Choosing Between ECs and Private Condominium
Despite the obvious similarities in their names, these two types of residential properties are distinct in their own ways. In this article, we will be answering all the common questions regarding the differences.
Executive Condominiums, or ECs, are a unique public-private hybrid type of housing. It begins as public housing but transitions to private housing after a period of 10 years.
Private Condominiums, on the other hand, are privately owned residential properties containing many residential units available to be owned by different owners. These come in either freehold, 99-year leasehold, or 999-year.
Advantages of ECs
1. Easier on the wallets
With prices about 25% to 35% lower than private condos, and you will still be eligible for CPF housing grants worth S$10,000 to $30,000 (if your income is low enough).
2. Pleasing designs and styles
Aesthetically speaking, they look no different from Private Condominiums.
3. Come with the whole host of facilities
In fact, at a lower price, you enjoy the same facilities as a private condo, such as 24 hours security, swimming pools, tennis courts, and more.
4. Privatization in the 11th year
Due to this feature, ECs may end up being a better investment for homeowners, as you no longer have to follow HDB’s restrictions on selling. It can then be sold to foreigners and companies, expanding the prospective market of buyers.
Disadvantages of ECs
1. Restrictions of property ownership
An example would be that owners must not have owned other properties or disposed of any within the last 30 months.
2. Minimum Occupancy Period
No renting or selling during the first five years.
3. Infeasible option for singles
Singles cannot buy a new EC unless they join the HDB’s Joint Singles Scheme. For more information on that scheme, you may refer to our earlier articles which outlined the different grants available to first-time homeowners.
4. Eligibility concerns
Given that ECs are a form of public housing, not everyone will be eligible to purchase them. Household income cannot surpass S$16,000 per month, which makes this option mostly suitable only for the ‘sandwich class’ – those whose household income passes the limit for HDB flats, but are not high enough for purchasing private condos. Moreover, one of the buyers has to be a Singapore citizen.
Advantages of Private Condominiums
1. No restriction on property ownership
2. No Minimum Occupancy Period
They can be sold or rented from the outset, with no MOP of five years to worry about. This allows active property investors an avenue to grow their wealth.
3. Have a longer term lease
New launch Private Condominiums can be 99-year, 999-year, or even freehold.
4. No eligibility concerns
Disadvantages of Private Condominiums
1. More pricey
Besides coming at generally higher prices, there are also no HDB housing grants available.
So, which of the two should you choose?
We feel that the final choice has to be context dependent. Both options have their merits as well as limitations, and we have compiled the following factors for you to weigh your decision-making:
High cash reserves: Condo
If you have good cash reserves you should consider buying a condo due to less stringent requirements with regards to your nationality, marital status, and ownership of multiple properties. On the flip side, if you have other life priorities to plan and save for, ECs will be a better choice.
Short-term monetary intensive goals: ECs
If you have a huge financial commitment to plan for in the near future, such as a wedding, and feel that erring on the side of prudence suits you better, then choose the lower-priced EC.
Varying income: ECs
If you are a self-employed person (SEP) with varying income, ECs may suit you better. The wide number of unforeseen circumstances that a SEP may face would demand extra prudence. Also, a key point to note is that for persons without a fixed income, the amount of money that they can borrow for the likes of renovation is reduced. The Total-Debt-Servicing-Ratio (TDSR) stipulates that a person may only borrow up to 60% of their income, but for SEPs, that arbitrary income is 30% lesser. For more information on the TDSR, kindly refer to our earlier articles on the differences between bank loans and HDB housing loans.
Ultimately, these are simply general guidelines. We hope that you may peruse these factors to help better align your decision with your goals and circumstances. They should serve as guiding points rather than hard and fast rules – what matters most at the end of the day is that you feel that you have made a rationalized choice that you feel will serve you well.