The Florence Residences
Resource & Info
How To Buy New Launch Condominium
Acquiring a private residential home is a reflection of luxury and affluence in Singapore. And it is a natural impression given the premium status pegged by the cost of owning even one of these units.
But for those who have the financial recources to afford a luxurious units, such The Florence Residences, you have every reason to take pride in your purchase and your upgrade in lifestyle.
To assist first-time condo owners, we have included some useful information and tips to facilitate your buying a much simpler affair.
Step-by-step Guide In Buying New Launched Condominium For Local and Foreigner.
When buying a private residential property, there are some factors which you should not overlook. Try to familiarise yourself with these considerations which may affect your purchase.
1. Who Can Buy
A foreigner who wishes to purchase a landed residential property is required to seek approval under the Residential Property Act. However, there are types of property such as a condominium unit, which a foreign person can purchase without approval.
2. Know Your Budget
Planning your financial resources and finding out how much you can actually afford to pay for your home, is one of the most important steps when buying a property. You’re legally required to pay a down payment of at least 20% of the property price (5% booking or Option fee and 15% exercise fee) in cash and/or CPF. As a foreigner, the full 20% has to be paid in cash. You should also take into account incidental costs such as legal fees, agent’s commission, registration charges, transfer of ownership, Buyer’s Stamp Duty (BSD) and others, all of which can come up to quite a significant sum.
3. Visit Showflat Preview To Find What Suits You
Showflats typically open for previews few weeks before the official launch date whereby the actual selling prices of the apartments will still be under wraps. Instead, there will be an “indicative price” to give you a rough guide of the price range of each unit type. At the same time, developer will usually include early-bird discounts to attract and reward committed buyers.
4. Engage A Property Agent
A highly competent property agent is handy at this stage. Although not mandatory, an experienced property agent will be able to advise and guide you through the entire balloting/buying process. This is important when it involves procedures, timelines, loans application and conveyance matters. It becomes even more crucial when buyers need to sell their current properties timely in order to fund their latest purchase.
If you intend to hire a property agent to represent you, do check that property agency and agents are licensed and registered with the Council for Estate Agencies (CEA). We will like to highlight that property agents are not allowed to offer you any benefit, in cash or kind, to induce you to engage their services. Visit the CEA website for more information on engaging a property agent and the role of an agent in a property transaction.
5. Get an Approval-In-Principle (AIP) From The Bank
Having known the indicative price of the condo by now, ensure you have sufficient finances to pay the upfront costs of the condo and the various payments that follow. Your appointed property agent, or an agent at the showflat, can work with you to estimate how much of a bank loan you will require, in order to obtain an Approval in Principle (AIP) from the bank you are intending to get a loan from.
An AIP is basically the bank’s agreement to lend you a certain sum of money, based on your financial health and credit history, as a home loan. This will be valid for 30 days. When you get an AIP, you are not obliged to take up a loan from that bank. So if you happen to find a better home loan from another bank later on, you’re free to go with that too. All property transactions in Singapore are subject to a maximum Loan to Value ratio (LTV). This is the amount you can finance a purchase through a loan, or mortgage. For foreigners, major banks tend to vary their eligibility requirements according to case-by-case situation.
6. Booking Process. Submit Expression of Interest (EOI) together with a blank, unsigned cheque.
Typically one week before the official launch of the new condominium to the public, prospective buyers are invited to the preview at the development’s showflat. If you are interested to get one of the units, you can fill up the developer’s Expression of Interest (EOI) form. A blank cheque together with the EOI form would be handed to the developer. Addressed to the developer’s project account, the blank cheque is an expression of your interest in purchasing on the official launch day. On actual launch day, you will be invited back to select your choice units through a balloting system. The blank cheque is meant for the 5% booking or Option fee. Should you wish to proceed with the purchase on that day, the necessary amount will be entered accordingly based on the actual selling price revealed on launch day. Submitting the blank cheque does not obligate you to go through with the purchase. Should you decide not to proceed any purchase, it will be returned to you.
7. Ballot On Launch Day. Book Your Unit. Pay 5% Option Fee. Obtain the Option to Purchase (OTP)
On the official launch day, you will be issued a random ballot number. The developer will pick out ballot numbers from the ballot box to determine who gets to pick their units first. The sooner your number is picked, the more choices of units you will have. At this point, it is likely that someone else will have already picked the exact one you had been eyeing on. Therefore, it is better to have a few choice units shortlisted so you have other options in the event your choice unit has already been taken.
If none of your ideal choices is available, you can choose to pass, and your blank cheque will be returned to you with no penalty.
On the other hand, if you have booked your unit, you will need to pay the 5% booking fee by filling up the blank cheque that was previously submitted during preview. The developer will furnish you with the followings:
Property Details Information (PDI)
PDI is a set of documents detailing floor plans, rules and regulations, and other necessary details, which you are required to read, agree, and sign the terms on all of these documents.
Option to Purchase (OTP)
After paying 5% of the booking fee or Option fee, you will be offered the Option-To-Purchase (OTP) form. You have a 14-day window to re-evaluate your purchase. Within this window period, you exercise this option by signing the OTP and forward it to the seller’s solicitor. By signing the OTP, which a property agent will assist you, means that the developer shall reserve the residential unit exclusively for you as the buyer.
Be sure of your decision, though. If you back out after paying this Option fee, you’ll forfeit a portion of it (usually 25% of the 5% Option fee) shoould you abort the purchase.
