This is a complete guide on how to buy a new launch private property, detailing the step-by-step process to secure your dream home.
To navigate to each section of the post, please click on the links in the Table of Contents below.
- Fix an Appointment with the Official Property Agency
- Visit New Launch Private Property Showflats
- View the Different Unit Types
- Check Out the Actual Location
- Submit Letter of Authorisation (LOA)
- Property Booking Day
- Property Details Information (PDI)
- Post-Launch Properties
- Secure a Bank Loan and Hire a Conveyancing Lawyer
- Total Debt Servicing Ratio (TDSR)
- Signing The Sales and Purchase Agreement (S&P)
- Payment Property Stamp Duties
- New Launch Private Property - Property Progressive Payments
- Collect the Keys and Move In
- An Investment Perspective - New Launch Versus Resale
- Are All New Property Launches Under Construction Good Investments?
- Other Resources
- Reviews of New Property Launches
With so many new private property launches, to find the ideal home, buyers will need to consider three very important criteria:
- Investment Potential
One of the most efficient way to find suitable new property launches is to seek advice from a property agency officially appointed by the developer. As it has all the latest necessary information on hand, this will save you lots of time researching different properties yourself. (Note: For new launch private properties, you don’t have to pay any commission. So, why not take advantage of the free service!).
Fix an Appointment with the Official Property Agency
Fix an appointment with the appointed property agency and provide him with some basic information about your property preferences and budget. The representative of the property agency will then prepare the necessary materials for your consideration.
Besides drawing up a list of recommended properties that matches your requirements, he can also help to evaluate your finances and affordability, including the use of CPF savings for your property purchase. This is one of the most important steps in property investment to prevent over-stretching your finances.
In addition, the property representative can guide you through the entire buying process, including advising you on bank loans and recommending conveyancing lawyers.
If you are a foreigner, your property agent can also advise on the types of property you are eligible to purchase.
Visit New Launch Private Property Showflats
Next, set aside time to visit the showflats of new property that you have shortlisted together with your real estate representative. Typically, showflats will open for preview about 2 weeks before the official launch day. At this point, the developers will only provide “indicative prices” for the different unit types. These prices are usually not far off the mark and sometimes developers may provide early-bird discounts. Check with your property representative for the latest updates, including how well the development is being received.
View the Different Unit Types
View the different unit types and evaluate their sizes and layouts. There may be units of the same size but with different layouts. Some of the things to look out for are the relative size of the living room, dining room, bedroom, kitchen and balcony, as well as any odd configuration. For those who often cook at home, then a bigger and enclosed kitchen may be preferable. Also check out the quality of the fittings and household appliances that come with the property, such as cooking stove, fridge, washing machine, dryer, sanitary ware, etc.
Check Out the Actual Location
Very often, the showflats are not located at the actual site of the property. It’s important to check out the actual location to survey the surroundings. Some of the things to take particular note of include:
- Surrounding – Is the property located in a tranquil area with lots of greenery or is it near a busy road like an expressway?
- Facing – Is it facing the morning/afternoon sun or unsightly buildings? Is it windy and airy?
- View – Do you have a clear view in front of your property, or will there be potential new developments that may obstruct your view in the future.
- Essential amenities – Are there eateries, supermarkets, shopping centres and schools around the area?
- Transportation and accessibility – Is the area well-served by public transportation like MRT, or will there be any improvements in the future?
Besides the above, you may also wish to check out what are the future developments in the surrounding areas, such as shopping centres, parks, hospitals, new employment hubs, etc. These are important factors to determine the investment potential of the property.
Submit Letter of Authorisation (LOA)
Once you have decided on your property and is keen to proceed with the purchase, you can submit a Letter of Authorisation (LOA). This will be handed together with a blank cheque issued to the developer’s project account (Important Note: Never issue the blank cheque in anyone’s name, except the name of the developer’s project account).
The purpose of the LOA is to allow interested buyers to participate in the balloting for a unit in the development.
However, at this point of time, only an “indicative price” range of the different unit sizes are given. Your property representative will be able to advise you on the entire booking process. Before the day of balloting, there will be one or two days set aside for the developers to check through all the applications from all the joint marketing agencies (JMA) to ensure everything is in order. Dates will then be set aside for priority booking, which may include employees of the developer and those on bulk purchase.
This will be followed by balloting for the public to determine their queue number to select their units. The earlier your queue number, the better chance of snaring your choice unit.
Property Booking Day
Once all the queue numbers have been determined, buyers will be given the date and time to visit the show flat to choose their units. However, due to the covid-19 pandemic, the booking will now be done in the offices of the respective property agencies in which they submitted their cheques through.
Prior to the booking day, you will be advised by your property representative on the procedure. You property representative will also be present on the booking day to guide you through the entire process. It is advisable to shortlist a few units in the event your choices are taken by those ahead of you in the queue. If you are unable to get your choice unit and decide to pull out of the purchase, the cheque will be returned to you in full without penalty.
