Executive Condominium (EC): A Comprehensive Buying Guide
Executive Condominium (EC) is one of the most popular types of property in the Singapore market.
Introduced in 1997, the EC features developments that are built by the private developer, along with full suite condo facilities (pools, clubhouses, BBQ pits, etc.)
If not for the designation, many people wouldn’t even be able to tell an EC from a private condo. In this article, I will explain how and why to purchase an EC.
Why Choose An Executive Condo?
ECs are specifically designed for Singaporeans who find themselves “sandwiched” – that is, their income is too high to qualify for a new BTO flat, but they also don’t want to take on the cost of a fully private condo.
As I mentioned above, ECs offer full suite condo facilities and the same level of quality; but at a more competitive price point:
At present, ECs average $993 psf, where private condos average $1,609 psf.
By these numbers, a 900 sq. ft. ECs might have a quantum of about $900,000, whereas an equivalent sized private condo might be closer to $1.45 million.
We can also see that ECs have appreciated faster than condos on a price psf basis. Since 2005, ECs have made a gain of 183 per cent on average, whereas private condos have risen about 116.2 per cent.
Even for pure home buyers who are not looking for a pay-out, ECs have an attractive proposition: they allow you to have the same facilities as a private condo, but at much lower prices.
As such, it’s not hard to see why EC projects tend to sell out fast.
Key Points To Know When Buying An Executive Condo:
To buy a new EC, you must meet certain conditions:
- You must be a Singapore citizen
- If you have any co-owner(s) of the property, at least one must be a Singapore citizen or a Permanent Resident*
- You must apply under one of the following HDB schemes: (1) Public Scheme, (2) Fiancé / Fiancée Scheme, (3) Orphans Scheme, or (4) Joint Singles Scheme*. You can find the details of these schemes on the HDB website.
- You must be at least 21 years, or 35 years old if applying under the Joint Singles Scheme
- Your combined monthly income must not exceed $16,000
- You must not own any other properties, and must not have sold any within the past 30 months
- You must not have bought more than once any of the following in your history: a BTO flat/DBSS, a new EC unit or an HDB resale flat using CPF housing grant (for first-timer grant). Basically, you can only enjoy the privilege of subsidised housing twice.
*If applying under the Joint Singles Scheme, both you and your co-owner must be Singapore citizens.
Understanding The Restrictions Till Privatisation of Executive Condo
The first batch of buyers for an EC is subject to a five-year Minimum Occupation Period (MOP). During this time, they cannot sell the EC on the open market, nor can they rent out the entire unit (although they can rent out rooms). In this regards, EC follows the same policies as HDB flat.
Do not mistake the end of MOP for privatisation!
An EC is still an HDB property until after it’s 10th year. While Singaporeans and PRs can buy an EC on the open market after the five-year MOP, it can only be sold to foreigners after ten years. This is when the EC is fully privatised.
Note, however, that subsequent buyers of ECs (i.e. resale ECs) are not subject to the five-year MOP. This is considered advantageous by some buyers – not only is there no MOP, but a resale EC is also much closer to full privatisation!
Financing for Executive Condo
There are a few things to note regarding financing an EC purchase:
- You cannot take an HDB Concessionary Loan,
- Your maximum Loan-To-Value is 75%, unlike 90% for buying an HDB,
- You are subject to Maximum Servicing Ratio (MSR) where your loan payment cannot exceed 30 per cent of your income,
- The Total Debt Servicing Ratio (TDSR) also applies. This rule takes into consideration all your debt obligations (such as car loan, credit card instalment payments, etc) plus your mortgage payment, where they must not exceed 60% of your income.
As for the payment schemes you have two options:
Progressive Payment Scheme (PPS) for New Launch ECs
- Put down an initial deposit of five per cent of the property price (cash only), to secure the Option to Purchase (OTP)
- If upgrading from a flat, you may have to pay the resale levy next (see below on upgrading)
- Within two weeks of signing the Sale & Purchase Agreement, pay the Buyers Stamp Duty (BSD). The BSD can be paid in any combination of cash or CPF. You can use the IRAS online calculator to determine the BSD, based on the price of your EC unit.
- Make the rest of the down payment (the next 15 per cent) in any combination of cash or CPF.
From that point on, monthly home loan repayments will commence. The amount you pay each month increases as the development nears completion:
- 5 to 10 per cent upon completion of foundations
- 10 per cent upon completion of reinforced concrete
- 5 per cent upon completion of walls
- 5 per cent upon completion of ceiling
- 5 per cent upon completion of doors, windows, and electrical work
- 5 per cent upon completion or roads, car park, and drains
- 25 per cent upon receiving the Temporary Occupancy Permit (TOP)
- 15 per cent upon receiving Certificate of Statutory Completion (CSC)
This means your monthly loan repayments will gradually increase. For example, say you take a $750,000 loan, at 1.3 per cent per annum, for 25 years.
