New Launch Uncompleted
HDCLA · Project Account · OTP & S&P · Progressive Payment · TOP · CSC · ABSD Remission · Executive Condominiums
4.1aHDCLA & Developer Licensing
Housing Developers (Control and Licensing) Act (HDCLA)
The HDCLA regulates developers who sell or offer to sell uncompleted residential properties. Any person or company doing so must obtain a Housing Developer's Licence from the Controller of Housing.
Key developer obligations under HDCLA:
- • Obtain Housing Developer's Licence before selling
- • Open and maintain a Project Account per development
- • Deposit ALL purchase monies from buyers into the Project Account
- • Withdraw from Project Account only for project-related purposes
- • Use prescribed Sale & Purchase Agreement (S&P) form
- • Provide buyers with brochure, floor plans, and unit specifications
Project Account — Buyer Protection
Under HDCLA s.9, every licensed developer must maintain a Project Account at an approved bank for each project. All buyer payments must be deposited here — preventing developers from commingling funds or diverting buyer monies to other projects.
Withdrawals are permitted only for purposes directly related to the development (e.g., construction costs, professional fees, land payments).
4.1bSale Licence vs No-Sale Licence
| Licence Type | What It Allows | Typically Issued To |
|---|---|---|
| Sale Licence | Developer may sell units after obtaining Building Plan Approval from the Commissioner of Building Control under the Building Control Act | Established developers with a good track record |
| No-Sale Licence | Developer may construct but CANNOT sell units until additional conditions are met (e.g. TOP or other compliance milestones) | Developers with lesser track records or past compliance breaches |
4.1bOTP & S&P Process — New Launch
⚠ Booking Fee — Key Rules
→ Minimum 5%, maximum 10% of purchase price
→ If OTP not exercised (private residential): developer refunds 75% of booking fee
→ If OTP not exercised (EC): developer forfeits 5% of purchase price (not just 75% refund)
→ OTP is non-assignable / non-transferable — named person must exercise it
→ Re-issuance of OTPs is prohibited (wef 28 Sep 2020); URA may grant validity extension of up to 12 weeks if both parties agree
4.1cNormal Progressive Payment (NPP) Schedule
| Construction Stage / Event | Payment | Cumulative |
|---|---|---|
| Booking fee (OTP issued) | 5% | 5% |
| Exercise OTP — sign S&P | 15% | 20% |
| Foundation completed | 10% | 30% |
| Reinforced concrete framework completed | 10% | 40% |
| Partition walls completed | 5% | 45% |
| Roofing completed | 5% | 50% |
| Doors, windows, ceilings, plastering completed | 5% | 55% |
| Car park, roads, drains, recreational facilities | 5% | 60% |
| Notice of Vacant Possession (after TOP) | 25% | 85% |
| Certificate of Statutory Completion (CSC) | 15% | 100% |
4.1dShortfall in Floor Area — Buyer Remedies
Under the Housing Developers Rules, if the actual floor area of a completed unit is less than stated in the S&P Agreement, the developer's liability depends on the size of the discrepancy:
| Shortfall vs S&P stated area | Result |
|---|---|
| Less than 3% of stated area | No reduction — buyer has no claim |
| More than 3% of stated area | Reduction at (Unit Purchase Price ÷ S&P area) per sqm for the excess above 3% |
Worked Example
Unit Purchase Price: $2,000,000
Floor area stated in S&P: 100 m²
Actual floor area on completion: 95 m²
Shortfall = 5 m² (5% of 100 m²) → exceeds 3% threshold
Rate per sqm = $2,000,000 ÷ 100 = $20,000/m²
Compensable shortfall = 5 m² − 3 m² = 2 m²
Compensation payable = 2 × $20,000 = $40,000
4.1d★Remedies for Breach — Seller & Buyer (All 5 Types)
| Breach Type | By Whom | Remedy / Consequence |
|---|---|---|
| Shortfall in floor area | Developer (Seller) | ≤3%: no claim. >3%: price reduction at (Unit Price ÷ S&P area) per m² for excess above 3% |
| Defects in workmanship / materials | Developer (Seller) | Developer must rectify within 12-month Defects Liability Period (from VP date or 15th day after TOP notice) |
| Failure to deliver vacant possession (late delivery) | Developer (Seller) | Liquidated damages at 10% p.a. on all instalments paid, calculated daily from due VP date until actual VP delivered. Deductible from outstanding purchase price. |
| Failure to pay instalments (buyer default after S&P) | Buyer | Developer may forfeit 20% of purchase price and repossess the unit. Buyer loses the unit and all payments up to the 20% cap. |
| Unauthorised alteration to premises | Buyer | Buyer cannot make structural alterations without developer's written consent. If done, developer may require reinstatement at buyer's cost. |
4.1eTOP, CSC & Defects Liability
| Item | TOP | CSC |
|---|---|---|
| Issued by | Commissioner of Building Control (BCA) | Commissioner of Building Control (BCA) |
| Meaning | Building safe to occupy; minor works may be outstanding | ALL building works fully completed |
| Effect | Developer issues Notice of Vacant Possession → keys handover | Developer issues Notice of Legal Completion → final payment due |
| Payment triggered | 25% of purchase price | 15% of purchase price |
| Defects Liability Period | Starts from date of VP notice (typically 12 months) | — |
4.1fABSD Remission for Housing Developers
When a licensed housing developer purchases residential land, they pay 40% ABSD upfront (the developer-specific rate, wef 16 Dec 2021; separate from the general 65% entity rate which applies from 27 Apr 2023). Of this, 5% is non-remittable (always payable upfront within 14 days of acquisition). The remaining 35% may be remitted upfront if all sale conditions are met (sell ALL units within 5 years from land acquisition).
