EC Singapore: Executive Condo Buyers Guide 2023!

If you wish for a swanky apartment with a gym or swimming pool but don’t want to fork out ridiculously high private home prices, then executive condominiums (EC) might be the right choice for you.

The benefits and lifestyle that an EC offers can help buyers find stability and balance in Singapore’s fast-paced lifestyle. No wonder why so many people want to own an EC in Singapore!

If you too wish to buy an EC, here is everything you need to know before making a well-informed decision. This article discusses eligibility, the salary you need to earn, CPF housing grants available for ECs and much more.

Contents:

• What is an executive condo?
• Is an executive condo considered private property?
• Key differences between a new EC and a resale EC
• Eligibility conditions for purchasing an EC
• How much do I need to earn to afford an EC in Singapore?
• Can singles buy EC alone?
• Is buying an EC a good investment?
• What are the CPF housing grants available for ECs?
• Are ECs cheaper than condos?

What is an executive condo?

An Executive Condominium or EC is a public-private hybrid between HDB flats and private condos. Executive condos provide an affordable middle-ground between public housing and private condos and are often the go-to choice for the “sandwich class” – Singaporeans whose income exceeds the income ceiling for HDB flats but still can’t quite afford a private condo.

Although developed by private property developers with all the frills of a private condo, ECs are offered at subsidised prices with the scope of certain housing grants. You might have walked past a fancy-looking EC and mistook it for a condominium.

The monthly income ceiling for HDB BTO (Build-To-Order) flats is currently $14,000, while for ECs, it is $16,000. So, those who have a combined household income between $14,000 and $15,999 can get their hands on a new home only by purchasing an EC or a private condo.

Since private units are much more expensive, ECs make an attractive choice for the sandwiched class.

But best of all, ECs magically get upgraded to “private” status. Wait, how?

Is an executive condo considered private property?

Executive condos start under the HDB umbrella and are treated as public housing for the first 10 years, bound by HDB rules. From the 6th to 10th year, ECs are sold just like regular resale flats but only to Singapore citizens or permanent residents. Only after the 10th year do they go fully private, and that is when you can sell or rent them out to a bigger pool of buyers including foreigners.

ECs include all the same facilities as full-fledged condos, like gyms, swimming pools, tennis courts, etc., but are priced substantially lower than private condos. But since ECs are officially recognised as private properties from the 11th year, buyers should no longer expect any CPF housing grants.

If you want to own an executive condominium, you must know whether to buy a new EC or a resale EC. What would be a better buy? Let’s compare.

Key differences between a new EC and a resale EC

New EC	Resale EC
More restrictive eligibility criteria	Less restrictive eligibility criteria
Takes about 2 to 3 years to build	Already completed
Must fulfil the 5-year MOP	Generally no MOP required
Takes 10 years for full privatisation	Closer to full privatisation
CPF housing grants allowed	No CPF housing grants are available
Progressive Payment Scheme, starts with less down payment	Min. 25% down payment

How can I buy an EC in Singapore?

Even though ECs are considered HDB properties in the first 10 years, you are not allowed to take a HDB loan to finance your purchase. Instead, you will have to opt for a home loan in Singapore. Although a bank loan might offer lower interest rates initially, it demands a higher downpayment of 25% – of which 5% must be in cash – as you can only borrow a maximum of 75% versus 90% for HDB loans.

This means, in addition to an above-average income, you should also have amassed sufficient cash/CPF savings to cough up the downpayment – without crossing the income ceiling.

Note that 75% is the maximum amount (Loan-to-Value limit) you can borrow. If you already have an existing car loan, student loan, etc., you might not be able to borrow that much, thanks to TSDR (Total Debt Servicing Ratio). TDSR is the amount used from your gross monthly income to pay for all your debts.

Additionally, there is a 30% MSR (Mortgage Servicing Ratio) limit, which means you can only borrow up to 30% of your monthly income for your home loan. When buying an EC, both TDSR and MSR must apply.

There are some additional costs involved too. Be ready to pay approx. $2,000 in legal fees and up to $200 in valuation fees for a new EC. Buyers will also have to fork out the Buyer Stamp Duty (BSD), which is 3% of the property purchase price or 4% if the property price is more than $1 million to $1.5 million.

A key benefit of buying a new EC over a private condo is the eligibility for CPF housing grants. However, you must have a monthly gross income of $16,000 or less to be eligible. We will discuss the types of housing grants available for new ECs in detail in the section below.

Eligibility conditions for purchasing an EC

Before doing anything, you must check whether you meet the eligibility conditions to buy an executive condo considering the HDB’s rules.

