Real estate developers can continue offering the deferred payment scheme (DPS) for executive condominiums (ECs) since eligibility and ownership rules prevent speculation in these projects.
However, home buyers hoping that the interest-only housing loans (IOL) and interest absorption scheme (IAS) will also be available for ECs will be disappointed. The withdrawal of the two programmes in September 2009 affects all types of private residential projects.
In response to queries from The Business Times, the URA issued clarifications on several payment schemes.
Many thought that the government had withdrawn the DPS for all types of uncompleted private homes in 2007 to control speculation. Last week, they realised that the scheme would still be available for ECs, when developers of Privé, an EC in Punggol, announced that they would offer the scheme.
As of Monday, the 680 apartment units available at the development have received 823 applications.
When asked why property developers can still offer the DPS for ECs, URA said that ECs “are different from other private residential developments” since they are intended for owners to occupy and are subject to ownership conditions and eligibility criteria.
Additionally, the subsale of booked ECs is not permitted.
“With these conditions, there is no need to remove DPS for ECs,” said the URA. The 2007 move was intended to “discourage excessive property investments in a buoyant market”.
When the DPS was scrapped in October 2007, URA had informed the Law Society of Singapore, the Real Estate Developers’ Association of Singapore (REDAS) and all licensed property developers in writing that the cancellation would not affect ECs and flats under the design, build and sell scheme (DBSS).
Developers planning to offer the DPS for ECs need to seek the approval of the HDB to change the terms in the standard sales and purchase agreement.
Meanwhile, URA said the ban on IOL and IAS “is effected via the Monetary Authority of Singapore’s housing loan rules for financial institutions”, which affects all residential properties, including ECs.