Property Details Information (PDI)
Once you have booked your unit, you will have to pay 5% of the purchase price with the cheque you have earlier submitted with the LOA, after which the developer will provide you with a set of Property Details Information (PDI) documents. Some of the information in the PDI will include your unit number, floor plans, rules and regulations, equipment provided and other terms relating to your property purchase. You will be asked to read and agree to the terms and details in the PDI documents by signing on all the pages.
The Option to Purchase (OTP) will be given to you at this point, which confirms your official booking of the property. Should you back out of the purchase, 25% of your booking fee will be forfeited by the developer.
If you have missed or unable to secure your choice unit in the newly launched private property, don’t despair. You can either wait for the developer to release new batches for sale (if any) or look at other post-launched properties that are already on the market. Very often, especially for large projects, developers will release their units in phases. If you find a property to your liking, you simply need to put down a cash deposit (5% of the purchase price) to secure the OTP. Do take note that once signed, you won’t be getting your money back. You will have 3 weeks to exercise your OTP.
Secure a Bank Loan and Hire a Conveyancing Lawyer
With your copy of the Option-to-Purchase (OTP), shop for a suitable bank loan to finance your property. The bank will do a credit assessment before granting you a Letter of Offer (LO), which basically specifies the terms and conditions of the loan. [Note: It is advisable to secure an Approval-In-Principle (AIP) for a bank loan before committing to your property purchase]. An AIP sets the quantum of the loan the bank is willing to lend you. It also set out your monthly mortgage instalments, among other terms and conditions. This will give you an indication of the property you can afford.
The last thing you want is not being able to get the relevant financing for your property, jeopardising your purchase.
Total Debt Servicing Ratio (TDSR)
Do take note that when taking a bank loan, you will be assessed on your total debt servicing ratio (TDSR). The TDSR is imposed by the Monetary Authority of Singapore (MAS) to prevent borrowers from over-extending their financial burden. It is currently set at 55%, which means your total debt commitments (e.g. home and renovation loans, car loan, study loan, credit card debts, etc) will be capped at 55% of your total gross income. This will in effect limit the amount of loan you can borrow. More information on this can be found in “Change In CPF Usage and Housing Loan Rules”.
Signing The Sales and Purchase Agreement (S&P)
By now, you should have engaged a conveyancing lawyer as within 2 weeks of obtaining your Option-to-Purchase (OTP), the developer will deliver the Sales and Purchase Agreement (S&P) to your lawyer. After you have exercised the option at your lawyer's office, you will have a further 5 weeks to endorse the S&P by paying 20% of the purchase price of the property (which will include the initial 5% booking fee). Your lawyer will help you to deliver the signed S&P Agreement back to the developer and handle all your subsequent progressive payments for the property.
Payment Property Stamp Duties
Within 14 days of signing the Sales and Purchase (S&P) Agreement, you will also need to pay the relevant property stamp duties. They are the Buyer’s Stamp Duty (BSD) and the Additional Buyer’s Stamp Duties (ABSD), if applicable. These stamp duties are applicable regardless whether you are buying a new launch private property or a resale.
The BSD and ABSD rates are computed as follows:
|Additional Buyer's Stamp Duty (ABSD)||Rates on/or after 16 December 2021|
|SCs buying first residential property||0%|
|SCs buying second residential property||17%|
|SCs buying third and subsequent residential property||25%|
|SPRs buying first residential property||5%|
|SPRs buying second residential property||25%|
|SPRs buying third and subsequent residential property||30%|
|Foreigners buying any residential property||30%|
|Entities buying any residential property||35%|
|Plus additional 5% for housing developers (non-remittable)|
|Buyer's Stamp Duty (BSD)|
|Higher of Purchase Price or Market Value of the Property||Rates on or before 14 February 2023||Rates on or after 15 February 2023|
|Amount exceeding $3,000,000||6|
To find out more information about property stamp duties, please refer to “How To Calculate Singapore Property Stamp Duties?”.
New Launch Private Property - Property Progressive Payments
For the remaining 80% of the price of the new launch property, you will have to make progressive payments according to a set of construction stages as stipulated below:
- 10%: Notice on completion of foundation work.
- 10%: Notice on completion of concrete framework.
- 5%: Notice on completion of brick walls of each unit.
- 5%: Notice on completion of ceiling of each unit.
- 5%: Notice on completion of doors, windows, electrical wiring, plumbing and internal plastering.
- 5%: Notice on completion of carparks, roads and drains.
- 25%: Notice of vacant possession or obtaining the Temporary Occupation Permit (TOP).
- 15%: On obtaining the Certificate of Statutory Completion (CSC), which is the completion date.
These progressive payments can be made via CPF, cash or a bank loan.
If the developer fails to deliver vacant possession of your property by the stipulated date, it is liable to pay liquidated damages amounting to 10% p.a. on the total instalments already paid.
Collect the Keys and Move In
The estimated TOP date should be clearly indicated when you purchase your property. After you have moved in, there is a 12-month Defects Liability Period where the developer must make good any defects found. The developer must rectify the defects within 1-month of your notice.