• You must qualify under one of these HDB eligibility schemes to purchase an EC:
  • Public Scheme
  • Fiancé/Fiancée Scheme
  • Joint Singles Scheme
  • Orphans Scheme
• You must be at least 21 years old; the co-applicant should be an SC or SPR. If you are buying alone, you can only purchase a resale EC (without a CPF housing grant). If you are a single SC, the minimum age criteria is 35 years and above.
• Under the income ceiling rule, your household cannot earn a combined gross monthly income of more than $16,000, no matter what scheme you apply under.
• To qualify under the property ownership rule, you:
• should not own or have disposed of any other property in Singapore or overseas within the last 30 months of applying for an EC,
• haven’t bought an EC, HDB and/or DBSS flat, and
• haven’t received a housing grant before applying to buy an EC.
• You must fulfil a Minimum Occupation Period (MOP) of 5 years before selling or renting out your flat.

How much do I need to earn to afford an EC in Singapore?

To derive how much income you need to earn, let’s take the example of a new 3-bedroom EC since it is one of the popular sizes for an average Singaporean household.

Based on the price of the executive condo, you can get the amount of maximum loan you can get. Usually, a 3-bedroom EC can conservatively cost anywhere between $800,000 and $1,200,000.

Now let’s get down to the calculations.

Step 1: Calculate the downpayment and loan quantum

Those eligible to buy an EC can borrow up to 75% (maximum LTV) of the EC price from the bank.

EC price	Downpayment	Loan quantum
$800,000	$200,000	$600,000
$1,200,000	$300,000	$900,000

Step 2: Outline your monthly mortgage repayments

Depending on the maximum loan quantum you can borrow, you can compute the estimated monthly instalments based on the available interest rate and loan tenure. Let’s say the interest rate is 1.6% p.a. and the loan tenure is 25 years.

EC price	Loan quantum	Monthly instalments
$800,000	$600,000	$2,428 per month
$1,200,000	$900,000	$3,642 per month

Step 3: Consider the additional MSR rule (for ECs still within MOP period)

Mortgages for EC developments which have not yet met the Minimum Occupancy Period (MOP) are subjected to a 30% Mortgage Servicing Ratio (MSR).

EC price	Monthly instalments (at 1.6%, 25 years)	Minimum salary required
$800,000	$2,428 per month	$8,093 per month
$1,200,000	$3,642 per month	$12,140 per month

*Please note that if you are a second-timer who already has an HDB property and now looking to upgrade to an affordable private condo, you must not forget to take the HDB resale levy into account.

This amount is payable by buyers who purchased a subsidised property (like BTO or balance flats) first from a developer, later sold it, and then purchased another subsidised property from HDB, like EC. The resale levy amount depends on your previous subsidised housing type.

Check out the table below for the amount of resale levy a Singaporean household would need to pay depending on their first housing type.

First Subsidised Housing Type	Resale Levy Amount (Households)
2-room flat	$15,000
3-room flat	$30,000
4-room flat	$40,000
5-room flat	$45,000
Executive flat	$50,000
Executive condominium	$55,000

Can singles buy EC alone?

Unfortunately, singles are not allowed to buy a new EC alone in Singapore. At least not until the 5-year MOP is fulfilled. You can however apply with your parents or jointly with another single SC (under the Joint Single Scheme) if both of you are at least 35 years old.

Also note that single applicants for EC are not eligible for housing grants. If you (SC or SPR above 21) are planning to buy alone, you can only buy a resale EC.

How much do you pay upfront for EC?

The amount you need to pay upfront will vary based on the type of property you are buying.

For resale ECs, you will take a minimum downpayment of 25%. Moreover, 5% of your property’s payment must be in cash. The remaining 20% can be from your CPF savings.

If you are buying an EC still under construction, a payment of 5% in cash needs to be made while booking a property. Only after 9 weeks, you will need to make an additional 15% payment.

Can I buy a new EC if I currently own an HDB flat?

You are eligible to purchase a new EC if you have bought only one of the following before the application:

• An HDB flat, such as BTO flat
• An EC/DBSS flat from a property developer
• A resale HDB flat using a CPF housing grant (for first-time applicants)

You can buy any 2 of the above property types in total but not the same property type twice. For example, you can buy an HDB flat and an EC but not two HDB flats or two ECs.

If you have purchased two such properties already, you are not entitled to apply for an EC or be listed as an essential occupier in an application.

Is buying an EC a good investment?

When choosing between BTOs, resale flats and ECs, each housing type has its own benefits and drawbacks. It actually depends on your financial goals and your intention of investing in the property market.

According to HDB’s Minimum Occupation Period (MOP) rule, you have to wait 5 years before selling and/or renting out your apartment. Once the property hits the MOP, you can expect to earn a healthy profit. You can sell or rent your EC to Singapore Citizens (SCs) or PRs.

The price or total value of an EC generally appreciates over the years. When an EC gets fully privatised after 10 years, you can sell to anyone, including foreigners. Foreigners are allowed to buy executive condos in Singapore.

