How to buy a new condo

Your search for new launch condos begins with going around viewing each project’s showflat

Showflats typically open for previews 1-2 weeks before the official launch day (when units go up for sale).

At this point, the actual prices of each unit won’t be revealed yet. Instead, there’ll be an “indicative price” that’ll give you a rough idea of the price range of each unit type.

There’ll also be agents at the showflat to answer your questions. On your part, we’ve got a few tips to help you make your property-buying decision.

Smart interior design like large mirrors on the wall give the impression of a bigger space, but 150 square metres is still 150 square metres.

Carefully evaluate whether the size and layout of the unit works for you, rather than how nicely the showflat is designed.

With new launches, the only way to visualise what the condo will look like is through the artist’s impressions.

For a good gauge of how closely the actual condo will resemble what you see in the pictures, compare the developer’s previously completed projects against their artist’s impressions.

Also bear in mind that showflats often won’t be in the exact location of the actual condo. So, other than viewing the showflat, you might also want to make a trip down to the actual site.

Consider things like: How busy are the roads outside the condo (especially if you’re eyeing a unit on a low floor)? Is the route to the MRT station sheltered?

Also bear in mind the surroundings might change by the time the condo is built.

Look out, in particular, for any empty plots of land around the condo site. It might seem like you’re getting a spectacular sea view, but if they’re building an even taller condo right opposite you, there goes your view!

Once the condo obtains its TOP, meaning key regulatory requirements for the development are met, you can finally move in!

Knowing the condo’s estimated TOP will help you in planning your next property move – both figuratively and literally. Most condos will manage to obtain their TOP up to a few months before their estimated TOP. But play it safe, and plan according to their promised TOP date.

Unlike resale condos, the prices of new launch condo units are typically fixed. Other than the usuals such as early bird discounts, you won’t have much luck with negotiating prices down.

With the indicative price of the condo in mind, ensure you have enough finances to foot the upfront costs of the condo and the various payments that’ll follow.

Your appointed agent, or an agent at the showflat, can work with you to estimate how much of a bank loan you’ll have to take; then, get an Approval in Principle (AIP) from the bank you’re intending to get a loan from.

An AIP is basically the bank’s agreement to lend you a certain sum of money, based on your financial health and credit history, as a home loan. This will be valid for 30 days.

If you’re sure you’re going to buy, fill up the developer’s Expression of Interest form and submit this together with a blank, unsigned cheque.

This is basically you expressing your interest to select a unit on the launch day. You’ll be invited back on the launch day to select your unit; the blank cheque is meant for you to pay the 5% booking fee should you wish to proceed with the purchase on that day.

Launch day!

At this point, you’ll be given a random ballot number. The developer will pick out ballot numbers from the ballot box to determine who gets to pick their units first. The sooner your number gets picked, the more choices of units you’ll have.

You probably have a choice unit in mind based on the price, unit size and layout, floor and which direction it faces. Once you’ve selected your unit, pay the 5% cash deposit by filling up the blank cheque that you previously submitted.

You’ll also have to sign a set of Property Details Information (PDI) documents, which will include the floor plans of the unit, details of the condo development and other relevant documents.

You’ll then be granted the Option to Purchase (OTP), which means you’ve choped the unit. Exciting times!

If none of your ideal choices are available by the time it’s your turn to select a unit, you can choose to pass, and your blank cheque will be returned to you at no penalty.

Or, if this is post-launch day and the condo is already for sale to the public, you can head down to the showflat anytime and, if you’re decided, put down the cash deposit and get the OTP on the spot.

Be sure of your decision, though – if you back out after paying the deposit, you’re not getting it back.

The developer has up to 2 weeks after granting your OTP to deliver the Sales and Purchase Agreement (S&PA) to you, typically via mail or courier.

You have 3 things to do:

While waiting, go back to the bank with your OTP to finalise your bank loan application.

The bank will issue you a Letter of Offer, a formal contract that states the terms of the loan package.

You’ll also have to engage a lawyer who’ll complete the conveyancing work (or “legal bits”, in layman’s terms) for you.

Your bank can assist in finding you a lawyer, or you can choose to get your own. Conveyancing fees usually cost $2,000 to $3,000.

Ok, back to the S&P. Upon receiving the S&P, you’ve got 3 weeks to exercise your OTP by signing the S&PA at your lawyer’s office.

Your lawyer will also be the one to hand the signed S&P back to the developer.

Now, for the second round of payments.

Pay the Buyer’s Stamp Duty (BSD) within 14 days of signing the S&PA.

The BSD rate is calculated based on the purchase price of the condo unit:

• First $180,000: 1%
• Next $180,000: 2%
• Next $640,000: 3%
• Remaining amount: 4%

For instance, if the condo costs/ is valued at $1,200,000, your stamp duty will be:

1% of first $180,000 + 2% of next $180,000 + 3% of next $640,000 + 4% of remaining $200,000 = $1,800 + $3,600 + $19,200 + $8,000 = $32,600

Oh, and Additional Buyer’s Stamp Duty (ABSD), also within 14 days of signing the S&P, if necessary.

Singapore Citizens get to escape the ABSD for their first residential property, but for everyone else – Singaporeans who are already property-owners, PRs and foreigners – this might be quite a hefty sum:

• Singaporeans: 12% on their second residential property, 15% on their third and subsequent
• PRs: 5% on their first residential property, 15% on their second and subsequent
• Foreigners: 15% on their first residential property, 20% on their second and subsequent

For instance, a Singaporean family buying their second residential property at $1,200,000 will have to fork out an additional 12% x $1,200,000 = $144,000 ABSD.

The BSD and ABSD can be paid via bank transfer, NETS, cash, cheque or GIRO to the Inland Revenue Authority of Singapore (IRAS).

You’ll also have to pay another 15% of the purchase price as downpayment within 8 weeks of obtaining your OTP.

By the time you receive and sign your S&P, it’ll probably already be 5-6 weeks after obtaining your OTP, which leaves you 2-3 weeks to do so.

The downpayment can be paid in cash, CPF, or a combination of the two.

The remaining 80% of the price of your condo will be made progressively, each time the developer completes a certain stage in construction:

10%: Upon completion of foundation work
10%: Upon completion of concrete framework
5%: Upon completion of brick walls of each unit
5%: Upon completion of wiring, doors and windows
5%: Upon completion of carparks, roads and drains
25%: Upon obtaining the TOP  – at this point, you can finally move into your new home!
15%: Upon obtaining the Certificate of Statutory Completion (CSC) – this is the legal completion date of the development

These progressive payments can be made via cash, CPF or a bank loan.

The fact that payments are stretched over multiple stages is also why some homebuyers choose new launch condos over resale condos – they’ve got more time to pool money to pay for the condo at each stage, which means they can take up a smaller bank loan.

In contrast, with resale condos, you have to make full payment at the start. Meaning to say, whatever that isn’t paid via cash of CPF has to be paid with a bank loan.

The estimated TOP date should be clearly indicated right from the beginning.

Once the condo obtains the TOP, that’s when you can finally move in!

Tip: Whether you’re planning to move in immediately or not, check your flat for any defects ASAP after getting your keys. 

You’ll typically enjoy a one-year Defects Liability Period – in the 12-month period from taking possession of your new home, any defects in the construction of the home can and should be rectified by the developer’s contractor.

And that’s it!