Subsidised Housing and Private Housing
Updated: Sep 9, 2020
1. For ease of understanding, I thought it would be better to categorise the types of properties into two categories, mainly Subsidised Housing (HDB/ECs) and Private Housing (Condominiums/Landed Property).
2. There are other categories of properties such as commercial and industrial in Singapore, but the Basics on Real Estate (Singapore) shall only cover on residential properties types in Singapore.
*Photo by John T on Unsplash*
What is Subsidised Housing?
3. If I were to put it in a layman term, it is housing with bonuses! And these bonuses come in the form of Housing Grants and the below-market-rate sale price at the time of launch and applies in general to the "Build To Order" (BTO), Design, Build and Sell Scheme (DBSS) flats and Executive Condominium (ECs).
4. In building BTO and DBSS flats, the Housing Development Board (HDB) pays market rate for the land and construction cost. However, in making these housing as affordable as part of the public housing initiatives, these flats are priced below market rate in the BTO/DBSS sale exercises.
5. Grants are readily available for applicants to use in purchasing their flat and the grant amount can go as high as $80,000 under the Enhanced Housing Grant if applicable! With all these initiatives, we had seen quite a substantial amount of Singaporeans/SPRs being able to own their HDB flats!
6. In building ECs, tenders are called for the sale of the land parcel and subsequently developed by a private housing developer who won the bid. EC is a subsidised housing because of the grants available as well as a lower reserve land price as compared to other pieces of land marked for private residential property.
7. It is important to note that ECs also have a Minimum Occupation Period (MOP) of 5 years just like a BTO flat. During the MOP period, if there are needs for clarification, HDB is still the authority to approach for such matters.
8. In recent years, ECs had replaced the DBSS scheme and targets the middle-income group where their income rendered them unable to purchase an HDB flat and yet may not be able to afford a full private housing. This scheme had been quite popular as seen from the sold-out sales of ECs over the past few years.
* There are other types of subsidised housing in Singapore such as HDB rental flats, these would not be covered for now.*
Private Housing in Singapore
*Photo by Mark C on Unsplash*
9. Private housing in general ranges from Condominiums to Landed Houses in Singapore. These were developed by housing developers who either brought the land through Government Land Sales (GLS) or En-bloc Sales and developed the area into a private housing project. The government does not subsidise these projects, and they generally are marketed and priced directly by the developers.
10. Prices largely depend on the price per plot ratio (PPR) combined with the construction costs, land fees, marketing fees and other miscellaneous fees. Thus with all these considerations, it is natural that the sale price of these private properties would be higher than subsidised housing from the start as they have different intent to fulfil from the start.
11. In additional for private housing, there are generally no restrictions on citizenship for condominiums. However, there are specific requirements to adhere to for foreigners to buy landed properties where approval have to given by the Land Dealings Approval Unit (LDAU), a department in Singapore Land Authority (SLA).
What are the requirements for owning one of these properties?
12. Having shared on the basic categories of residential real estate in Singapore, the main question would be the requirements in owning one in terms of financial means are? A simple table on the loan-to-value (LTV) ratio, availability of grants and downpayment for the properties mentioned above had been summarised into a table as follows:
13. There are specific rules and regulations to follow when purchasing either of the properties mentioned as the real estate industry is heavily regulated in Singapore. These regulations apply to the finance industry as well, in particular mortgage loans. As such, you would notice that there are stark differences in the requirements for each type of property so I would cover that in a future article.
A straightforward article to share information as all things start small. I will be sharing more information on other topics, and I hope to see you along the way as I share more details on the real estate industry in Singapore!
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