Developers have been getting creative with schemes to entice buyers back to a slow market but some of them are tripping up over the fine print of the regulations.
While they may appeal to cash-strapped buyers, some of the concepts at uncompleted projects are crossing the line, forcing the Urban Redevelopment Authority (URA) to step in. It has issued a warning letter to the developer of Gem Residences for two instances of non-compliance, a spokesman told The Straits Times yesterday.
GEM Residences is the first private condominium project for Evia Real Estate, which used to develop executive condominiums. Upcoming executive condo include Treasure Crest and Northwave EC while existing ones include The Terrace EC, Brownstone EC, The Visionaire EC, Parc Life EC , Waterwoods EC, Signature at Yishun, Skypark Residences, Wandervale EC, The Vales EC, The Criterion EC, Bellewaters EC, Bellewoods EC.
Under a “specimen cheque scheme”, the joint developers of the Toa Payoh project had offered potential buyers cheques of $7,500 or $10,000 to submit as expressions of interest. These amounts would be used to offset their booking fee.
The URA told them the practice would circumvent the requirement of a minimum 5 per cent booking fee to buy a home. The project had its VIP launch last Friday. Buyers were instead offered a direct discount or rebate of the same amount. Gem Residences sold about 55 per cent of units on its launch weekend.
In the second instance of non-compliance, the developers offered buyers triple-key apartments with a kitchen in each of the three sub-units. But this was not in keeping with the approved floor plan and the URA ordered that it keep to the original design.
“The URA previously approved the plan for a residential unit comprising three bedrooms and a kitchen. The floor plan that was submitted to us for these units did not reflect three separate kitchens or sub-units,” the spokesman said.
There has also been a hitch at Lloyd Sixtyfive in River Valley, where the developer has been told by the Controller of Housing to hold off on offering a tenancy scheme, which it is reviewing.
Developer TG Developments had intended to launch an “experiential purchaser scheme” that would allow potential buyers to place a downpayment and then stay in the unit with the option of purchasing about two years later.
Some of the successful incentives have been at completed projects, where schemes have targeted price and loan curbs to take the sting out of the Total Debt Servicing Ratio (TDSR).
Such projects enjoy more flexibility as they have obtained the Certificate of Statutory Completion and individual titles have been issued, and so they no longer come under the Housing Developers Rules.
One popular concept has been the deferred payment scheme used at OUE Twin Peaks, which is proving successful because it defers obtaining the full home loan under current TDSR rules.
The TDSR determines how much an individual can borrow – total monthly debt payments, including home loans, cannot exceed 60 per cent of a home buyer’s income.
About 60 per cent of these recent 140 purchases were made under the scheme, which allows buyers to put up 20 per cent of the total purchase price now and pay the rest two or three years later, by which point there could be changes to loan curbs. Developer OUE has sold about 140 units at the project since late March when the scheme was introduced along with another incentive offering a longer option-exercise date.
Units under the deferred payment scheme are priced just 5 per cent over other units, which is very reasonable, said Mr Dominic Lee, PropNex group district director, whose team has helped sell 75 units since late March. “Everyone knows it is a good time to buy property, but TDSR is an issue,” he said.
Ardmore Three has also had some success since introducing a 15 per cent Additional Buyers’ Stamp Duty (ABSD) rebate in April, on top of a 12 to 15 per cent direct discount for units.The project has sold more than 25 units since it introduced the ABSD assistance package, according to caveats.