On receipt of the OTP, you also need to finalise the loan with your bank, who will furnish you with the Letter of Offer, a document outlining the terms under which you are receiving the loan.
Offer to Purchase
Alternatively, if the units are available post-launch and are now for sale to the public, you can head down to the showflat anytime and, if you’ve decided, you can skip the OTP and jump straight to the Offer to Purchase. Terms and conditions are drafted and make your 20% down payment right away.
8. Secure your bank loan. Sign the Sales and Purchase Agreement (S&PA). Pay 20% down payment.
In Singapore, all S&PAs are governed by the Housing Developers (Control and Licensing) Act, and as such, developers use standardised contracts provided to them by the Housing Developers Act. While any changes and amendments to the standard form have to be approved by the Controller of Housing before they can be validly issued to you, you should nevertheless look through your S&PA, and ensure that everything’s in order before signing on the dotted line.
This is the completion of sale document. If you have signed an OTP, this S&PA will be drawn up and delivered to you typically via mail or courier within 14 days, after which you have a further 3 weeks to sign and exercise this S&PA. As a foreigner the full 20% has to be paid in cash. Also, within 14 days of completing your S&PA, you must pay Buyers Stamp Duty (BSD) and/or ABSD. This will be calculated based on the purchase price as stated in the S&P Agreement.
Down Payment and Legal Fees
At this point, you are required to pay the remaining 15% Exercise fee of the property price (20% down payment consists of 5% Option fee and 15% Exercise fee).
In addition to the BSD and/or ABSD, you will also be liable for conveyancing fees, and any other services used. It is worth requesting a quote on these fees prior to commencing with the lawyer’s services.
There are 3 things you need to do:
1. Secure Your Bank Loan
Return to the bank with your OTP to finalise your bank loan application. The bank will issue you a Letter of Offer, a formal contract that states the terms of the loan package.
2. Hire A Local Property Lawyer
It is important to have a local qualified conveyance lawyer to act for you in the purchase and take care of the conveyancing matters. If you’re taking a bank loan, the bank will usually be able to recommend a firm from its panel. You’re not obliged to use them, so make sure to shop around to get the best rates.
If you engage a lawyer, you should clarify the scope of services to be provided and the legal fees payable. For more information on the role of a lawyer in a property purchase, you may refer to the Law Society of Singapore’s ‘Know the Law NOW!’ booklet, available here.
3. Sign the S&PA
Before you sign off on your new property purchase and commit to a significant financial outlay, be sure you go through your Sales & Purchase Agreement (S&PA) carefully. The S&PA is a private contract between the developer and yourself. You have 3 weeks to sign it at your lawyer’s office and exercise the Option. Your lawyer will also be the one to hand the signed S&PA back to the developer.
9. Pay for the rest of the condo progressively
The remaining 80% of the price of your condo will be made progressively, each time the developer reaches a certain milestone during construction stage:
10%: Upon completion of foundation work
10%: Upon completion of concrete framework
5%: Upon completion of brick walls of each unit
5%: Upon completion of wiring, doors and windows
5%: Upon completion of carparks, roads and drains
25%: Upon obtaining the Temporary Occupation Permit (TOP) – at this point, you can finally move into your new home!
15%: Upon obtaining the Certificate of Statutory Completion (CSC) – this is the legal completion date of the entire development.
These progressive payments can be made via cash, CPF or a bank loan.
The fact that payments are stretched over multiple stages is also why some homebuyers choose new launch condos over resale condos – they’ve got more time to pool money to pay for the condo at each stage, which means they can take up a smaller bank loan.
In contrast, with resale condos, you have to make full payment at the start. Meaning to say, whatever that isn’t paid via cash of CPF has to be paid with a bank loan.
10. Finally TOP. Collect keys to your new home!
The vacant possession date is the latest date where you can collect the keys to your unit. Do note that the actual handing over of the keys may occur before or after the vacant possession date. The developer is contractually bound to deliver vacant possession of the property to the buyer by the date stated in the Option to Purchase (OTP) and S&PA. Otherwise, the developer has to pay liquidated damages to you. Delivery of vacant possession will occur after the issuance of the Temporary Occupation Permit (TOP) for the project, or, if all the relevant legal requirements have been met, the Certificate of Statutory Completion (CSC) for the project, which will allow you to occupy your unit. Occupation of a building or part thereof without a TOP or CSC is an offence under the Building Control Act.
Once Temporary Occupation Permit (TOP) is issued and you have paid the progress payment due upon TOP, the developer will inform you of the procedure to collect the key to your unit. After collecting your newly minted keys, you’ll typically enjoy a 12-month Defects Liability Period. You can report any defects found in your unit to the developer to carry out rectification works.
Seek Professional Advice
Finally, if you are ever uncertain about what to do, never be afraid to seek an expert opinion, especially with the critical administrative documentations. That is one of the reasons why most first-time property buyers will engage a competent CEA-registered real estate agent to manage the entire process for them. More so with HDB upgraders who are in the midst of selling their existing HDB and using the funds to make the down payment for the condo.
Whatever option you go for, though, it’s super exciting that you’re en route to your next property milestone.
If you need advice on your specific situation(s), whether you are a prospective home buyer or otherwise, you should consult the relevant professionals for further advice. While we endeavour to ensure accuracy in this guide, we make no representations or warranties of any kind (whether express or implied) about the accuracy, completeness, format, currency or any other aspects of this guide or its application. Any reliance you place on this guide is strictly at your own risk.