HDB rarely approves housing subsidies beyond a second timer from what we understand.
Why Rivercove Residences?
Ms Claire currently lives in Fernvale. She had previously seen Hundred Palms Residences which was launched in 2017 but her family had been rather used to staying in Punggol area.
Her husband and herself were drawing below S$14,000. They are eligible and were hoping to upgrade to a condominium with facilities.
They have one child, and they desired to upgrade to a condominium in order to enjoy the facilities. They felt a condominium could be past down to their child in future as well.
They also enjoy hosting friends and family for barbeque over the weekends. Both Ms Claire and her husband came from humble backgrounds and neither has lived in a condominium before.
Hence they desire to upgrade from their HDB as they see it as a form of upgrade of their current lifestyle, as well as a form of investment.
So how and where do we start?
Ms Claire made an appointment to view the Rivercove Residences showflat during the 2 weeks preview launch period.
For most buyers who are not acquainted with ECs, private developers typically open the showroom up for buyers to view for 2 weeks. No sales are permitted during this period, and neither are cheques collected.
Instead, buyer’s need to fill up a manual application that gets filed as an E-Application (short form: E-App) in order to join the ballot.
The Rivercove Residences showflat had 2 layouts: a 3 bedroom and a 4 bedroom premium. Ms Claire and her husband were keen to look at a 3 bedroom premium unit. This is the biggest 3 bedroom layout of all; because it came with a study, yard and utility (stack 08).
They liked it because the study room can easily be converted into a store room, maid’s room or even hacked off to form a larger dining area. Also, it can even fit a single size bed. The size of this unit is 1163sqft.
I had proposed for her to select a few more layouts and stacks which she did. However that stack remained her utmost favourite.
As we see above, the e-App requires buyers to state their income, employment status and marital status etc.
Also, buyers have to declare the number of subsidies taken, as well as address of the previously subsidised flat.
What happens after the e-Application is submitted?
A ballot ticket with a 4 digit number is generated after the intended purchasers sign the e-Application form. This forms their “queue” number on the actual day of balloting.
Buyers who had submitted for the ballot will be entitled to receive the price list for the EC. The price list is comprehensive and covers every unit. It is sent 2 days before the actual balloting of the unit.
I received the 8 page price list on the morning of 12 April 2018 and sent it to Ms Claire. The balloting was scheduled for 10am on 14 April 2018.
Unlike private condominiums which only releasing the price on the ballot day itself at the showflat, I would say when balloting for an EC the prices are transparent.
Buyers are mentally prepared for the price they expect to pay for their desired unit. There is no obligations even at this stage – they can still opt out of the balloting should they want to.
They can take the next 1-2 days discussing and shortlisting units and come armed on the balloting day itself for their desired unit.
Prices stated in the price list come in the normal payment scheme and the deferred payment scheme. The deferred payment scheme is 3% higher than the normal payment scheme.
Why is this so? The difference between the normal and deferred payment scheme is that the mortgage loan for the EC only starts after buyers have collected the key at TOP.
This is especially attractive to purchasers who are still servicing an existing HDB loan. It would be hard for them to sustain both their existing HDB loan and a bank loan for the EC.
Hence, deferred payment scheme is the desired option for most home dwellers who have an existing HDB.
What happens on balloting day?
Everyone hates queuing. This form of balloting can be tiring and nerve wrecking for some buyers, even us agents.
There is no sheer win to the ballot process. It is pure chance. Numbers are called at random so everyone has to pay rather close attention.
Second timers are only given 30% quota at any EC launch. This means that if a second timer applicant is not called before the quota is met, they would have to wait a month later before the EC can officially sell the unit to them.
The majority of EC units i.e. 70% are actually reserved for first timers during the launch.
Our number was finally called. We then proceed in and join what us real estate agents have termed as the “snake queue”.
Inside the showroom, IT IS A MARKETPLACE. At every second, you hear the announcer going “xx-xx (unit number) SOLD!”. Our hearts were racing. Were we going to secure the unit or not?
We quickly flip to our units shortlist and re-look at the units again. Some had been sold. We quickly cross them out.
We were not only racing against availability of units; we were racing against the second-timer quota. If it’s met, Ms Claire can only book the available units a month later.
By then, her desired unit may have been snapped up. In fact, 4 to 5 bedrooms are always snapped up the quickest at an EC launch due to the limited availability of such units in the private market.
Can you see any yellows (representing 5 bedrooms)? I presume not. Because most were already snapped up by the time we stepped in.
So what happened next?
It was finally our turn! Thankfully, Ms Claire got the unit of her choice!
She happily signed on the cheque and we went out into the waiting area to wait for the option to purchase (OTP) to be generated.
After it was generated, both husband and wife signed on the option to purchase and left the showroom.
They got the unit! So what next?
It’s not over yet!
For all EC applications, various documents are required by HDB in order to process their application.
The 5% is kept in escrow by the developer.
Here is the interesting thing: Should the buyers be ineligible for the EC after submitting their documents (for example, they are 3rd timer applicants, or have not met their Minimum Occupancy Period or exceed the S$14,000 income threshold), the developer refunds the entire 5% booking fee.
However, if buyers decide to give up on the unit entirely, they lose 25% of the booking fee.
The unit is considered a “bounced out unit” and the various sales agencies will be notified for a possible round of ballot for this sort of units.
After booking the unit, we proceed to source for a bank loan for Ms Claire.
We had previously done a bank loan assessment for her during the preview period so she was confident of securing a loan. Thereafter, we source a conveyancing lawyer to assist with the EC purchase matters.
Once HDB approves the application, they inform the developer, upon which the Sales and Purchase Agreement will be delivered by the developer’s lawyer to the buyer’s appointed solicitor.
Buyers are required to exercise the option to purchase in 3 weeks after the Sales and Purchase agreement is received by the appointed solicitor.
There is no standard timing for when HDB approves the application. They would review through all the information submitted and may request for additional documents, eg payslips or statements from the buyers to assess their eligibility for the EC.
For straightforward cases it could be approved in 1 – 2 weeks. For complex cases it may take up to 6 weeks.
So when do they need to sell their HDB?
Ms Claire exercised the option shortly after receiving it. They opted for the deferred payment option which meant that they did not need to sell their HDB right away. Their bank loan starts after they collect the keys to Rivercove Residences.
Are you in the same position as Ms Claire?
Are you in the same situation as Ms Claire and planning to upgrade from your current HDB to an EC?
Are you unsure if you are a first or second timer?
Are you looking to buy an EC and enjoy the perks of living in a private condo?
Check out a few ECs that will be launching in the market over the next few years (2019 to 2020). Some of these ECs will be Sumang Walk (Punggol), Anchorvale Crescent, Canberra and Tampines.
The most immediate one in 2019 will be the EC at Sumang Walk at Punggol
Ms T is a practising real estate agent for more than 7 years and has extensive experience assisting clients in the upgrade of their HDB to their private property. For an in-depth discussion or questions on divorce of purchasing of an EC/private condominium, you may contact us below.