The Ministry of National Development (MND) has introduced three new measures to align the executive condominium (EC) scheme with that of public housing and support a sustainable EC market.

Firstly, the cancellation fees for ECs has been reduced from 20 percent to five percent of the purchase price, to relieve the financial burden of buyers who have to cancel their bookings after signing the Sale & Purchase Agreement.

The new fees will apply to land sales launched on or after 9 December, including those where the tenders have not closed.

Currently, the cancellation fee is similar to that of private housing at 20 percent. But unlike private home buyers, EC buyers cannot sub-sell their units if they fail to complete their purchase, hence the fee.

The fee had put significant financial pressure on young couples who were not able to proceed with their marriage and subsequently the EC purchase. The reduction will align the cancellation fee for EC units with that of Build-to-Order (BTO) flats.

Meanwhile, second-timer applicants purchasing EC units directly from developers will now have to pay a resale levy, just like second-timer applicants purchasing BTO flats.

The new levy will apply to land sales launched on or after 9 December, including those where the tenders have not closed.

At the moment, second-timer applicants purchasing EC units directly from developers benefit from lower prices due to the initial eligibility and ownership restrictions imposed on EC buying.

The alignment of treatment with second-timer applicants purchasing BTO flats will ensure greater parity.

Finally, the Monetary Authority of Singapore (MAS) will cap the Mortgage Servicing Ratio (MSR) for housing loans granted by financial institutions for EC units bought directly from developers at 30 percent of a borrower’s gross monthly income.

This is in line with earlier measures rolled out by the HDB and MAS to encourage financial prudence among public housing buyers. The move discourages EC buyers from over-stretching their finances while supporting an affordable and sustainable EC market.

The 30 percent MSR cap will apply to EC purchases where the Option to Purchase is granted on or after 10 December.

 

Romesh Navaratnarajah, Senior Editor at PropertyGuru, wrote this story. To contact him about this or other stories email romesh@propertyguru.com.sg

 

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