As competition in the private property market heats up and sales slow down, developers have been coming up with creative ways to sell their unsold stock. Some have offered rebates, vouchers and even tiered payment plans. The Urban Redevelopment Authority (URA) has however been picking up on some creative incentive schemes which may have tripped up on regulations.
Take the newly launched Gem Residences as an example. There is currently a 5 per cent minimum booking fee for purchases of a new home, and the developers of Gem Residences have tried to ease the burden for their buyers by offering cheques of $7,500 to $10,000 to offset their booking fee under a “specimen cheque scheme”. As this would circumvent the fulfilment of the minimum booking fee requirement, the developers have instead offered rebates or direct discounts accumulating to the same amount originally to be offered in the cheques.
Another project with a creative scheme is Lloyd Sixty Five in River Valley. Its developers had originally come up with an “experiential purchaser scheme” which offers the buyer the opportunity to stay in the unit with only a downpayment, and the option to purchase will only kick in 2 years later. The scheme is under review by the Controller of Housing as it is essentially a tenancy scheme.
Uncompleted residential projects in particular were under URA’s scrutiny. Completed projects with unsold stock enjoy slightly more leeway as they will already have obtained their Certificate of Statutory Completion and are no longer restricted by the Housing Developers Rules. Developers of OUE Twin Peaks were for example able to successfully offer deferred payment schemes which allowed buyers to pay 20 per cent of the purchase price up front, with the remaining amount payable only 2 to 3 years later. Buyers who may be banking on the lifting of property curbs, in particular the total debt servicing ratio (TDSR) by then may find this scheme favourable.