Are you looking to buy a new Singapore condo any time soon? In this case, you should know that you should be able to commit to the conditions of the issued OTP, as the possibility to reissue another OTP is not an option any longer. In other words, you should act within the validity of the issued OTP, as you won’t be able to get another one for the coming 12 months. This new restriction was recently released by the URA and should become familiar to all homebuyers because it can affect the final results of a property purchase.
Besides the inability to reissue a new OTP to the same client during a period of 12 months since the end of the previous OTP, developers are also not allowed to offer agreements in an upfront manner to any customer. These two measures are not proposals, as they become effective immediately after they have been officially announced by the URA. This took place on the 28th of September, so they are in use as we speak.
What’s the main plan behind the issuing of such measures? According to the URA, the goal is to reduce the practices that influence price inflation in the real estate market and to make people think twice before investing in a property. We live uncertain times when jobs and employment can become problematic in a very short period, so authorities recommend being sparing when it comes to long-term expenses.
Such measures appeared because some developers chose to continually reissue OTPs for their clients, once they expired so that the paid fee isn’t lost and the clients could still purchase the property later on. A while ago, the possibility to reissue an OTP was available for one year or 18 months at most, in case the buyer didn’t manage to sell his previous property. But, apparently, some took advantage of this aspect and continued renewing the OTPs, which affected the offers available on the market and the prices of selling units. According to Ms. Ling Hui Lin, who is the URA’s housing controller, there is a need for a greater deal of responsibility and commitment when we decide to purchase a new property. The measures are to prevent those who may be facing financial risks to jump into making considerable expenses, which they might not be able to support in the future.
Thus, taking into account the new measures, an OTP will be valid for only three weeks after the issuing of the purchase agreement. A homebuyer will have to make use of his OTP within its validity term, which means signing the sale of the property and the purchase agreement, returning the document to the developer. If the buyer fails to do so during the validity term of the OTP, then he might lose a quarter from the booking fee, for the benefit of the developer.
Hopefully, these measures will prevent homebuyers to jump into buying new launch properties, unless they have sufficient financial means to make such a decision. In times of economic uncertainties, we should be more careful before committing to expenses that span over several years or take a good part of our monthly budget.