In Singapore, when you say a condo, it can either mean a private condominium or an executive condominium (EC), two kinds of residential properties here that are somewhat similar but have striking differences.
To help you distinguish either property, we created this guide that enumerates the things they have in common as well as their differences, including the benefits and disadvantages of owning an executive condo. Aside from that, we listed the requirements to purchase an EC.
What is a private condo?
Over 80% of Singaporeans live in HDB flats or public housing, while the remaining reside in privately-owned residential properties. Of this, the most common kind of such property here is a private condo.
Private condominiums are non-landed strata developments, where the buildings or blocks contain many residential units. These projects are either freehold or 99-year leasehold.
Unlike HDB flats, residents of private condominiums have access to impressive amenities and facilities, like 24/7 security, swimming pools, tennis courts, landscaped areas, gyms, clubhouse and many more.
What is an executive condo?
An executive condominium, which is better known as an EC, is intended for a more affluent group of people whose household salary surpasses the monthly income ceiling for public housing (HDB flats) but are having difficulty in purchasing private properties.
This is a public-private hybrid type of housing as ECs are considered as public housing from the start, but fully transitions to private property after 10 years. These properties generally have a leasehold tenure of 99 years.
Originally, the government introduced the executive condo in 1999 as a replacement for the former Housing and Urban Development Company (HUDC) flats.
What are the similarities between ECs and private condos?
Structurally and facility-wise, an EC and private condo are basically the same, as they both offer similar facilities such as round-the-clock security, swimming pools, tennis courts, landscaped areas, gyms, clubhouse and others.
Another commonality is that an executive condo and private condo are both marketed and sold by private real estate developers or home builders. In comparison, HDB flats are directly sold by the Housing Board.
What are the major differences between EC and private condo?
Although they’re essentially the same in form, the differences between ECs and private condos lie in their original selling price as well as the rules and regulations that apply to each kind property. For instance, unlike private condos, ECs have restrictions on who can purchase them. For particulars, please read the details below:
- A private condo is privately-owned from the start. As such there are fewer government restrictions unlike for HDB flats, which are public housing. For instance, right from the start, a private condo can be sold to Singaporean citizens, permanent residents (PR) and foreigners. A private condo can also be rented out for minimum of 3 months, instead of 6 months for HDB flats.
In contrast, an EC starts off as public housing, hence its buyers need to comply with some restrictions set by the Housing and Development Board (HDB). One of them is the Minimum Occupancy Period (MOP) of five years. During this period, EC buyers are not permitted to:
- Rent out the entire executive condo
- Sell the EC via the open market
- Purchase any private property, either in Singapore or abroad
But after the five-year MOP, the executive condo can be divested to Singapore citizens and permanent residents (PR). After 10 years, the unit can be sold to foreigners. Thereafter, buyers of resale ECs no longer have to fulfil the MOP. At such time, an executive condo will become fully privatized and will be treated as a private condominium.
- Despite the five-year MOP, ECs are 25% to 30% more affordable than private condos of similar size and location. One reason for the lower price is that the government subsidises the land cost of these projects. In fact, prices of new or off-plan executive condos range from S$700 psf to S$900 psf, which works out to about $650,000 for a two-bedroom unit to S$800,000 for a three-bedder. In comparison, a three-bedroom private condo can fetch over S$1.2 million.
In addition, executive condos are considered as public housing from the start. As such, the buyer can further reduce the selling price by taking advantage of CPF Housing Grants of S$10,000 to S$30,000 depending on your eligibility. Given the lower cost and grants, more Singaporeans opt to purchase an EC rather than a private condo.
- Given the lower selling price of ECs, these properties typically have greater potential for capital appreciation than private condominiums. In fact, a research by Squarefoot revealed that the price gap between a private condo and a nearby executive condominium narrows substantially after the latter meets its five-year MOP. However, please note that there is still a possibility for lower price gains as EC developments are usually located far from the city centre and MRT stations.
A home for singles
- Another difference between an EC and private condo is that a single by his own can’t buy an executive condo from the start, but he can do so with a private condo. If a single wants to purchase a new or off-plan EC, he needs to so under HDB’s Joint Singles Scheme. Under this scheme, you and up to 3 other co-applicant singles (unmarried, divorced, or widowed) must be at least 35 years old and all are Singapore citizens.
- For private condos, no group of buyers are given priority over the rest. But for executive condominiums, 70% of the homes are earmarked for first-timers during the developer’s initial launch period.
Mortgage Servicing Ratio and Total Debt Servicing Ratio
- If you plan to purchase a new executive condo, please keep in mind that you need to comply with the Mortgage Servicing Ratio (MSR), which is currently at 30%. Under this rule, the monthly repayment for the housing loan take out to buy the EC should not exceed 30% of your monthly household income, and the maximum loan tenure must not go beyond 30 years.
