Parc Central Residences Executive Condominium is launching in Q1 2021, and being the first EC to launch in the East Region since 2012, it is expected that there will be a high demand for units at this development.
Before you decide on purchasing a unit here, it may be useful to first understand a little bit about the history of Executive Condominiums.
Executive Condominiums (ECs) are a very unique class of housing in Singapore, first introduced in 1999. For buyers who are keen on purchasing a unit at Parc Central, it would be useful to first delve a little into the definition and history of ECs so that you can make a better and more informed decision.
Let’s first define what are Executive Condominiums. According to the Housing and Development Board (HDB) website, ECs are a class of housing introduced to meet the needs of Singaporeans, especially young graduates and professionals whose income allows them to afford more than an HDB flat but not yet for private residential property. In this case, ECs are, in many aspects, on par in terms of design and facilities with private condominiums especially since they are developed and sold by the private developers. What this means is that an Executive Condominium is essentially the same as a normal condominium, but with some differences, as we will see later in this article.
There are some notable differences that all potential Parc Central home owners need to be aware of, that distinguishes it from private condominiums. In the same way as for HDBs, Executive Condominiums were intended to serve as homes rather than investment options. The Executive Condominium goes through a few different phases in its lifespan. For the first five years, home owners cannot sell it away, and for the next five years after that, the EC unit can only be sold to Singapore Citizens and Singapore Permanent Residents. Only after the EC unit has fulfilled a ten year period can it be fully privatised and sold on the open market to anyone, including foreigners.
Whereas HDB flats are built by the government and provided to residents of Singapore as a form of subsidised housing, Executive Condominiums, on their first launch, fall under HDB eligibility conditions, but are built by private developers. Executive Condominiums have a very interesting progression over their lifespan. They remain as a public-private hybrid that is public for the first 10 years, and become private in status thereafter.
To provide some contextualisation (and perhaps some justification) for these measures, Executive Condominiums like Parc Central are state-subsidized at its launch is meant to be part of an overall scheme to provide affordable housing options for all residents, and not as an investment tool. This means that the restrictions in place prevent ECs from being speculated, i.e. bought when prices and low and immediately sold for profit once prices surge.
There are a number of criteria purchasers must meet in order to qualify for Parc Central Executive Condominium. First, there needs to be at least 1 Singapore Citizen applicant. Next, the applicants need to form a family nucleus and fall under 1 of 4 schemes: Public Scheme, Fiance/Fiancee Scheme, Orphans Scheme or the Joint Singles Scheme (where both needs to be Singapore Citizens).
Executive Condominiums have an income ceiling of $16,000.
As of this time in writing, the household income ceiling for applying for new HDB flats is at $14,000 (in comparison, it is $21,000 for 3G units), whereas the income ceiling for ECs is $16,000.
For families whom have a combined household income of $14,001 or $15,999, the only way you can get a new home is to either purchase an executive condominium or buy a unit in a private condominium. If you are open for options in the resale market for a second hand unit, then there are more options, but buying a brand new unit also means that you can renovate it to your own liking.
Executive Condominiums like Parc Central begin under HDB eligibility conditions, and although developed by private developers, applicants still need to go through HDB approval. This also means that applicants can qualify for CPF housing grants that can help to offset some costs for the purchase.
First-time applicants for Parc Central executive condominium who are Singapore citizens and applying as a couple can get between $10,000 to $30,000 in CPF housing grants provided their combined income is $12,000 and below.
Executive Condominiums such as Parc Central have a very different and unique lifecycle. From the time they reach TOP (Temporary Occupation Permit), a 5 year MOP (Minimum Occupation Period) begins, within which owners cannot sell the EC. Owners also cannot rent out the whole apartment during the MOP, but can rent out rooms if they so desire.
From the 6th to 10th year, Parc Central EC can be sold, but only to Singaporeans and PRs. Buyers of the EC unit cannot qualify for any grants – grants are applicable only for the new buyers.
From the 11th year onwards, the executive condominium becomes fully privatised and can be sold to foreigners. This means that the pool of potential buyers get greatly expanded.
Herein lies the greatest draw of ECs – whilst Parc Central will start off as HDB property, in 10 years’ time it will be officially recognised as private property.
This is where ECs differ in value as compared to HDB BTO flats. When HDB restrictions lift, your executive condominium unit can realise its investment potential.
After selling an EC, if the buyers are eligible for and want to buy another new unit from HDB, they must wait for 30 months before they can apply for another new unit.
Since Executive Condominiums turn in a private condominium after 10 years, given the lower price at which they were bought, this provides an opportunity for home owners to realise a substantial capital appreciation should they choose to sell after 10 years. This means that buyers of ECs should not think about short term profits, but rather take advantage of the EC's long-term property appreciation. Boosted by a public-to-private property transition after 10 years, the Executive Condominium generally sees relatively more appreciation than other private property, such a private condominiums.
