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Choosing between Executive Condominium vs Private Condominium

Updated: Aug 23


Planning to upgrade from HDB?


For most, an upgrade to Executive Condominium (EC) or Private Condominium would be on their cards. While EC is priced cheaper than a Private Condominium, choosing one over the other could be a dilemma for those that can afford both properties.


So how do you decide between an EC or a Private Condo?


EXECUTIVE CONDO



EC are a form of hybrid housing, it is a public-private housing that is sold by private developers but is subsidised by the government. They have similar condo attributes such as swimming pools, and gyms and better design than HDB. The upkeep for EC is funded by the residents in the form of maintenance fees.


Buying a new EC comes with restrictions on eligibility. These are the following considerations.


Family Nucleus

A family nucleus under the following eligibility schemes

  • Public Scheme

  • Fiancé/Fiancée Scheme

  • Orphans Scheme

  • Joint Singles Scheme

Citizenship

  • Must be Singapore Citizen

  • At least 1 other applicant must be SC or SPR

Income

Monthly household income must not exceed $16,000

Private Property Ownership

Buyers must not own or dispose of any private property within the past 30 months.


Number of HDBs owned previously

As with any HDB properties, you can only buy HDB properties twice regardless of type (BTO, Resale, etc). Thus if you are a third-time buyer, you will not qualify for a NEW EC ( You are allowed to purchase a resale EC after its MOP)


You can check the latest eligibility at this link.


PRIVATE CONDO



Private Cono is a form of private housing developed by private developers. They have additional facilities such as a pool, garden and gym. Each development is responsible for its own upkeep. The fundings for the upkeep are from the individual owners in the form of maintenance fees.


There are no restrictions on buyers for private condos.


DIFFERENCES

Other than eligibility, these are the notable differences between an EC and Private Condo.

  • MOP Period - Sale and Rental Restrictions

  • Grant

  • Pool of Buyers

  • ABSD

  • Pricing

  • Land Tenure

  • Bank Loan Calculation


MOP Period

When you purchase a government-developed residential property such as HDB or EC, there is a Five Year Minimum Occupancy Period. During this period, you are not allowed to sell or rent out the entire unit in the open market. Additionally, you have to reside in the unit during this period. If you are living somewhere else ( such as working aboard), your time spent away will not be included in the calculation of MOP.


In addition, MOP would start from the TOP date instead of the purchase date. If your EC takes 4 years to complete, it will be a total of 9 years before you can resell on the open market. However, unlike HDB, the land tenure will start from the date the land is acquired by the developer and NOT the TOP date.


MOP does not apply to Private Condos. For private condos, you can sell or rent anytime after purchase. For sale, Private Condos are subjected to Sellers Stamp Duty (SSD) during the first 3 years.




Grant

CPF Housing Grant will be available for buying an Executive Condominium. The grants are as follows

  • Family Grant or

  • Half Housing Grant

Source: HDB

The co-applicants must be eligible for the grant when booking the EC unit.


Citizen Top-Up of $10,000 when a qualifying member of the SC/SPR household obtains Singapore citizenship.


These grants are not available for Private Condos.


Pool of Buyers

ECs are fully privatised after 10 years. Before that, the EC could not be sold to foreigners or entities. While this may deter some buyers, the residential market in Singapore has changed somewhat, with local residents (SC/SPR) forming the bulk of property transactions.


Moreover, EC is usually located in the suburbs. These areas are less popular with foreigners. Thus while EC technically limits the pool of buyers, it should not be the main concern for EC buyers.


Private Condos have no restriction on the types of buyers for resale.


ABSD

For private properties, if you have an existing property before purchase, you would need to pay ABSD if you choose not to sell it before purchase is made. You can always opt for ABSD remission if you meet the following criteria.


  1. The married couple did not own interest in more than one residential property each at the date of purchase of the second residential property.

  2. ABSD has been paid on the second residential property.

  3. The first residential property (co-owned or separately owned) is sold within 6 months after

  4. the date of purchase1 of the second property for completed property or

  5. the issue date of the Temporary Occupation Permit (TOP) / Certificate of Statutory Completion (CSC), whichever is earlier, if the property was uncompleted at the time of purchase

  6. The married couple remains married, and there is no change of ownership in the second residential property at the time of sale of the first residential property.

  7. The married couple has not purchased or acquired any other residential property since the purchase of the second residential property.

