The Ministry of National Development have introduced three new measures that will be aimed to regulate the Executive Condominium scheme.
This is to ensure greater parity to that of public housing and to improve the viability and sustainability of the EC market.
The first measure will involve fees imposed when buyers cancel their EC purchase. Cancellation fees have been decreased from 20% to 5% of the EC purchase price. This is to alleviate their financial strain.
This will be in effect for land sales launched on or after 9 December and will include those with tenders that are not closed. The current cancellation fee for ECs matches that of private housing – 20%.
The difference lies in the inability of EC buyers to sub-sell their units during an incomplete purchase, which brings cause for the implementation of the fee.
The second measure will affect buyers who are directly applying for EC units from developers for the second-time. A new resale levy will be imposed on this group of buyers.
The new ruling will be in effect for to land sales launched on or after 9 December and will include those with tenders that are not closed.
From current market practice, such applicants will gain to benefit from reduced prices due to the initial eligibility and ownership restrictions imposed on the purchase of ECs.
Therefore, this new ruling will ensure greater uniformity between buyers applying for EC and BTO flats for the second time.
The third measure will be implemented by the Monetary Authority of Singapore (MAS). Buyers of EC units whose housing loans are granted by financial institutions will be imposed with a cap on the loan’s Mortgage Servicing Ratio (MSR).
This will concern units that have been directly purchased from developers at 30% of the debtor’s gross monthly income. The new cap imposed is in alignment with previous measures implemented by the Housing Development Board and Monetary Authority of Singapore.
The objective of this new measure is that of strengthening financial austerity of buyers of public housing units.
It will serve to deter EC buyers from over-straining their finances as well, which will further spur an economical and viable EC market. If the Option to Purchase is granted on or after 10 December for an EC purchase, the cap will be imposed.