BTO vs ECs

One of the biggest milestones in modern life is the moment of holding your title deed to your first property. In an expensive city like Singapore, reaching that milestone is challenging, but not impossible. But the crucial question is this: should your first property be a Build-to-Order (BTO) or an Executive Condominium (EC)?

Getting a new Housing Development Board (HDB) flat is the cheapest option in Singapore. Before you commit to either one, let us look at which property will add value to you in the future!

Executive condominiums are viewed as a hybrid between regular HDB flats and private properties, providing benefits that fit the best of both worlds. Being a hybrid development, you can be sure to enjoy condo-like attributes such as swimming pools, gyms, clubhouse and better design, at the subsidised rate by HDB. That is like buying a Lexus at the price of a Toyota! BTO flats on the other hand, are newly launched HDB flats that provide a more affordable option for younger Singaporeans to start their property journey.

With ECs, you can also save from burning a bigger hole in your pocket by not having to cover renovation costs due to most EC units being developer designed.

Grants

In purchasing a BTO flat, you will automatically be eligible for CPF housing grants. For BTO flats specifically, the Enhanced CPF Housing Grant (EHG) allows you to get a grant from $5,000 to $80,000 if you and your spouse are earning a combined total of less than $9000 per month. On the other hand, EC buyers will benefit from the Family Grant if there is a household income ceiling of $16,000. This grant allows Singaporeans to get $10,000 to $30,000, depending on household income.

Hidden Costs

It is also important to note that ECs have a lesser likelihood of having hidden costs as opposed to BTO flats. For instance, the units in ECs come purchased with a developer designed unit, so you will be able to move in right away without any time spent on renovation costs once you get your keys! As BTO flats are newly developed, you have to source for a renovation contractor and interior designer to make your new house homey and comfortable to live in.

Upgrading

For the first 10 years, ECs are bound by HDB’s rules before being considered a private property from the 11th year onwards. This provides for a good value and potential appreciation for EC property owners as you will be able to further your property investment portfolio while capitalising on maximum returns, therefore becoming a better investment for you as you will no longer be bound by HDB restrictions on selling. If you have plans to continually upgrade your properties for investment purposes, it would be easier to upgrade to a private housing with an EC once you reach the 5 years MOP on your EC unit.

However, BTO flats take an average of 3 years to complete and upon collecting the keys to your BTO flat, there will be another 5 years of Minimum Occupation Period (MOP) to fulfil. By then, it would be safe to assume that you and your spouse are earning more than the income limit of S$16,000 and it would leave you in a sandwiched position as you would have been more than financially ready for an EC, however realise that you would not be eligible for one. So, purchasing an EC would be more suitable for your property investment portfolio due to its faster route in upgrading should you have plans to upgrade in the future.

Do you still have queries on whether to get a BTO or an EC? We are Pamela and Shirley, and we are here to help! Drop by our website at www.wonderhomesg.com and give us a call today!