Although the real estate market in Singapore is at peak these days, some discouraging practices are affecting the sales figures by a considerable level. The Urban Redevelopment Authority (URA) is now taking hard steps to tighten the property market monitoring practices so that deals for private developers can be controlled.
The main trouble occurs due to special arrangements of some private homebuyers with developers or property agents. They try to reissue options to purchase after expiry. This idea can be used for almost one year and can be even extended to 18 months right from the first OTP date. It gives buyers extra time to sell their existing homes.
Observes also reveal that in some cases, this activity can be considered genuine as some upgraders may need more time to set up enough financial resources to purchase a new launch residential unit. However, some property investors also make gamed arrangements without having a mindset to proceed with the deal; they just end up aborting it. Such activities lead to a breach of loan covenants.
Even some genuine home upgraders may feel less secure about their stable income during recession days, and they may prefer to abort the deal. Considering these instances, URA has now decided to engage developers on a regular basis. The developers are now allowed to grant the Option to Purchase only when they are ready to exercise and that too within the validity period. Note that the validity period of OTP used to be almost five weeks.
URA officials are examining the logbooks of developer OTPs from past one year and they have collected relevant details about how much deals ate being aborted. Buyers that are involved in such events are also identified. This information may help authorities to identify genuine and fake purchases.
With this logbook based information, URA may also ask developers for specific reasons to reissue OTPs multiple time. At the same time, developers are advised not to pressurize buyers to make transactions. It is important to follow balanced procedures to execute deals.
Although the monitoring activities are being executed from a long time and developers have received several warnings earlier; the conditions are getting stricter now. At present, some developers are even fearful of losing sale license; especially if they don’t take the warnings strictly.
The professionals believe the OTP reissuing for some reasonable period may ensure easy closure of deals as it helps buyers and upgraders to get enough time for making financial arrangements. But the long delays may put the market at higher risk, and the scenario may turn worse with time. Following adequate measures for real estate deals may help everyone, including agents, buyers and sellers, to stay in profit. That is why Authorities are now more careful about controlling and monitoring sale-purchase activities along with OTP reissuing.
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