The Most Irresistible
Deferred Payment Scheme Condo
in Singapore!

Developers are required to sell all their units within 5 years. To drive sales, they offer the deferred payment scheme for buyers to finance by selling their current home.

The property market in Singapore was softened since the peak in the year 2013.  In 2016, many luxury condominiums above $2million remain unsold even after TOP obtained.  However, under government ruling on developers, they are required to sell all their units within a certain period of time or face a steep penalty, Qualifying Certificates (QC) and Additional Buyers’ Stamp Duty (ABSD).

How do QC and ABSD Affect Developers?

Type Qualifying Certificates (QC) Additional Buyers' Stamp Duty (ABSD)
Type of Sites Non-Government Land Sales (GLS) Residential Sites All Residential Sites bought after and on 8 Dec 2011
Developer Foreign and/or listed Developers All Developers
Conditions to be Fulfilled • TOP in 5 years.
• 2 more years to sell all the units - or a total of seven years from the date it bought the land.
• It is not allowed to rent out unsold units.
• TOP and sell all their units in 5 years.
• There are still other detailed conditions.
Penalties • A banker's guarantee worth 10% of the land purchase price will be forfeited.
• The banker's guarantee is submitted during the time of purchase.
• Unsold units risk being force-sold by the Government.
• 10% of the purchase price of the site for land bought after and on 8th December 2011.
• 15% for land acquired after January 2013.
• The government will waive ABSD if they agree to build, complete and then sell all their units within a stipulated period.
• If the Housing Developer fails to comply with any of the conditions of the undertaking, then the ABSD amount shall be repaid in full with interest.

In order to avoid the penalty, many developers offer the attractive discount to buyers. Unfortunately, developers have learnt that offering discounts alone may not be good enough lure buyers in a big way.

In normal brand-new condo transaction, a buyer would pay a 20% down payment (5% in cash and 15%% in cash or CPF), pay for stamp duties within 2 weeks of exercising the option to purchase, and start paying progressively increasing instalments as their housing loan starts disbursement. A buyer would also not be able to sell their option to purchase to another buyer without incurring the Seller’s Stamp Duty (SSD).

Whereas in a deferred payment scheme (DPS) scenario, there are several different schemes in the market. Some with 20% cash to move in, some 10% and even as low as 5% down payment to move in.  Then the remaining payment can be deferred for a year or two without any interest charge. There is a project is open for the possibility for their buyers to “flip” because there was a provision of “And/Or Nominee(s)” in the OTP.

That is the beauty of DPS by offering flexibilities to the buyers for fund transfer and management or even buy time to sell their current homes.

OUE Twin Peaks

In March 2016, OUE became the first developer to roll out deferred payment scheme on top of 15% discount to move their balance units at Twin Peaks.  Buyers can move into their new homes once they have exercised the option to purchase and made a small down payment. They will then have to pay the rest of the sum, usually through a loan, within one to three years, depending on the developer’s rules.

It is a win-win situation for both developer and buyer.  However, the developer must obtain Certificate of Statutory Completion (CSC) and the project is de-licensed and no longer under the purview of the Controller of Housing, before they can offer such sweeteners to the buyers.

100% sold proven that this creative marketing strategy at OUE Twin Peaks and The Peak @ Cairnhill had sparked similar moves by the other developers to drive sales for unsold completed projects.

d-leedon

In June 2016, CapitaLand rolled out its own version of a deferred payment scheme, known as the stay-then-pay programme, at two mega projects, 1,715-unit D’Leedon and the 1,040-unit The Interlace.

Stay-then-pay programme allows Singaporeans and SPR to pay 10% within 8 weeks to exercise the option to purchase, live in the unit and pay the balance 90% a year later, whereas, for foreign buyers, the down payment is 15%. This gives buyers sufficient time to sell their current property and sort out their finances, in which case the loan required would be lesser.

The Interlace

Few other projects that have been on the market for some time – CapitaLand’s Sky Habitat and Interlace and Ardmore Three by Wheelock Properties also subsequently rolled out such a scheme to woo buyers.

Wheelock Properties allows their buyer to defer 80% of the price for two years with enticing discounts and rebates at Ardmore Three, with selling prices at more than $3,000psf.

Corals Keppel Bay

In addition, rare luxury waterfront development by Keppel Land, Corals at Keppel Bay is giving $50,000 off prices for selected units. The average selling price is around $1,850psf after the discount.

Meanwhile, another similar project by Keppel Land, the Reflection at Keppel Bay is offering the first and only version of deferred payment scheme with and/or nominee to their buyers. Just 20% initial deposit all in cash, the buyers can defer the balance payment for 2 years and will enjoy rebates of $5psf after 2 years.

Reflections at Keppel Bay

A new freehold condo in prime District 10, One Balmoral by Hong Leong Holdings offers a 13% discount on the prices of all units.

TG Development added a new flavour to the deferred payment scheme, namely the “Experiential Leasing Scheme” for Llyod Sixity on June 2016. The scheme gives buyers the option of leasing the property for two years before deciding to buy it.

One Balmoral

Under the scheme, by paying a 10% down payment plus a 2.5% refundable deposit, the buyers can enjoy the experience of living in the unit first and the luxury of time to decide whether they want to buy the unit.

Mon Jervois

In early 2017, it was a challenging period to the local developer, Singapore Land (UIC) while their deadline for 10% ABSD for 3 projects was close but left with many unsold units.  The projects are Alex Residences in Redhill, Pollen & Bleu on Farrer Drive and Mon Jervois on Jervois Road. Their priority is to push for completion, TOP then CSC so they can let buyers to see the final product before committing to a purchase or provide more flexible sales terms to their buyers.

In mid-2017, UIC has fully sold Pollen & Bleu by giving 15% rebates, with similar scheme offered to Mon Jervois and currently still on sale. Alex Residences obtained TOP in October 2017 and actively pushing the remaining units which are high floor 3-bedroom.

The Crest Panorama View

In September 2017, WingTai relaunched The Crest at Prince Charles Crescent with the best deferred payment scheme so far in the market. 5% initial deposit to move in and 5% further deposit after one year, then 90% final payment after two years.

Even with the benefit priced in, the scheme still gives good returns on investment if the buyer rents the unit out. Some buyers who defer payment may also be anticipating loan-to-value changes down the road.

The Crest Deferred Payment Scheme

In September 2017, WingTai relaunched The Crest at Prince Charles Crescent with the best deferred payment scheme so far in the market. 5% initial deposit to move in and 5% further deposit after one year, then 90% final payment after two years.

Even with the benefit priced in, the scheme still gives good returns on investment if the buyer rents the unit out. Some buyers who defer payment may also be anticipating loan-to-value changes down the road.

Should you rush to buy?

It is always tempting to rush in when the developer offers such significant discount plus deferred payment schemes.

After slumbering for 4 years since the peak in 2013, Singapore property market is now blooming in 2017, notably in new condo launch.

Looking ahead 2018 private home sales, we expected that more and more private projects will be sold through deferred payment scheme or related creative marketing strategy.  Especially in the urban areas of high-end private residential projects. This may increase the demand and price of private homes. As a result, this will heat up the luxury residential market.  It is the best timing to buy a property now before the price going too high.

Meanwhile, with the TDSR and cooling measures still play a role, deferred payment scheme will not bring negative impact to the property market. We believe that the Government is monitoring the property market situation closely and will make policy adjustments if necessary. However, in any circumstances, every buyer should remain focused on the fundamentals, not sentimental and always buy at your own means.

Which Cluster House are you keen to view? Let’s discuss in the comments!

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