EC stands for Executive Condominiums. It’s still under HDB ruling and more targeted for the middle class family nucleus.
Typically, if you can afford more than HDB houses but find private houses too high for your budget, you may want to consider ECs.
Specifically, there is an income ceiling of 14K per family nucleus — i.e. both husband and wife, or if multiple generation are still in the workforce, the amount of income cannot exceed 14K.
When you want to purchase an EC there are conditions similar to HDB rulings even though the property are built by private developers.
You have to buy an EC as a family nucleus. You have to take a bank loan (not HDB loan) There must be a Singapore Citizen within the nucleus. PRs can purchase, but you still require at least one Singaporean in the family. You have to deposit 5% of the total value by cash.(booking fee) There is a family grant for 1st timers whereas 2nd timers will need to pay resale levy. As mentioned, there must be a Singapore citizen in the family nucleus — this makes EC a somewhat exclusive property type. The 5% cash deposit is also a common barrier for people to buy EC.
ECs reach a semi private status after 5 years. You can then sell the property off, but only to Singaporeans and PRs. However, after 10 years, the EC becomes fully private, allowing you to sell it to locals and foreigners alike.
One thing to note is that ECs will have similar or potentially better facilities and management as their private condo counterparts. You will also have maintenance fees to pay.
The reason why people have their eye on ECs is because of its low supply. Because of the government’s ‘master plan’ on land use, the allocated plots for ECs are very low. For example, there is only ONE EC scheduled for launch in the whole of 2018.
ECs have grants, because it’s under HDB. But you can’t expect as much grants as resale or BTOs. You can get up to 30K grant under the ‘family grant’.
TIMELINE & PROCESS
First off, you deposit the 5 percent cash. Then there is the progressive payment system —
for example,
within 9 weeks after booking, you pay another 15% (exercise fee) when the foundation is done, another 10% when the walls go up, 5% windows, 5% and so on. This should reassure people’s concern whereby they worry that if they buy an EC for 800K, they may not be able to pay all upfront.
You need only pay cash for 5% upfront. The rest can be paid progressively, and via the loan and CPF as well.
GOOD INVESTMENT
ECs are seen as good property investments in Singapore.
The reason for this is that you are buying it at a lower entry price compared to private condo developers. For example, a private condo would go at $1000 per square foot, but ECs can potentially go at an entry price of $700 per square foot.
You’ll be looking at an appreciation in the $200k range. i.e. if you buy an EC at 800K, you’ll be able to sell it off at 1 Million dollars in 10 years time.
We know that owning a property is a form of security for your overall wealth management. We’ve also covered that buying an EC is not as complicated as you may think. ECs can potentially be your first step to owning private property.
MY ADVICE
If you have the financial means, do consider buying an executive condominium. I would strongly suggest you to seek advice on the financial planning side of things.
But on the bright side, after 10 years, you get to enjoy the cash-out, which you can use to buy another property or downsize and have that extra money for retirement, assets for your children, or whatever your dreams may be.
I’m happy to discuss further in person, or answer any questions you may have on ECs. Drop me a message or call me at 9752 6549!