Buying a TOP unit allows you to collect the keys and move in immediately.
Prospective buyers can opt to purchase a few types of properties in Singapore – resale, new homes or TOP properties. We look at how TOP projects differ from other properties and why consumers should explore this market.
By Joanne Poh
When considering a property purchase, one must know exactly where the property is on its timeline — whether it has just been launched, is under construction, has received its temporary occupation permit (TOP), or has already been inhabited for some time.
In the case of resale properties, one key advantage purchasers enjoy is being able to inspect the premises before committing to the purchase, and the ability to move in immediately upon completion of the sale.
Conversely, purchasing a unit in a new development that is still under construction usually involves waiting for the property to be built before finally collecting the keys. While purchasers enjoy being the first to move into a brand new unit, the wait for the property to be ready
for occupation can take years.
TOP projects, on the other hand, offer purchasers the advantage of being able to move in right after the sale, while still being able to enjoy a brand new unit.
These are developments which have recently been constructed and are now ready to be occupied for the first time. Purchasers who buy units in TOP projects are able to collect their keys once they have paid the necessary amount.
What is a TOP and how does it affect purchasers?
In order to understand what a TOP project is, it is necessary to first know what a TOP is.
When developers are working on a new development, there comes a time, usually after several years of construction, when the property is ready for occupation by residents.
At this point, the developer has the option to apply for a TOP. In order to receive one, the property must fulfil a number of regulations put in place by the Building and Construction and Authority (BCA).
These regulations ensure that the building is safe for occupation. When the developer receives the TOP, this means that purchasers can officially pick up their keys and move in.
While a TOP indicates that residents are officially allowed to move into their units, it does not necessarily mean that the entire development has been completed. For instance, certain shared facilities could still be under construction. Despite the fact that the property has not officially been completed at the TOP stage, it is certified as suitable for habitation.
When the entire development is finally completed, the developer can then apply for a CSC (Certificate of Statutory Completion).
The TOP enables buyers to move into a brand new unit without having to wait for the developers to receive the CSC, which often arrives years later. They are also free to immediately rent out the unit, and the rent can then be channelled into paying their home loan installments.
How are TOP projects different?
Simply put, a TOP project is a development which has already reached the stage where developers can apply for a TOP.
Instead of waiting years for the development to be completed, purchasers commit to buying the property only when the TOP has been released. Once the purchase has been set in motion, they are free to collect their keys and move in.
Conversely, purchasers at units in developments that have only just been launched face a much longer wait for their new homes to be ready, as work is unlikely to have commenced on the building, and all that stands in its place is an empty plot of land. Buying at the TOP stage instead of at the launch enables purchasers to avoid having to make a financial commitment years before enjoying the fruits of their purchase.
One key way TOP projects differ from purchases made early on in the development of a property is the fact that payment must be made within a compressed timeframe.
Aerial view of crowded Singapore high rise apartment skyscraper buildings.
PropNex CEO Mohamed Ismail said: “In the case of ready-to occupy properties, payment has to be made upfront and all at once instead of in progress installments, as is the case for under-construction properties.”
When you purchase a unit in a new launch, payment is made in stages according to the state of completion of the project.
You will first start by paying a booking fee, followed by the downpayment and stamp duty. You then pay the rest of the purchase price in installments according to what has been built. For instance, you pay 10 percent of the purchase price when the foundations of the property have been laid, 10 percent when the reinforced concrete framework has been completed, five percent when the partition walls have been built, and so on.
When it comes to TOP projects, you are required to pay the booking fee, downpayment, stamp duty and the bulk of the progress instalments upfront.
Unlike purchasers at new launches, who often have months to source for home loans or raise funds for the next progress payment, TOP project purchasers are obliged to work on a much shorter timeline, and must ensure they are of good financial standing before they commit to the purchase.
Pricing of TOP projects
Ismail cautions that the purchase price of TOP projects may differ from that of newly-launched projects.
“Generally, ready-to-occupy properties are priced higher than under-construction properties, as a lot of infrastructure developments, such as roads or MRT stations, have already been completed. Price appreciation also has to be
taken into consideration.”
On the other hand, TOP projects can have the advantage of being more affordable than resale property.
Resale homes in established estates are often priced at a premium. In addition, resale property prices are usually set by the owners rather than developers, which frequently makes them costlier, such as in the case of non-urgent sales.
A new home to be enjoyed right away
Despite the higher prices vis-a-vis new launches, the ability to occupy or rent out TOP property immediately after the purchase mitigates the added cost, while being able to move into a brand new unit often makes TOP projects more desirable than resale property.
It is easy to see why many purchasers prefer not to have to wait years for under-construction property be built. There are many reasons to want to be able to occupy the property immediately, such as the desire to move into a new home without first having to find temporary accommodation, and the need for immediate rental income in order to finance the purchase.
At the same time, purchasers are free from many of the hassles which plague buyers of resale property, such as protracted home inspections and having to undertake extensive renovations.
There is a surplus of unsold units in many developments, and in a best-case scenario, buyers are even able to choose between several unit types and multiple floors. TOP projects thus enable buyers to buy brand new property without facing the constraints placed on them by the limited volumes of resale property.
Purchasing TOP projects also offers buyers a way to get their hands on a unit at a sold-out development, by taking over a purchase from another buyer in what is called a sub-sale.
There is much to like about TOP projects from an investor’s perspective. TOP projects are especially attractive to buyers who wish to see immediate returns on their investment, or be able to inspect a property before committing to a purchase.
Read the full TOP Special here.
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