However, should the developer fail to rectify the defects, you can take the following actions:
- Notify the developer of your intention to initiate rectification works to be done and provide the estimated cost of carrying such work.
- Give the developer an opportunity to carry out the proposed rectification works within 14 days after the date of notice, failing which, you may proceed to rectify the defects yourself and claims compensation.
In addition, should you find the area of your property smaller than what is stipulated in the Sales and Purchase (S&P) Agreement, you can demand a reduction in the sale price. However, developers are given a buffer of 3%. In other words, you can only claim compensation for the difference of the area above the 3% buffer, calculated at the rate of what you have paid per square metre.
An advantage of buying a new launch private property compared to a resale is that home buyers are able to stretch their payments over a longer time period. This means taking up a smaller bank loan while building up their necessary funds to finance the property.
In contrast to resale properties, full payment is required on completion of the property transaction in about 12 weeks. After exhausting your cash and CPF monies, the balance will have to be financed by a bank loan straightaway.
An Investment Perspective - New Launch Versus Resale
When it comes to real estate investment, there is a choice between a newly launched private property and an older resale property.
Although a new property will always cost more, it usually offers a higher rate of capital returns compared to an older resale property of the same attributes (e.g. location, size, facilities, and tenure). Naturally, many investors simply focus on the prices without realising other important aspects of property investment which will be elaborated below.
Leveraging Your Capital
Like in any investments, real estate is cyclical, and prices can go up or down. However, a newly launched private property, which is also known as BUC (Building Under Construction), allows you to leverage on your capital.
A BUC property let you pay progressively. In other words, you only pay a certain percentage of the selling price based on the completed stages of the development. You do not need to pay in full, unlike buying a resale private property. This allows you to get a return on the total value of your purchase despite paying only a fraction upfront.
At the same time, your unutilised capital can be invested elsewhere until you need it.
The value of properties usually appreciates over time. Of course, there are periods of downturn due to a financial crisis or an economic downturn, but the real estate market usually recovers to register new peaks.
In addition, the capital appreciation of new private properties under construction tends to increase at a faster rate. By the time the development is completed, there is a good chance your investment will be profitable. Therefore, one of the key tactics to maximise your returns is to use equity to finance your investment.
Other Advantages of Buying a New Launch Private Property
Besides the above, buying a new launch private property also enjoys the following advantages:
Early Bird Special or Discount – To kickstart the sale, housing developers usually offer some discounts. This will also help to generate publicity as part of their marketing effort.
Step-Up Pricing – After the developers have moved a certain number of units, they will start increasing their prices over time, or when their inventory of unsold units dwindled. Hence, early buyers will benefit from the step-up prices and stand to gain once the development is completed.
Decaying Lease – Both a new and resale leasehold property will suffer from lease decay, but the former will get a fresh lease. With a shorter lease, a resale property will suffer more significantly from lease decay, negatively affect its value to a greater extend.
No Maintenance Fees – No maintenance fees are payable for a new private property until it is completed, saving investors a tidy sum and lowering the overall cost of investment. However, a resale property does not enjoy such a benefit.
Are All New Property Launches Under Construction Good Investments?
No, not all new property launches under construction are good investments. But they do offer you some advantages highlighted above that will help you increase your chances of making money.
There are many factors to evaluate when investing in a property. These include the following:
- Entry price
- Demand/Supply situation
- Rental price and rentability
- Transformational potential
If you need assistance in finding the right property for you, please feel free to WhatsApp or Email us.
Meanwhile, you may wish to check out the following new property launches:
- Hill House, a 999-year leasehold condo development at Institution Hill in District 9
- Terra Hill, a freehold condo development at Pasir Panjang
- The Continuum, a freehold condo development at Thiam Siew Avenue in District 15
- Copen Grand EC - The first executive condo in the Tengah smart and sustainable township
- Tenet EC - An executive condo 4 minutes' walk from the Tampines North integrated transport hub
- The Arden, a condo development at Bukit Panjang and a short walk to the Phoenix LRT station
- Sceneca Residence - A mixed-use development directly linked to the Tanah Merah MRT station
- Botany At Dairy Farm - Located 7 minutes' walk from the Hillview MRT station
- Lentor Hills Residences, a condo development 3 minutes' walk to the Lentor MRT station
- Blossoms By the Park, a mixed-use development at one-north and within walking distance to 2 MRT stations
- The Greater Southern Waterfront – A Property Market Outlook
- Jurong Lake District Development: A Property Investment Hotspot?
- Woodlands Regional Centre: Property Hotspot In the North Region
- Novena Master Plan – Health City Novena to Spur Transformation
- Mega Developments In The East Region
- Development of Tampines North
- Tampines Nature Parks An Appeal to Property Buyers
- Tampines Regional Centre – A Vibrant Shopping Haven
Reviews of New Property Launches
For reviews of new property launches, please click on the links below. More project information can also be found here.