BREAKING IT DOWN FOR YOU SO YOU DON'T HAVE TO GO LOOKING ANYWHERE ELSE!
If you have been planning to buy a home, you are already aware that owning a home is a long-term commitment. However, depending on your needs, there are several options available to Singapore homeowners. The three most popular types of residential units in high-rise buildings are BTO, DBSS, and EC. Here is some information on each type of residential unit in order to help you select the best option for you.
WHAT DOES BTO STAND FOR?
BTO is an abbreviation for the term Build To Order. This is under Singapore's Housing and Development Board (HDB) flat allocation system that offers flexibility in timing and location for owners buying New HDB flats in Singapore. Eligible buyers planning to shift into a new HDB apartment in the near future can apply for apartments in their preferred location from specific sites launched. Tender for construction will be called only if the number of applicants is at least 70% of the number of apartments in a specific contract (50% since 2011), otherwise, the project will materialise, not built. For more information on BTOs click HERE.
EXAMPLE: Waterway Sunrise II Northshore Cove, Punggol
*Credits of image to the Official HDB Website
WHAT DOES DBSS STAND FOR?
DBSS is an abbreviation for the term Design, Build and Sell Scheme. This was first introduced by Singapore's Housing and Development Board in 2005. Flats built under this scheme were meant for public housing and developed by private developers and agencies. When the project is completed, it is handed over to HDB to manage the development. Supposedly, they were meant to be built with better designs and mostly only in matured estates. The design, finishing and quality of the apartment unit would be improved than that of a typical HDB flat. However, DBSS units do not come equipped with: a swimming pool, gym, and the other facilities that normal condos typically enjoy. Although it has all the condo interior fittings - a standard DBSS is usually furnished with things such as kitchens cabinets, bathrooms, cabinets and air conditioner.
EXAMPLE: Golden Kismis, Studio Apartments
*Credits of image to the Official HDB Website
WHAT DOES EC STAND FOR?
EC is an abbreviation for the term Executive Condominiums. This is a type of housing in Singapore. First built in 1999, an EC is a hybrid of a public and private housing. Executive Condominiums resembles private condominiums and are enclosed within a gated compound with security, amenities like swimming pools, clubhouses, playgrounds and so forth. They are also built and sold by private developers, but at a price lower than private homes because their land prices are subsidised by the Government. Additionally, buyers can take Central Provident Fund (CPF) grants to pay for an EC bought from a developer. Hence an EC is subject to some regulations that apply to HDB flats:
- Buyers' household income must not exceed $14,000, in order to qualify for an EC. (the limit was raised from the previous $12,000 in August 2015. )
- For direct purchases from a developer, there is a minimum occupancy period of five years; during which the EC cannot be sold or rented out whole.
- After five years, the EC can only be sold to Singaporeans or Singaporean Permanent Residents (PRs).
- Only when the development reaches ten years old can it be sold to foreigners.
In December 2013, HDB announced that Executive Condos will now be subjected to the Resale Levy. This is a lump sum payment made to HDB when you purchase a second subsidised home. However, this only applies to ECs whose land sales were launched on or after 9 December 2013. At present, there are still a few ECs available that are not subjected to the Resale Levy.
*Important Note: While Executive Condominiums (EC) are treated as public housing, after the 10th year, they’re considered private properties.
EXAMPLE: The Criterion, Executive Condominiums
*Credits of images to Source.
HERE'S HOW PUBLIC AND PRIVATE PROPERTIES DIFFER FROM A PURCHASING STANDPOINT.
- You would require a Bank Loan for Private Housing: All forms of private housing needs a bank loan, which means the following:
- You will need to make a higher cash down payment (at least 5%) - that depends on your CPF balance and Debt Servicing Ratio (DSR). Public housing, on the other hand, can be purchased with no cash down payment with an HDB loan.
- Banks do not offer continuous fixed-rate loan packages. Instead, the rates revert to floating rates after 3 – 5 years. HDB loans, on the other hand, do offer continuous fixed-rate loan packages, but the interest rate is currently more expensive (2.6% compared to bank interest rates that hover around 1.7%).
- Resale Restrictions with public housing, there’s a Minimum Occupancy Period (MOP) of 5 years that needs to be satisfied before you can rent or sell it. There’s also a resale levy that needs to be paid in certain cases, which will cancel out much of your housing grants when buying another property. But with private housing, you’ll need to pay the Seller Stamp Duty (SSD) if you sell your home within 4 years.
- The possibility of Freehold HDB flats comes with a 99-year leasehold. However, with private properties, you might be able to find freehold land which ranges from 999 lease properties to totally freehold.
- Know your eligibility for grants, HDB buyers have a variety of grants to help with the purchase, but if you want to buy a private property, you can get a grant for an Executive Condominium (EC) if it’s over 11 years. You may be able to get a grant ranging from $5,000 – $30,000 depending on your income, making this the only type of private property you can get a grant for.