07| 6 Must-Ask Questions When Buying from Developers

The journey of purchasing a house is filled with excitement and requires careful planning. Before diving into buying a new house from developers, we need to address several crucial questions. Here are six questions you must ask when purchasing from developers:

#1. Who's the developer?

Discovering the identity of the developer is vital to investigate their background and track record. A developer with strong financial standing minimizes the risks of poor workmanship, delays, or project abandonment. You may research a developer's background online as well as their reputation from the social media and forums.

#2. Freehold or leasehold?

Consider your priorities when choosing between freehold and leasehold properties. Investors generally prefer freehold properties, while homebuyers may have varying preferences. Although freehold properties are often favored, understanding the reasons behind this choice can provide valuable insights.

Read also: Property Showdown: Freehold VS Leasehold - Which reigns supreme? 

#3. Is the project covered under the HDA?

Ensure that the residential property you're interested in, such as terraces, semi-detached houses, bungalows, flats, condos, and townhouses, is covered under the Housing Development Act (HDA). For serviced apartments, consult with the developer to confirm HDA coverage. The HDA safeguards homebuyers' interests by enforcing standard terms in the Sale and Purchase Agreement (SPA), ensuring compliance with rules on vacant possession, defect liability, and more. Learn more about how this law protects homebuyers' interests in our link below.

Read also: Secure your home purchase: Know the HDA

#4. What is the estimated completion date?

Knowing the estimated completion date allows you to plan for your new home accordingly. The HDA specifies that landed properties with individual titles should be completed within 24 months from the SPA date, while high-rise and landed properties with strata titles should be completed within 36 months from the SPA date. However, developers can request additional time for project completion. Keep in mind that longer construction periods may lead to higher progressive interest payments to banks. Therefore, it's crucial to inquire about the estimated completion date.

#5. Strata or individual title?

Different property types have varying title arrangements. High-rise properties like flats, condos, serviced apartments, and townhouses fall under the strata title. These properties are subject to the Strata Management Act, which requires owners to pay monthly maintenance fees and sinking funds. Renovations to the building facade may also have restrictions. On the other hand, landed properties such as terraces, semi-detached houses, and bungalows may have individual titles. However, gated and guarded landed properties can be either individual or strata titled, depending on the developer's plans. 

#6. Residential or commercial title?

When purchasing high-rise properties, some are labeled as condominiums, while others are called serviced apartments. The distinction lies in their land titles. High-rises with residential titles are referred to as condominiums or flats, while those with commercial titles are labeled as serviced apartments. Keep in mind that utilities rates for commercial titles tend to be higher, approximately 20-30% more. However, it may be possible to convert the electricity tariff from commercial to residential rates, subject to certain terms and conditions. Additionally, quit rent and assessment rates for properties with commercial titles are typically higher than those with residential titles.

Remember, it's crucial to ask as many questions as possible to gain a comprehensive understanding of the project. The above six questions are the most important ones, but we'll be sharing ten more questions in our upcoming video, providing deeper insights into the projects. Stay tuned for more information!