Ways to Buy House

Would you buy a house you cannot inspect? Or would you choose one that is new and completed or previously owned? Or do you prefer to pay a deposit and wait for the completion before you pay the rest? In this article we outline the different ways to purchase a house.

Yet-to-be completed house/apartment unit from a developer - Schedules G & H

The purchase of yet-to-be completed houses from housing developers is through the regulated contracts known as Schedule G and Schedule H of the Housing Development (Control and Licensing) Regulations 1989. In this method, there is no house to inspect and the purchase is based on the contract to build and deliver by the developer.

If its land and building to be erected ("landed property"), Schedule G is used and the scheduled completion is 24 months from the date of signing of the sale agreement. For an undivided share on the land and a parcel in a subdivided building to be erected, Schedule H is used and the scheduled completion is 36 months from date of signing of the sale agreement. In either contract, the progress payment is also regulated in the following manner:

Table 1. Third Schedule Payment

Item	Schedule G	Schedule H	% of Purchase Price
1	Immediately upon the signing of the Agreement	Immediately upon the signing of the Agreement	10
2	Within 21 working days after receipt of the Vendor's written notice of the completion of the foundation and footing works of the building	Within 21 working days after receipt of the Vendor's written notice of the completion of: work below ground level including piling and foundation of the building	10
3	the reinforced concrete framework of the building	the reinforced concrete framework and floor slab of the parcel	15
4	the walls of the building with door and window frames in position	the walls of the parcel with door and window frames in position	10
5	the roofing, electrical wiring, plumbing (without fittings), gas pipings (if any), internal telephone trunking and cabling	the roofing/ceiling, electrical wiring, plumbing (without fittings), gas pipings (if any), internal telephone trunking and cabling	10
6	internal and external plastering of the building	internal and external plastering of the parcel	10
7	sewerage works serving the building	sewerage works serving the building	5
8	drains serving the building	drains serving the building	5
9	roads serving the building	roads serving the building	5
10	Take vacant possession with water and electricity ready for connection to the building	Take vacant possession with water and electricity ready for connection to the parcel	12.5
11	Within 21 working days after receipt of the separate document of title with a valid Memorandum of Transfer duly executed by the Vendor or on the date vacant possession is taken	Within 21 working days after receipt of written confirmation of Vendor's submission and acceptance by the Authority of the application for subdivision of the building	2.5
12	At vacant possession to be held by stakeholder until defects liability period is over	At vacant possession to be held by stakeholder until defects liability period is over	5

In the above table, every notice for payments must be supported by the Vendor's Architect/Engineer's Certification.

Take note that the Housing Development (Control & Licensing) (Amendment) Act 2006 passed in Parliament in December 2006 allows the Vendor's architects/engineers ('submitting persons' to issue Certificate of Compliance and Completion ('CCC) in place of Certificate of Fitness for Occupation (CFO).

Buyers should also take note that if the works has already progressed at the time of signing of the contract, other payments would follow accordingly to the works' progress for eg. if the progress is at Item 5 of Table 1, the progress payment for 35% of the purchase price would immediately follow the 10% paid at the signing of the contract.

The advantage here is you get to choose the choice units if you are the first few. The disadvantage is the unit might not end up as what you expected; takes longer to complete or not be completed at all.

Yet-to-be completed house/apartment unit from a developer - 10:90 concept

This is another way of purchasing a home which some developers have already been practicing. The purchaser would only need to pay a down payment of eg. 10% and the rest of the purchase price is to be paid only upon notice of due completion of the building with all that are expected of a normal completed building.

At the time of writing, the standard agreement for purchases under this type of payment is being deliberated by made by the Ministry of Housing & Local Government and would go through the normal process of formulating and incorporating into Regulations.

Although it is not mandatory for developers to implement this method, interested buyers can check advertisements or enquire with their developers on whether such payment system of 10:90 concept is offered.

The advantage here is you minimize your worries on the progress payment or the project being abandoned. The disadvantage is the completion might be faster than you think and you will need to get your loan package with a bank ready upon notice of completion.

Completed house/apartment unit from a developer

A completed new house from a developer is only considered so when a CFO/CCC has been issued. In this case, the contract of sale is not regulated anymore and the terms & conditions are subject to negotiations by the two parties. The payment method would be similar to those of completed secondary market purchase.

The advantage here is you are buying a new property that has never been lived-in. The disadvantage is that the units might be leftovers and may not be choice units.

What you see is what you get with the secondary market. The payment system is normally 10% down payment on the purchase price followed by the balance of 90% within 3 months of signing the sale and purchase agreement. An extension of one month is normally granted subject to the imposition of interest at the prevailing market rate.

The advantage of buying a completed property from the secondary market is that the home has been tried and tested and most problems associated with newly built homes have been dealt with by the seller. You will also have the advantage to check out your neighborhood. There is no disadvantage to think of, unless one has an aversion to previously owned homes and its history.

Buying from an auction

Auctions are commonly associated with reserve prices that are lower than market value. There is no certainty that the reserve price can be secured as others would be bidding for the same property in a popular location. The payment methods are stated in the Proclamation of Sale. To be able to bid, a bank draft of 5% or more of the purchase price be submitted, if successful the bidder would have to top-up for the rest of the down payment and sign the contract of sale on the same day. A grace period of 90 or 120 days is given to secure a loan to pay the balance of the purchase price.

The advantage of buying at an auction is you may be able to purchase a unit that is lower than the original developer's price. The disadvantage is that vacant possession is not guaranteed and if the bidder has not been diligent would be shocked to discover unsettled debts and liabilities attached to the property.

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