Property developers in Singapore are resorting to creative ideas to sell off their unsold units in the market. In 2016, renowned property developer, OUE Limited, offered various payment schemes for its masterpiece developer at Orchard – OUE Twin Peaks. OUE Twin Peaks features over 460 unit residential apartments that is situated on Leonie Hill Road.
Are these payment schemes legal? – Payment schemes offered by these developers are perfectly legal as the project – OUE Twin Peaks had obtained the Certificate of Statutory Completion (CSC).
Some of the payment schemes includes the delayed payment and deferred payment. For the delayed payment offer, home seekers will only need to put down a 20 percent upfront and complete the option aka exercise by the specific time frame. This is other words, also allow the potential home owners to stand to gain if the government or authorities step in to tweak the current stamp duty system.
For deferred payment, home buyers required to complete a 20 percent down-payment for the issuance of the required documents like the OTP (Option to Purchase) and will complete the payment of the balance two or three years later. This scheme was also offered by many developers back before 2007 before the government stepped in to remove it. The buyers in this instance will then have to exercise the OTP (Option to Purchase) within 14 days and pay their respective stamp duty and additional buyers’ stamp duty. Right after that, they are able to collect the keys to their units and occupy or rent them out immediately.
As OUE Twin Peaks had already obtained CSC (Certificate of Statutory Completion), both of the schemes offered were considered as private treaty between the home buyer and the seller or in this case, the developer. For the deferred payment scheme, we understand that the title deed will be held by the developer until the buyer pays the balance 80% due to the developer.
Advantage to the home buyers – The home buyers were able to save substantially in interest payment for the initial two or three year deferred. Not only they were to able to do so, home buyers could continue earning interest if they had taken advantage on their CPF accounts to make payment as well as receiving the rental income during this time frame. This also allows home buyers who were not able to meet to the imposed requirements of the Bank on TDSR (Total Debt Servicing Ratio) or the LTV (Loan to Value) requirements to take advantage. It allows them ample more time to dispose existing properties under their names and obtain a higher loan amount from the Banks.
Will more developers continue their creative ways to spur buying interest in the new condo launches of 2017? We certainly hope see that.
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