- Licensed developers must use standard forms of option and sale and purchase agreement.
- A booking fee, commonly 5% of the price, secures the option.
- You generally have three weeks from receiving the agreement to sign it.
- The balance is paid in stages linked to construction milestones.
Why new launches are different
When a licensed housing developer sells a home that has not yet been built, the law sets the form of the option and the sale and purchase agreement. The terms are therefore far less negotiable than in a resale purchase, and the payment schedule is fixed.
The developer's lawyers prepare the agreement. You still need your own lawyer to review it, act on your mortgage and deal with CPF.
The booking fee and the option
You secure the unit by paying a booking fee, commonly 5% of the price, in exchange for the developer's option. Within 14 days, the developer's lawyers send the sale and purchase agreement, together with copies of the title documents, to you or your lawyer.
The option must then be exercised by signing the agreement within three weeks of receiving it. If you decide not to go ahead and the option lapses, the developer keeps a quarter of the booking fee and refunds the remaining 75%.
Progressive payments
Instead of paying the balance in one go, you pay in stages as the building goes up. The first stage brings the total paid to 20% of the price, including the booking fee, within eight weeks of the option date. After that, instalments fall due as each construction stage is certified complete, including:
- Completion of the foundation.
- Completion of the reinforced concrete framework.
- Completion of partition walls and ceilings.
- Completion of door and window frames, wiring, plastering and plumbing.
- Completion of car parks, roads and drains.
- A larger instalment once the Temporary Occupation Permit (TOP) is issued.
- A final portion, which is paid to the Singapore Academy of Law to hold as stakeholder before it is released to the developer.
Your mortgage before completion
Until the property is completed, you only hold rights under the sale and purchase agreement, not a registered title. The bank's security at this stage is therefore usually a mortgage held in escrow together with an assignment of your rights under the agreement. Your lawyer handles these documents, and the CPF Board's security documents if you use CPF.
Stamp duty
Buyer's stamp duty, and any additional buyer's stamp duty, applies to new launch purchases as well, and is due within a short time of signing. It is worth working out the amount early, as it falls due near the start of the purchase.
A lawyer can go through the developer's agreement with you and explain the payment schedule before you sign.
This article is general information on Singapore law and is not legal advice. Rules and agency policies change, and every situation is different. For advice on your own circumstances, speak with one of our lawyers.
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