LEEDON RESIDENCE – PAYMENT SCHEMES
Normal Payment Scheme
- 5% Booking Fee
- 5% Exercise within 2 weeks
- Sales Completion within 8 weeks.
- Vacant Possession after Sales Completion
Deferred Payment Scheme (Price Add 5%)
- 5% Booking Fee
- 15% Exercise within 2 weeks
- Sales Completion *within 2 years* from exercising.
- Vacant Possession within 8 weeks after exercising option, producing of stamp certificate, payment of 3 months maintenance fee and survey fee.
Deferred payment schemes have been catching on with property developers, with two more offering the option in a bid to move units.
The DPS seems to work for projects that are subjected to QC extension charges. The DPS was abolished in September 2009 in the first in a series of property cooling measures. However, at the time, the scheme was offered by developers mainly for projects under construction.
In its current reincarnation, the DPS is offered for projects that have already obtained a TOP and Certificate of Statutory Completion, which means the developments are no longer under the Controller of Housing. Any scheme offered by the developer after CSC — whether sales rebate, furnishing package or DPS — is considered a resale or private treaty deal between the developer and the buyers, explains Savills’ Cheong.
As the sites were purchased under the Government Land Sales programme, they are not subjected to QC conditions. However, the developer will be subjected to a 10% ABSD at the end of the five-year ABSD remission period if there are unsold units.
“Our priority is to push for completion — TOP and CSC — so buyers will be able to see and appreciate the completed project before committing to a purchase,” says Michael Ng, group general manager of UIC. “After TOP, CSC and legal completion, we will have the flexibility of providing more flexible sales terms such as those that are now in the market,” adds Ng.
What are the benefits of buying a DPS project?
The essence of a DPS lies in when the option needs to be exercised, and how long the completion period is deferred for.
Typically, a buyer would pay a 20 percent down payment (five percent in cash and 15 percent in cash or Central Provident Fund (CPF) savings) for a new unit, pay for stamp duties within two weeks of exercising the option to purchase, and start paying progressively increasing instalments within six to nine months as their housing loan starts disbursement. A buyer would also not be able to re-assign their option to purchase to another buyer without incurring the Seller’s Stamp Duty (SSD).
In a resale purchase scenario, a buyer would also pay the 20 percent down payment, pay stamp duties within two weeks of exercising the option to purchase, and draw down on the remaining 80 percent loan within 10 to 12 weeks. This means that he or she would begin servicing their monthly instalments upon completion as their loans are fully disbursed. In addition, a buyer would be able to resell the option prior to exercise if there were a provision of “And / Or Nominee(s)” in it.
The beauty of DPS lies in the flexibilities developers have upon delicensing their projects. Payment schemes can be tweaked to incentivise different groups of buyers with different needs.