Written by: Benjienen Toledo
I’m sure you have heard about Executive Condominiums or EC. But do you know how are they different from the traditional HDB flats?
You know that it is nicer and more exclusive, but it is also more expensive. What exactly is it that you are paying for?
EC is basically a hybrid between public and private housing. Essentially, it’s a subsidised private condominium. They are sold with certain restrictions so that they can be available at affordable prices for the select group – the middle-income Singapore families who exceed the Income Ceiling (Average Gross Monthly Household Income) of $12,000 for Housing and Development Board (HDB) flats, but are not quite yet able to afford a private property (Government of Singapore, 2013).
Is an EC for you?
You may be first-timers, a couple looking to get married in your early 30s and you would have a combined monthly income of about S$10,000 with some savings. Because you are more financially savvy, you are deciding between applying for a Build-to-Order (BTO) HDB flat and buying an EC. You may choose an EC since it is essentially the same housing product of condominium which offers the same quality of living.
Or, you may be second-timers and having a family with children, you are looking to make the transition to private housing. In upgrading, you choose between an EC and a private development. An EC holds a clear pricing edge over condominiums, though it’s physically indistinguishable because of the comparable facilities.
Is EC really worth it?
An EC is typically sold at about 20 percent discount than the similar private condominiums. The only difference is the five-year Minimum Occupation Period (MOP) and resale restrictions from the fifth to the 10th year. Mak & Huynh (2016) explains that on the aspect of property value, EC projects built with land tenders awarded in 2015, assume a worst profit margin of 4% and a best profit margin of about 13%. The average new sale price for EC projects could be at about S$730 psf on average.
Besides that, if you are a first-timer, you are eligible for a Central Provident Fund (CPF) family grant of up to S$30,000. You are also exempt from paying the resale levy, up to S$50,000 (Housing & Development Board, 2017). All in all, you stand to gain as much as S$80,000.
What makes EC Different?
EC vs Private Condo
EC vs HDB Flat
Now that you have learned about the difference between an EC and Private Condo, and between an EC and HDB Flat, below is a comparison of the costs when getting an EC vs an HDB flat:
You need at least $35,000 in cash for down payment for an EC; while the 10% down payment for an HDB flat will come from your CPF grant.
What are the EC Eligibility Conditions?
Are you eligible?
After learning whether you are eligible, together with other applicants and essential occupiers, you need to understand the requirements that you need to prepare.
What are the Requirements?
Specific documents are needed depending on your nature of employment. Also, please note that some forms of income/ allowance are not included when assessing your household income. Aside from these documents, the developer may also request further documentation if needed. (HDB, 2017)
*Contents of the letter of certification from your employer:
- Company Stamp/ Letterhead
- Certifying Officer’s Name, Signature, and Designation
Now you have the information that you need to make a sound decision. Determining whether getting an EC is buying a home or a lifestyle is unnecessary.
You can have both.
Of course your lifestyle will change when living in an EC with its prestige, location and facilities. But home is the feeling that lingers inside you, regardless of place and time.
When getting an EC, Connie (2016) advises that you need to make sure you have enough income leftover after paying for your mortgage loans to afford other necessities such as food and transportation.
The essential thing to consider whether you will get an EC, a condo or an HDB is your financial planning; the key is to live within your means and to make decisions, with no regrets.