An EC that is generally bought at a subsidised price from HDB offers high appreciation potential once it converts into a private condominium.

Let’s take a look at the pros and cons of investing in an executive condominium.

Pros	Cons
Cheaper than private condos	Bound by HDB rules for 10 years
Eligible for CPF housing grants (for first-time buyers)	Mostly located in ‘ulu’ locations
Become fully privatised after 10 years	Not eligible for HDB home loans; only bank loans
A good option for middle-income Singaporean families	Only a handful of HDB EC launches happen every year
Designed for own-stay purposes (owner-occupiers)	Income ceiling up to $16,000; those higher not eligible

What are the CPF housing grants available for ECs?

If you pick an executive condo over a resale HDB flat, one thing you are likely to miss is the available CPF housing grants. The maximum value of housing grants you can get for a resale flat is $160,000 – although it varies circumstantially.

For new ECs, the grants are available for first-time buyers who do not own an HDB property and must not have received any other forms of housing subsidy. If you fulfil all other eligibility requirements for buying an executive condo, there are two types of grants available:

Family Grant (goes up to $30,000)

Average monthly gross income of applicants/occupiers	SC household	SC/SPR household
$10,000 or lower	$30,000	$20,000
$10,000 to $11,000	$20,000	$10,000
$11,000 to $12,000	$10,000	Nil
$12,001 to $16,000	Nil	Nil

You can apply for a Family Grant at the time of booking the EC.

Half-Housing Grant (goes up to $15,000)

If you are a first-time applicant and your co-applicant has received a housing subsidy before, you can still get ‘half’ of the housing grant by applying for the Half-Housing Grant, which is basically half of the Family Grant.

Average monthly gross income of applicants/occupiers	Grant amount
$10,000 or lower	$15,000
$10,000 to $11,000	$10,000
$11,000 to $12,000	$5,000
$12,001 to $16,000	Nil

Please note that buyers of resale ECs are not eligible for any housing grants, and resale ECs are comparatively higher in price than new ECs.

Are ECs cheaper than condos?

ECs in Singapore are more attractively priced – 20% to 30% cheaper than private condos –  and come with facilities and stylish designs typically found in private condos, such as swimming pools, gyms, BBQ pits, tennis courts, function rooms, etc. There are two key reasons behind it:

Location. Mostly, ECs are generally built at less accessible locations, which might be a distance away from existing malls and MRT stations.

Subsidised land prices. Since ECs are generally built in the OCR (Outside Central Region), the land ownership is subsidised by the government.

	Executive condominiums (EC)	Private condominiums
Property type	Considered private after 10 years	Private
Lease	Max. lease of 99 years only	9-year, 999-year or even freehold
Price	20% to 30% cheaper than private condos	Relatively pricier than ECs
Who can buy it?	Only SC + SC, or SC + PR households	Anyone
MOP	5 years	Doesn’t apply
Income ceiling	≤ $16,000	No income ceiling
CPF housing grants	Eligible (for some)	Not eligible
Mortgage	Bank loan only; MSR & TDSR apply (if MOP is not reached)	Bank loan only, TDSR applies
Location	Usually in the outskirts or suburban areas	Mostly nearby MRT stations

Can I afford an EC?

Whether or not you can afford an EC depends on several factors apart from the minimum income you must earn.

Renovation costs are situational and sometimes highly subjective. If you are moving to a home that is like a blank canvas, you may not have to spend much on renovations. Depending on the developer of your EC, it might already come equipped with basic fixtures, or you can even expect high-end finishing.

Also, maintenance fees may vary for ECs, depending on the services and amenities available. ECs with more facilities charge higher Service & Conservancy Charges (S&CC), which can be as high as $400.

You must consider your home’s Annual Value (AV), which gives an estimate of how much you can earn from renting your house. Depending on your EC’s AV, you will have to pay property taxes on it. ECs tend to have a higher AV than resale flats. It means while you could earn a higher rental income from renting your EC, you will need to consider this long-term expense while assessing its affordability.

Please note that, as discussed, ECs get fewer housing grants compared to HDB resale flats

Final Thoughts

The decision on whether or not to buy an EC in Singapore should be made only after considering its pros and cons. While the amenities and benefits of an EC make them a go-to choice for Singaporeans, there is no point in having a dream EC home that compels you to cut corners to pay off your home loan mortgage.

Making a well-informed EC purchase decision will leave you in a good place for the rest of your life. But if you are eligible to purchase an EC, you should definitely keep it on top of your priority list before looking at other private properties.

If you have any questions about buying an EC, whether it is about finding the most suitable bank loan, applying for a mortgage or CPF grants, or planning your monthly repayments, please don’t hesitate to get in touch with us.

At Dollarback Mortgage, our team is dedicated to ensuring that your next financial purchase is the best decision for you