  8. The application for refund of ABSD is made within 6 months after the date of sale2 of the first residential property.

ABSD is now at 17% for the 2nd property, and this may be an issue for upgraders to fund this amount in addition to a minimum of 25% of the property value in cash.


For EC, you do not need to pay ABSD before you are done selling your flat. The following conditions must be met :


For acquiring a new EC unit, ABSD is fully remitted if the acquirer/ purchaser or any of the joint acquirers/ purchasers is a Singapore Citizen. However, you do still need to dispose of your flat within six months upon TOP.


Note that a resale levy may be imposed if you sell a subsidised flat ( even resale) to purchase a new EC. The rates are as follows.


Source: HDB

PRICING

Due to its restrictions, ECs are priced at a generous discount vs private condos. It is not surprising to find EC priced at 30% or more vs a private condo in the vicinity. As a result, this makes EC a more financially viable option for home seekers looking to switch to private properties.


TENURE

Compared to private properties, EC only comes with 99 years of leasehold.


On the other hand, private properties can be freehold or 999 years. While this may be a concern, especially for Freehold enthusiasts, the prices of EC have already factored this in.


BANK LOANS

While the above benefits seem to lean a property buyer closer to EC, the calculation of a Bank Loan may reflect a different scenario.


Private Properties

Loans for Private Properties shave to meet the Total Debt Servicing Ratio (TDSR). TDSR refers to the portion of the borrower's gross monthly income that goes towards repaying the monthly debt obligations of all loans, including the loan applied for.

It is currently set at 55%


EC

For EC, you must meet the TDSR and Mortage Servicing Ratio (MSR) requirements. MSR refers to the portion of borrow's gross monthly income to repay all property loans. This is capped at 30% of the borrower's gross monthly income. With the need to meet 2 requirements, you may get a smaller loan amount with the same salary for EC compared to private properties.


Here is a simplified example



A couple earning $5000 each

Age 30

Loan Tenure: 30 years

Total Income $10,000

No Debt


Based on TDSR (For Private Property)

The maximum loan repayment is $5500 per month

Maximum loan amount $1,224,866

Maximum property price $1,633,182

Initial outlet $458,223


Based on TDSR and MSR ( For EC)

The maximum loan repayment is $3000 per month

Maximum loan amount $ 668,120

Maximum property price $890,826

Initial Outlay $244,030



As a result of the restrictions on loans, one will be able to get a more significant loan amount for private properties as compared to EC, especially if there are no other outstanding loans.


This criteria also implies that the salary must be higher for EC applicants to qualify for the same loan amount. The alternative to a higher salary would be to increase the initial cash outlay for EC purchases. As calculation differs from person to person, our advice is to get a professional realtor to do the calculations and a banker to verify them. You can contact us for a complimentary property financial planning session if you need assistance.


UPCOMING EC for 2022.

There are 3 EC that will launch in 2022.


North Gaia (Launced Apr 2022)

Location: Yishun Close

MRT: Yishun MRT (1.3km)

Units: 616

PSF : Average $1250 psf

Status: Available


Location


Features

  • Comprehensive Condo Facilities

  • Quality Finishing

  • Equipped with built-in accessories cabinet in Master Bedroom wardrobe for selected units

  • High ceiling at Living/Dining/Bedrooms for selected units

  • Selected 3 BR offer flexible/optional configurations that can transform into a guest rooms or study room

  • Next to Khatib Bongsu Nature Park



TAMPINES TENET

Location: Tampines St 62

MRT: Tampines North MRT (500m)

Units: 590

Expected PSF: $1300 psf

Status: Target Nov 2022 Launch


Location






Features


  • 500m from the upcoming Tampines North MRT ( Cross Island Line)

  • 6 mins drive to Tampines Mall

  • There will be another EC and a mixed development within the same street/avenue upcoming in a year or two. This will support and push up the prices for Tenet in the future.


COPEN GRAND

Location: Tengah Garden Walk

MRT: Tampines North MRT (500m)

Units: 620

Expected PSF: $1150-1200 psf

Status: Target Oct 2022 Launch


Location





Features

  • Walking distance to Tengah Plantation MRT and Hong Kah MRT ( Jurong Line)

  • New Town, First Mover Advantage

  • Another EC will be launched in 2023/24 within the same vicinity.






For a clearer picture, it will be best to engage a property consultant to work through the numbers with you. Contact us for a complimentary property financial planning session today.






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