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First-time buyers get better shot at executive condos

FIRST-TIME home hunters will soon get increased priority to buy executive condominiums (ECs).

The Housing Board now requires EC developers to reserve at least 90 per cent of units for first-time buyers in the first month of sale. First-time buyers are those who have yet to receive a housing subsidy.

Until now, there was no such requirement.

In another change, families who have previously bought a new HDB flat will no longer have to pay a resale levy – ranging from $15,000 to $50,000 – when they buy a new EC flat.

Both new rules will apply first to ECs expected to be built in Punggol Field.

The Government made the 2.27ha plot available yesterday.

The plot, which can fit an estimated 620 homes, is now on the reserve list, which means that it will be put up for tender once a private developer commits to a minimum bid that meets the Government’s reserve price.

Property consultants say the latest moves by the HDB will raise demand for ECs, while addressing the housing needs of some newly-weds.

The EC scheme, introduced in 1995 to bridge the gap between public and private housing, allows families with monthly incomes of up to $10,000 to buy apartments similar to private condos.

Units come with facilities comparable to those of condos, such as swimming pools. But ownership restrictions apply within the first 10 years.

Eligible buyers can get a $30,000 housing grant for their EC, but they cannot sell it within the first five years, or let a foreigner buy it within the first 10 years.

Due to the restrictions, ECs were a less popular alternative to private housing to the extent that, for a while, the Government stopped offering this type of housing since the last one, La Casa, was launched in 2005 amid a property downturn.

But following a sharp run-up in property prices this year, the Government revived its EC programme to meet rising demands from Singaporeans.

New ECs typically cost 30 per cent less than full-fledged private condos, estimated Mr Lui Seng Fatt, regional director and head of investments at Jones Lang LaSalle.

Yesterday, the HDB also lifted the restriction on EC owners – who had received a housing subsidy – enjoying a second subsidised public housing unit, be it an EC, HDB flat or flat built and sold by private developers under the Design, Build and Sell Scheme (DBSS).

These EC owners can now buy another new EC, or a new flat built by the HDB or private developers, after a 30-month waiting period.

Those who used a housing grant for their first new EC will have to pay a resale levy of $55,000 on their original home if they move into a new HDB flat – to ensure a fair distribution of housing subsidies.

Previously, those who bought a new EC unit were barred permanently from buying a second new EC unit, HDB flat, or flat built and sold by private developers under the DBSS.

The change, with immediate effect, will put EC owners on an equal footing with owners of private properties, as the latter are allowed to buy new HDB dwellings after a 30-month wait from the time they dispose of their homes.

The HDB, in a statement yesterday, said the rule change was to ‘better meet the needs of EC buyers and align the EC policies more closely with public housing schemes’.

Property consultants say the changes are set to boost EC demand at a time when private home prices have quickly risen beyond the reach of many hoping to upgrade from HDB flats.

From January to September, private home prices shot up 22.9 per cent, more than twice the rate of resale HDB flats.

‘The EC will be quite a hot item now,’ said Mr Eugene Lim, ERA Singapore’s assistant vice-president.

Consultants do not expect the changes, alone, to make much of an impact on the current supply of lower cost housing, as there are no other EC plots on the market.

To date, 23 EC projects with about 10,400 homes have been developed and sold by the private sector.

 

Source: The Straits Times 21 Nov 07

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