MND tweaks cancellation fees, resale levy for ECs

ALL content used in this not-for-profit blog remain the property of their respective owners.
http://www.todayonline.com/singapore/mnd-tweaks-cancellation-fees-resale-levy-ecs

The Ministry of National Development has introduced three new measures for Executive Condominium (EC) developments to bring the terms of buying an EC closer to those of public housing and support a “stable and sustainable EC market”.

1) The cancellation fees for ECs has been reduced from 20 per cent to 5 per cent of the purchase price

2) A resale levy has been introduced for second-timer applicants who buy EC units directly from property developers

3) The Mortgage Servicing Ratio (MSR) for housing loans for EC units is now capped at 30 per cent of a borrower’s gross monthly income

The first two measures will apply to EC land sales launched on or after yesterday (9 Dec 2013), while the MSR cap will apply to EC purchases where the Option to Purchase is granted on or after today (10 Dec 2013).

The reduction of cancellation fees would help alleviate the cost for young working adults who book an EC but do not eventually get married. Currently, the forfeited amount is pocketed by the developer, which goes on to collect the full price from the next buyers when they resell the unit.

Analysts expect the MSR cap, with its impact on buying power, to have the largest effect out of the three new measures.

“I think, probably, the Government will look and see how the market reacts and to ensure that buyers exercise prudence before they enter the market,” said one analyst.