If considering a unit at Parc Central, there is no option for taking out a HDB loan, which many people prefer for the fact that interest rate is fixed and that it allows for up to 90% funding, and 10% in CPF payment.
Buyers for executive condominiums can only take bank loans, which has some downside in comparison because the maximum loan percentage is at 75%, with 5% minimum cash payment and the remainder in cash or CPF.
This means that buyers of ECs will need to have quite a bit of cash/CPF savings to on hand for the downpayment.
The documents needed from buyers of Parc Central would be their NRICs, birth certificates, marriage certificates, and latest income statements. For employed persons, the latest 3 months of payslips is needed, for self-employed persons, the latest Notice of Assessment (NOA) is required, for part-timer worker 6 months of payslips, commission based person 6 months commission statements.
First-timers buying Parc Central can enjoy many privileges and have priority in flat allocation. Applicants will be treated as a first-timer if the owners meet the criteria such as not being the owner of a flat bought from HDB, or an EC/ DBSS flat bought from a developer or have not received any CPF Housing Grant for the purchase of an HDB resale flat before.
In the event that one party in the couple is a second-timer whilst the other party is a first-timer, the great news is that the couple overall will be counted as a first timer and enjoy all the privileges and priorities that the first time a couple will enjoy.
You will be treated as a second-timer applicant if any of the listed owners or occupiers have owned or sold a HDB flat bought from HDB, a resale flat bought using a CPF Housing Grant, an EC/ DBSS flat bought from the developer or have taken some form of housing subsidy (e.g. benefitted under the Selective En bloc Redevelopment Scheme (SERS), HUDC estate privatisation).
There can be cases when applicants are not eligible to purchase an executive condominium and this can happen if they have not met the Minimum Occupation Period (MOP) of their current flat/ EC unit, or that they have previously cancelled a flat application.
If any of the applicants or occupiers own a HDB flat bought from HDB or on the open market, or a EC unit/ DBSS flat bought from the developer, the person must have fulfilled the 5-year Minimum Occupation Period before he or she can apply for a new executive condominium unit at Parc Central. An essential occupier must also have met the flat/ EC's 5-year MOP before he can be listed in a new executive condominium application.
If applicants currently own an EC, he or she must wait out a 30-month period from the EC’s effective date of disposal, which HDB will verify using the Notice of Transfer, or any other documentation that can provide such proof.
If any of the applicants booked a new HDB flat and subsequently cancelled the booking, he or she needs to wait out a 1-year period from the date of the cancellation before the person can apply or be listed as an essential occupier for the EC.
If any of the applicants had previously bought a DBSS flat or EC using a CPF Housing Grant and subsequently terminated the Sale and Purchase Agreement, that person must wait out a 5-year period from the date of the termination before he or she can apply or be listed as an essential occupier of an EC.
At the same time, for an executive condominium flat application, all the listed owners and essential occupiers must not own, dispose, or have an estate or interest in any other local or overseas property within 30 months before the date of the EC application, and up to the date of taking possession of the EC.
The properties considered in this instance include but are not limited to privatised HUDC flats, properties acquired by gift, properties inherited as beneficiaries under a will or as a result of the Intestate Succession Act, private property, properties owned, acquired, or disposed through nominees, regardless of properties’ location.
In essence, Singapore Citizens are allowed to buy these properties twice in total: flat directly from HDB, EC/ DBSS flat directly from the developer, HDB resale flat bought using a CPF Housing Grant (only applies to first-timer applicants).
If you have already bought 2 such properties, you will not be eligible to apply for a unit at Parc Central EC or be listed as an essential occupier in an application.
If you previously bought a new flat from HDB, Design, Build and Sell Scheme (DBSS) flat or Executive Condominium (EC) from a developer, or received a CPF Housing Grant, you will need to pay a resale levy if purchasing a unit at Parc Central.
The purpose of the resale levy is that it offsets the benefits that homeowners obtained from having their first subsidised flat when moving to the second subsidised one. This is to ensure a fair balance of benefits.
The resale levy is based on when the first subsidized unit was sold, and what type the unit was. For units sold on or after 3 March 2006, the housing type and resale levy are as follows: 2-room $15,000, 3-room $30,000, 4-room $40,000, 5-room $45,000, Executive Flat $50,000 and Executive Condominium $55,000. For single grant recipients the levy amount is halved.
If your first subsidised flat was sold before 3 March 2006, a percentage graded resale levy will apply. The housing type and resale levy are as follows: 2-room 10% or 15%, 3-room 20%, 4-room 22.5%, 5-room and Executive 25%. For single grant recipients the percentage amount is halved.
Potential home owners of Parc Central will be glad to know that Executive Condominiums have historically performed well in terms of price appreciation, earning their sellers considerable profit.