Proposed changes to housing developer rules to enhance project transparency and simplify buying process

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/ EdgeProp Singapore
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January 5, 2022 4:53 PM SGT
The proposed changes will require developers to provide more accurate information on their housing projects, especially in advertising and unit floor plans. (Picture: Samuel Isaac Chua/The Edge Singapore)
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SINGAPORE (EDGEPROP) - URA is proposing amendments to the Housing Developers Rules to enhance existing consumer protection for home buyers. The Housing Developers Rules protect home buyers interests with developers’ requirements and standard contracts for the sale of uncompleted private residential properties.
Before the amendments are finalised, HDB is inviting the public to provide feedback on the proposed changes from now until Feb 5. The public can submit their feedback online at go.gov.sg/hdr-consult.

More information shown on advertisements

The proposed amendment will require developers to provide more accurate and detailed information on their housing projects in advertisements.
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Developers will also need to obtain prior approval from the relevant authorities for features in their project such as vehicle pick-up/drop-off points, landscaping and water features, before these amenities can be included in advertisements.
In addition, developments that have already obtained their Temporary Occupation Permit (TOP) or Certificate of Statutory Completion (CSC) must state the TOP or CSC date in advertisements for the project. This will allow home buyers to know when they can move into the units once they have settled payments that are due.

Helping buyers make better informed decisions

Under the proposed amendments, developers will have to provide their record and past projects to home buyers. They must show their Construction Quality Assessment System and Quality Mark scores, as well as Green Mark certification for their completed projects in the past five years.
More details in the unit floor plans must also be given to home buyers. Developers will have to clearly mark out void areas in a unit, explain abbreviations used, and provide scaled floor plans for landed properties.
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The developer will also need to seek consent from home buyers if it wants to make changes to the unit floor plan, or make any substantive changes to the site plan for the common facilities after the Option to Purchase issue date. This does not apply if the changes are to comply with new government requirements.
URA also notes that some developers sell properties on freehold or 999-year leasehold land that belongs to a landowner to home buyers with a shorter tenure. In this case, the landowner has the legal right to charge home buyers ground rent.
For such cases, URA plans to require developers to provide information on the identity of the landowner and the ground rent payable, if any, in the Option To Purchase and in the Sale and Purchase Agreement.
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Simplified payment schedule

URA also wants to simplify the current payment schedule such that home buyers will only need to follow one sequence flow for the payment schedule.
This means making the first payment at the Certificate of Statutory Completion (CSC) comprising 8% to the developer and 5% to be held by the Singapore Academy of Law, followed by the final payment of 2% to the developers when the Completion Date payable notice is served after the CSC.
simplified payment schedule - EDGEPROP SINGAPORE
Source: URA
URA is also proposing to push back the Defects Liability Period on the 35th day after receipt of the notice of TOP payment, or the actual date the unit is delivered to the home buyer, whichever is earlier. Other proposed changes include reducing the threshold for claims for shortfall in the actual area of the unit from 3% to 2%.
The new amendment will also require developers to refund interest paid on loans, loan cancellation charges, and legal fees paid by home buyers if a Sale and Purchase Agreement is annulled, subject to a cap of 15% of the purchase price. This is on top of refunds to all instalment payments and any stamp duty paid by the home buyer.

Larger burden on developers

While the proposed changes to the Housing Developers Rules are beneficial to home buyers, they also place a larger burden on developers and add to the costs of compliance in an increasingly competitive landscape, says Lee Sze Teck, senior director of research at Huttons Asia.
“Examples are the reduced threshold for claims for shortfall in areas, later commencement of DLP period and enhanced refund coverage in the event of annulment. More details in plans, reduced threshold for claims will result in higher construction costs which are already much higher in the wake of disruptions from Covid-19,” says Lee.
He adds that the additional refund on costs incurred by buyers that is capped at 15% appears to be high, and says that some of these costs may eventually be passed on to buyers.

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