Buying a Commercial Property Under Construction from Developer in Singapore

Definition of Commercial Property

office building singaporeAs defined in the Sale of Commercial Properties Act. Basically, commercial properties are units intended for use for any purpose other than a residential purpose. In that regard, industrial properties would be regarded as “commercial property” and by extension would fall within the purview of the Sale of Commercial Properties Act.

Eligibility to buy

  1. Buyers must be at least 21 years old and not of unsound mind.
  2. There are no restriction on ownership rights
  3. Individual or companies may purchase
  4. There are no restrictions for owners of HDB flats. Even if the owner has not fulfilled the minimum occupation period, they can purchase commercial properties.

Important Notes on Option to Purchase

  1. Required identification number or passport number, UEN of companies (where companies are purchasers).
  2. Option to Purchase is issued by the developer upon booking with the usual 5% of payment to the Project Account.
  3. Sale Agreements will be sent to the purchasers or their lawyers within 2 weeks from date of Option
  4. Next progressive payment (15%) is payable within 8 weeks from the Option date
  5. If the Sale Agreements are not signed, the Option will lapse and developer is entitled to forfeit 50% of the booking fee
  6. Option is not assignable
  7. Developer is not to collect any booking fee exceeding 10% of the purchase priceI.
  8. Click here on the progressive schedule of payments for commercial properties

Side Letters

- Side letters could be issued with Option to Purchase depending on the developers and could include selection of finishes, payment schemes, highlighting of certain clauses in the Sale Agreement, developer’s absorbing of certain charges

Time line for payments

  • 5% paid (and GST) to obtain Option to Purchase usually on date of Booking or a few days later
  • 15% (and GST) payable within 8 weeks of Option date
  • Stamp duty (4% of purchase price less $15,400 for property above S$1m) payable on signing Sale & Purchase Agreement

Sale & Purchase Agreement

a.  It has to be signed within 3 weeks of receipt

Prescribed form - Form D

in the Schedule to the Sale of Commercial Properties Rules indicate the following:

a) estimated strata area;

b) The tenure of the property is an estate in fee simple or leasehold 99 years from (date);

c) Payment of the purchase price is in accordance with the Payment Schedule;

d) Interest on any overdue instalment is usually charged 2% above the average rate of the prevailing prime rates of the 3 major banks;

e) Also note that the developer has option to repudiate the Sale Agreement on account of non-payment of any instalment of the progress payments and to forfeit 20% of the purchase price;

f) The purchaser shall be liable to contribute and pay 50% of the title survey and plan fees;

g) Vacant possession of the said property is to be given on or before a specified date and in the event that the developer fails to deliver vacant possession by then, the purchaser is entitled to liquidated damages;

h) The purchaser is required to pay maintenance charges as approved by Commissioner of Building for the first 6 months in one lump sum and thereafter quarterly in advance;

j) The defects liability period is usually 12 months after the date of receipt of the notice of vacant possession and the procedure of giving notice to the developer to attend to the defects is set out in the Sale Agreement;

k) Compensation at the price per square metre for any shortfall in area will only be given if the said shortfall is in excess of 3% of the estimated area;

I) The purchaser's obligation to pay property tax and other outgoings commences after the date of receipt of the vendor's notice to deliver vacant possession;

Goods and Services Tax (GST)

GST is payable on the price of property classified as "non·residential" where the Vendor is a GST taxable person. GST is compulsory when business's taxable turnover for the past 12 months is more than $1million.

When is GST pavable?

i) Sale of completed non-residential properties:-

At the option fee and deposit stages, the time of supply is at the earlier or when payment is received or tax invoice is

issued.

For the remaining sum, GST is payable upon completion.

ii) Sale of non-residential properties under construction :-

For each progress payment for sale of properties under construction, payment of GST is together with each progress payment.

GST information can be found at IRAS website at www.iras.gov.sg. For GST-related queries, you may contact 1-800-356-8633.

CPF Funds

CPF Board does not allow usage of CPF funds for commercial property from 1 July 2006.

Sellers Stamp Duty

Does not apply to commercial properties .

Disclaimer:

The information on this website is for general information purposes only and may not apply to any particular set of facts or under all circumstances. Nothing on this site should be taken as legal advice for any individual case or situation.  Laws and sales agreements are constantly changing. The information on this website was accurate at the time of posting and we make every effort to keep it current, however we are not responsible for outdated materials.

Your Commercial Property Partner

  • Desmond Tan

  • +65 91143737

  • +65 61008123

  • CEA Reg R007497J

  • Huttons Asia Pte Ltd
    Licence: L3008899K

  • 3 Bishan Place #05-01
    CPF Bishan Singapore S 579838

Disclaimer

© Copyright 2018. Every care has been taken to prepare in the content of and material attached, in www.CosySingapore.com website. Responsibility cannot be held for inaccuracy and omission by the developers or the marketing agents. All graphic representations including artists’ impressions, architectural models, photographs, illustrations, drawings are not to be relied as statements or representation of facts. Floor plans have to be subjected to final survey and illustrations are approximate measurements. Subject to changes and availability apply to materials and finishes. Information is subjected to change and do not form part of an offer or contract (including Prices Quoted and Availability of Units). The entire agreement between the developer and purchaser as in the Sales and Purchase Agreement, shall in no way be modified by any representations or statements from this website.

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