Total Developer ABSD
40%
Paid upfront on residential land purchase. Licensed housing developers only.
Non-Remittable
5%
Always payable. Cannot be waived regardless of conditions met.
Remittable (Condition)
35%
Remitted only if ALL residential units are sold within 5 years from land purchase.
4.1gExecutive Condominiums (EC)
ECs are a hybrid public-private housing type — built by private developers but governed by HDB-like restrictions initially. They are sandwiched between HDB flats and fully private condominiums.
Buyer eligibility (purchase from developer):
- • At least 1 Singapore Citizen in the family nucleus
- • Must form a qualifying family nucleus (married, fiancé/fiancée, etc.)
- • Household income ceiling: $16,000/month (gross)
- • Cannot own other property locally or abroad at time of purchase
| Timeline from TOP | Who can buy on open market? |
|---|---|
| Within 5 years (MOP) | Cannot sell on open market (only HDB/developer in special cases) |
| After 5 years | Singapore Citizens and PRs only |
| After 10 years (fully privatised) | Anyone — including foreigners |
4.1hQualifying Certificate (QC) — Foreign-Owned Developers
Developers who have non-Singapore shareholders or directors must obtain a Qualifying Certificate (QC) from the Land Dealings (Approval) Unit before purchasing residential land. QC imposes strict completion and sale conditions.
| QC Condition | Requirement |
|---|---|
| Obtain TOP | Must obtain Temporary Occupation Permit (TOP) within 5 years from land purchase |
| Sell all units | Must sell ALL residential units within 2 years of obtaining TOP |
| Extension charges | Charged pro-rata on unsold units if deadline not met (see below) |
| SGX-listed exemption | SGX-listed developers with a 'substantial Singapore connection' may be exempt (wef 6 Feb 2020) |
QC Extension Charges (on unsold units, pro-rated)
Year 1
8%
p.a.
Year 2
16%
p.a.
Year 3+
24%
p.a.
Charges are pro-rated on the number of unsold units. Designed to prevent developers from sitting on unsold stock.
4.1iSub-Sale — Selling an Uncompleted Unit
A sub-saleoccurs when buyer "A" sells the uncompleted unit to buyer "B" after signing the S&P with the developer, but before legal completion.
| Step | Action |
|---|---|
| 1 | A pays option fee (5%) to developer and gets OTP |
| 2 | A signs S&P with developer (OTP exercised) |
| 3 | A pays BSD within 14 days |
| 4 | A decides to sub-sell to B — must inform developer |
| 5 | B's lawyers write to developer to request new S&P |
| 6 | Developer prepares new S&P agreement with B on same terms |
| 7 | B signs S&P and becomes the new owner |
RES Obligations in a Sub-Sale
- Advise A that Seller's Stamp Duty (SSD) applies to the sub-sale
- Prepare OTP for A to B — must include the standard sub-sale clause
- B bears administrative and legal costs charged by developer for new S&P
Standard Sub-Sale Clause (OTP from A to B):
“The Vendor shall endeavour to procure the Developer's agreement to a novation of contract with the Purchaser but in any event the Vendor shall execute the usual subsale Deed of Assignment-cum-Power of Attorney in the Purchaser's favour. The Purchaser shall bear the administrative and legal costs charged by the Developer for the issuance of any fresh Sale and Purchase Agreement. The Vendor shall authorise and direct the Developer to credit all monies paid by the Vendor in satisfaction of the sale price to the Purchaser's account.”
4.1jSCPA vs HDCLA — Commercial vs Residential Uncompleted Properties
The Sale of Commercial Properties Act 1979 (SCPA) governs uncompleted commercial properties. Compare it with HDCLA (residential):
| Aspect | HDCLA (Residential) | SCPA (Commercial) |
|---|---|---|
| Option Fee | Min 5%, max 10% of purchase price | No minimum stated; cannot exceed 10% |
| Refund if Option Not Exercised | 75% of option fee refunded | 50% of option fee refunded |
| Developer Licence | Mandatory — must obtain Sale or No-Sale Licence | Not required — can sell after Building Plan Approval from Commissioner of Building Control |
| Project Account | Mandatory for developers with Sale Licence | Not mandated (but most developers maintain one voluntarily) |
| Advertisement Controls | Housing Developers Rules regulate advertisements | No equivalent rules for commercial properties |
| Standard OTP/S&P | CEA prescribed standard forms required | No prescribed standard forms |
Section Quiz
4.1 — New Launch & Uncompleted Properties
10 questions · 90 seconds each · exam-style difficulty