But for purchasing a private condo, the buyers need to abide with the Total Debt Servicing Ratio (TDSR) framework introduced by the Monetary Authority of Singapore (MOM or central bank) on 28 June 2013 to prevent home buyers from loaning too much to fund the purchase of a property. The TDSR framework applies to all residential mortgages granted by all financial institutions in the city-state, including by banks, moneylenders, insurance firms and others.
Under the TDSR rules, home buyers can only loan to up 60% of their gross monthly income. The cap also takes into consideration all outstanding debts you have like car loans, personal loans, credit card balances and student loans. Banks even include small financial obligations such as gym memberships and monthly payments for appliances, when computing the amount it can lend.
- Resale levy
- If you want to purchase a new EC from a property developer, but you have previously bought government-subsidized housing such as built-to-order (BTO) flat from the Housing Board, a Design, Build and Sell Scheme (DBSS) unit or a new executive condo, you will need to pay a resale levy.
The aim of the resale levy is to provide a fair allocation of public housing subsidies to first-time and second-time buyers of government-subsidized homes. This is applicable to ECs launched since 9 December 2013.
What are the eligibility conditions to buy an executive condo?
Executive condos are popular as they’re a bargain. While they come with some restrictions, their market value after 10 years becomes roughly similar to that of private condominiums.
But before you go and buy an EC, please note that similar to HDB flats, there are stringent conditions before you are allowed to purchase a new or off-plan executive condominium. The eligibility requirements are discussed in detail below.
1. Age of the buyers
- If applying for any scheme aside from the Joint Singles Scheme, the buyers must be at least 21 years old.
- If applying under the Joint Singles Scheme, the buyers must be at least 35 years old.
2. Citizenship of the buyers/co-buyer and essential occupants
- One of the buyers must be a Singapore citizen.
- There should be at least one other co-buyer or applicant, a family member who must be a Singapore citizen or a Permanent Resident (PR). In short, you can’t buy an EC alone.
- If applying under the Joint Singles Scheme, all buyers or applicants must be Singapore citizens.
3. Monthly household income of the buyers
- You and your family’s combined income should not surpass S$14,000 per month. Prior to August 2015, the income ceiling was S$12,000. The income limit shows that ECs cater to the sandwich class, the group of people whose household income surpasses the limit for HDB flats, but are struggling to purchase private condos.
4. Property ownership
- The buyer, co-buyer(s) and essential occupant (if any) must not have any other property in Singapore or abroad, and have not sold such in the past 30 months.
- The buyer, co-buyer(s) and essential occupant (if any) must not have previously acquired more than one new HDB unit, DBSS flat or executive condominium (EC). This means you have only obtained one CPF Housing Grant so far, or none yet.
5. Buyer’s family nucleus
You can apply to purchase a new executive condo under any of the below eligibility schemes:
This requires you to have formed a family nucleus with spouse and children (if there is) or with your parents and siblings (if there is). If widowed or divorced, there must be at least one child under your legal custody. For divorcees, if the child is below 21 and your former partner shares in the responsibility in taking care of the child, you need his/her written permission before you are allowed to list that child as an occupant when applying for an HDB flat.
Under this scheme, you are set to create a family nucleus with your soon-to-be spouse, and it is expected that both of you will be tying the knot. Hence, you need to submit a Xerox copy of your marriage certificate within three months of getting the keys to your flat.
But if the marriage doesn’t proceed as planned, the flat needs to be returned to HDB, unless you qualify for other schemes. For instance, you listed your parents as occupants, making you eligible for the Public Scheme.
If you concluded the marriage prior to key collection, you need to give the copy of the marriage certificate to the HDB Sales Office when getting the keys. If it happened after that, submit a photocopy to the applicable HDB branch.
This is only open to orphans who are single, divorced, or widowed. Such orphaned brothers and sisters cannot purchase or lease HDB flats individually. In addition, at least one of the deceased parents was a PR or Singapore Citizen.
Joint Singles Scheme
To be eligible for this scheme, you and a maximum of three other applicants are allowed to purchase a two-room flat at non-mature locations. However, all of you must be Singapore citizens age 35 and above. Apart from being first-timers, all applicants must be unmarried, divorced, or widowed.
Other important things you need to know about the aforementioned schemes:
For the Public Scheme, Fiancé/Fiancée Scheme, and Joint Singles Scheme, any changes in the listed co-applicant or occupants will invalidate the EC purchase application.
Meanwhile, application for a 3Gen EC is only open those who qualify for the Public Scheme and Fiancé/Fiancée Scheme. Aside from that, the occupants must form a multi-generational family.
To fulfil this condition, you must be a married/engaged couple who plans to live with your parent(s), one of which needs to be Singapore citizen. For divorcees and widows, they need to live their parents and must have children under their legal custody. Those with non-adult children need to obtain their ex-partner’s written permission before listing the child as an occupant.
Aside from this article, you may also want to browse our resale HDB flats or private condos for sale or rent. If you want to know about future property hotspots in Singapore that will benefit from ambitious government plans, check our AreaInsider.
To get more guides like this, check out PropertyGuru.