Loan repayments during the laying of foundations may only be around $170 per month. By the time the walls are in place, this could rise to $700 per month. Upon completion of the whole project, monthly repayments may increase to $2,624 per month.
Note that the order of progression is not exact. Developers may sometimes complete multiple stages at once, for example. Also, you do not have to do anything when a given stage is completed. The developer will settle this with your bank, which will disburse the required amounts.
(You’ll receive a letter from your bank telling you the adjusted repayments whenever this happens).
You can make the loan repayment any combination of cash or CPF.
Deferred Payment Scheme (DPS) for Executive Condo
DPS is sometimes available for ECs, which allows you to defer loan repayments until you take the keys upon receiving Temporary Occupation Permit (TOP).
Using DPS, you pay an initial 20 per cent of the price as a booking fee. Note that the first five per cent must be in cash, while the next 15 per cent can be in any combination of cash or CPF.
You must then pay the BSD within two weeks of completing the Sale & Purchase Agreement.
After this, you do not need to pay anything until the Notice of Vacant Possession (the date when you can move in). If it takes two years for your EC to be built, then you will pay nothing for two years. At that point, you’ll have to pay for the rest of the property.
The main advantage of DPS is for upgraders. For example, if you’re upgrading from a flat to an EC, there may be an interim period when you’re servicing two loans – the loan for your previous flat (if you haven’t sold it yet), and the loan for your new EC.
This can be tough on your cash flow, so a DPS allows you to put off the EC’s loan repayments until your flat is sold.
Purchasing a Resale Executive Condo
Purchasing a resale EC is the same as buying a resale condo. Assuming you qualify for a maximum bank loan, the process is simple:
- Pay the first five per cent of the property in cash, to secure the OTP
- Pay the next 20 per cent in any combination of cash or CPF, when exercising the OTP and completing the Sale & Purchase Agreement
- Your bank will finance the remaining 75 per cent, and your loan repayments will commence
If for some reason, you cannot get full financing, or your loan application is rejected, contact me. This could be due to factors such as credit score or income level. I can help you to determine the issue and possibly resolve it.
Upgrading From a HDB Flat to an Executive Condo
For many HDB flat owners, it will be easier to upgrade to an EC than to a private condo.
If you buy a fully private condo before you sell your HDB flat, you’ll usually have to pay the Additional Buyers Stamp Duty (ABSD) upfront. For the second property, it is an additional tax of 12 per cent of the sales price*.
You can apply for ABSD remission if you’re a married couple, and one spouse is a Singapore Citizen. However, you must sell your HDB flat within six months of buying your new condo; otherwise, you’ll forfeit the ABSD amount.
With ECs, however, there’s no need to pay the ABSD upfront. It’s understood that your flat will be sold within six months, as you cannot own two HDB properties. This can make it easier on your finances if you want to buy before moving out of your flat.
However, you may have to pay a resale levy if upgrading from a BTO flat you have bought directly from HDB. This includes new Design, Build and Sell Scheme (DBSS), Executive Condominium (EC) from a developer or having received a CPF Housing Grant for a resale flat.
The resale levy is based on the resale price of your flat, or 90 per cent of its valuation, whichever is higher. The levy is as follows (for first subsidised flat sold on or after 3 March 2006) :
- 2-room flat: $15,000
- 3-room flat: $30,000
- 4-room flat: $40,000
- 5-room flat: $45,000
- Executive flat: $50,000
- Executive Condominium: $55,000
Available Grants for Executive Condo
Since a new EC falls under an HDB status, eligible buyers can still get to enjoy housing grant. Unfortunately, the only grant available for ECs bought from the developer is the Family Grant.
The amount of the grant depends on your income level and citizenship. The maximum grant amount is $30,000, although buyers with a monthly income exceeding $12,000 are not eligible for any grant.
Nonetheless, EC is the only type of (eventually) private property where you can enjoy government grants.
Two Things to Note About Executive Condo
The first thing to note is that all ECs are 99-year leasehold properties. If you want a freehold property, you’ll have to look for fully private condos.
Second, ECs tend to be further away from MRT stations. This is not always true – Parc Canberra, for instance, is right next to Canberra MRT station. But in general, the plots that HDB releases for EC use will be further from the train.
