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Sustainable Property Investments

DO NOT buy EC for the Grant but for the UPsidE POTENTIAL !!!

DO NOT buy EC for the Grant but for the UPsidE POTENTIAL !!!
Photo by Katie Harp / Unsplash

To purchase a EC, your average Income Ceiling of 2 persons should not exceed $16,000 for last 3 months for Salaried Employees.

Income Ceiling

  1. Spouse A:$10K, Spouse B: $6K = Monthly Income: $16K - Eligible
  2. Spouse A:$10K, Spouse B: $4K = Monthly Income: $14K - Eligible
  3. Spouse A:$15K, Spouse B: $2K = Monthly Income: $17K - Not Eligible
  4. Spouse A: $10K, Spouse B: $8K = Monthly Income: $18K - Not Eligible

For the scenario above, we can easily say that Couples 3 & 4 are not Eligible to apply for the EC and also not eligible to apply for the grant.

Information on Grants extracted from HDB.gov.sg 

In fact, if you purchase a EC, you will be subjected to Minimum Occupation Period (MOP) of 5 years after you have collected the keys to your EC. Hence from the time you booked your EC, Construction time and MOP time, it would have been 8 years or even longer as the Construction may take longer due to the Manpower crunch.

This is covered more in another article.

Perhaps, if you are considering purchasing an EC just because of the grants offered by the Government, I feel it is better to purchase a private condo. This is on condition that you can afford it as we do not advocate stretching your budget just to keep up with the Jones. One of the key reasons we advocate purchasing a private condo versus a Executive Condo is because as you are not time bounded by MOP.

You can even sell the condo the day after you purchase subject to SSD - Sellers' Stamp Duty

Calculation of the Grant amount

  • The cost of the EC: $1,000,000
  • Amount of Grant: $30,000
  • % of Grant with respect to cost of EC: 3%

From the calculation above, we know that the Grant amount is only 3% of purchase price. Of course, the percentage of grant falls if the price of the EC is higher.

Needless to say, a key point to consider is, do you want to collect the 3% but have to wait 8 years. if you divide $30,000 over 8 years, it is around $3,750 per year. Hence, it should not be a factor in your decision on whether to buy an EC. However, if you are looking at potential upside, then buying an EC is a no Brainer.

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