List of Some Executive Condos
Recent Executive Condo Launches (2019-2020):
- Ola EC, Sengkang, est. TOP 2023
- Parc Canberra, Sengkang, est. TOP 2023
- Parc Central Residences, Tampines, est. TOP 2023
- Piermont Grand, Punggol, est. TOP 2023
Available Resale Executive Condo (past the MOP date):
- Waterwoods, Punggol (2015)
- Heron Bay, Upper Serangoon (2015)
- 1 Canberra, Yishun (2015)
- Twin Waterfalls, Punggol (2015)
- The Rainforest, Choa Chu Kang (2015)
- The Tampines Trilliant (2015)
- WaterColours, Pasir Ris (2014)
- Blossom Residence, Bukit Panjang (2014)
- Arc at Tampines, Tampines, (2014)
- Ricer Parc Residence, Punggol (2014)
- Belysa, Pasir Ris (2015)
- Austville Residences, Sengkang (2014)
- The Canopy, Yishun (2014)
- Esparina Residences, Sengkang (2013)
- Prive, Punggol (2013)
All Privatised Executive Condos:
- La Casa, Woodlands (2008)
- The Quintet, Choa Chu Kang (2006)
- The Esparis, Pasir Ris (2005)
- Whitewater, Pasir Ris (2005)
- Park Green, Sengkang, (2004)
- Nuovo, Ang Mo Kio (2004)
- Lilydale, Yishun (2003)
- Bishan Loft, Bishan (2003)
- The Dew, Bukit Batok (2003)
- The Eden, Tampines (2003)
- The Floravale, Jurong West (2000)
- Woodsvale, Woodlands (2000)
- Northoaks, Woodlands (2000)
- The Florida, Hougang (2000)
- The Rivervale, Sengkang (2000)
- Summerdale, Boon Lay (2000)
- Yew Mei Green, Choa Chu Kang (2000)
- Pinevale, Tampines (1999)
- Chestervale Bukit Panjang (1999)
- Windermere, Choa Chu Kang (1999)
- Simei Green, Simei (1999)
- Westmere, Juring (1999)
- Eastvale, Pasir Ris (1999)
Popularity of Executive Condo
ECs represent a significant opportunity for gains, as well as an ideal property segment for sandwiched Singaporeans
The EC scheme is hands-down one of the most successful “sandwiched property” schemes in Singapore, hence its presence from 1997. It has even outlived the popular Design Build & Sell Scheme (DBSS), and prices between ECs and “normal” private condos have narrowed over the years.
In the current Covid-19 environment, buyers who want a condo – but are worried about committing to a higher quantum – should consider an EC as an alternative (if they meet the income ceiling).
Likewise, flat owners who are upgrading may want to consider the convenience of ECs, which can offer both DPS, and the lack of upfront ABSD; these help to ease any timing or cash flow issues.
Summary: Pros and Cons of Buying an Executive Condo
While buying an Executive Condo does sound like an attractive alternative to a private condo, do consider the pros and cons.
- Cheaper than private condo
- Can enjoy housing grants
- Built by private developers with full suites condo facilities
- HDB upgraders can enjoy ABSD exemption
- Deferred Payment Scheme eases the financial burden of HDB upgraders
- Buying at ‘subsidised’ prices and with housing grants (subject to eligibility) means a high chance of future capital gains
- Have to fulfil five-year Minimum Occupation Period (MOP), during which time can’t rent out or sell
- Subject to Mortgage Servicing Ratio (MSR) where only 30% of income can be used to service loan. In contrast, Total Debt Servicing Ratio (TDSR) is applicable for the purchase of a private condo, which is capped at 60% of gross income. This means with the same income, you can borrow twice as much for a private condo than an executive condo. If the gross income is $16,000 (EC income ceiling), the maximum loan-to-value (LTV) is about $1.068m. For a private condo, the LTV is $2.137m. From an investment perspective, if a couple earns $8,000 of monthly income each, they can possibly buy two properties, with one as an investment property to generate rental income. Buying an EC would not be possible.
- Subject to household gross income ceiling of $16,000
- Must fulfill HDB eligibility schemes
- Can only sell to foreigners after ten years
- Limited supplies and location choices
If you are undecided between buying an EC or a private condo, do drop me a note for a non-obligatory discussion. Or schedule a virtual meeting using the calendar below.
Danny Han has been a licensed real estate agent since 2005. He also had five years of experience as a financial consultant. The insights and knowledge he shares in his blogs are the results of years of experience in helping many of his clients in their Property Wealth Planning.
Prior to becoming a real estate agent, Danny was a full-time church pastor (don’t be shocked!) for 23 years. Even now, he is still actively involved in church work and preaches regularly. He has also made six mission trips to Myanmar to-date.
Danny is a foodie, so during his spare time he would go with his kakis to try different “CNG” (cheap and good) food. (Be sure to check out his Holland food blog in this site).
Do feel free to drop him a Whatsapp message for a non-obligatory discussion if you are planning to grow your property wealth.
Subscribe to receive updated practical property investment insights, property reports and good investment deals