Your Step-By-Step Guide To: Buying a Private Building Under Construction (BUC)
Buying a private building under construction, or BUC, is a little different from buying a home that’s already been built.
For one thing, you’ll learn how it feels to have to wait years for your home, just like all those hopeful couples waiting for their BTOs.
So you won’t have to wait any longer than you already have to, here’s a guide to buying your own BUC.
1) Visit showrooms
Unlike resale property buyers, who’ll be trawling through property listings, prospective BUC buyers should get out of their homes and visit the showrooms of new launches.
Take the time to examine not just the models and plans of the units, but also explore the area around the showroom. You want to ensure that you’re buying a property in an area that you like and that has the amenities you need.
Before you go any further in committing to a property, first check if you are liable to pay Additional Buyer’s Stamp Duty (ABSD). Singapore citizens who already known at least one property and all PRs and foreigners must pay ABSD. If you’re planning to sell an existing property, this should be timed to happen at the same time as your purchase of the new BUC, so you can pay less or even no ABSD.
Pay a booking fee and get the Option to Purchase
If you come across a development you like, you can make a booking on the spot, provided you bring along your IC and your cheque book so you can pay the booking fee of 5%.
Once you’ve paid the booking fee, you can take home the Option to Purchase (OTP), with the promise that the Sales and Purchase Agreement (S&P) be sent to you within two weeks.
2) Receive your S&P
While waiting for the S&P to be sent to you, you should get to work researching home loans, and then applying to the right bank.
So how do you know which bank is the right one? Use MoneySmart’s home loan wizard to compare loans and interest rates. It’s free, and definitely easier to use than calling up all the banks individually.
The bank will issue you a Letter of Offer, which you will then forward to your lawyer, whom by the way you can appoint at this stage if you haven’t already.
3) Exercise the Sales and Purchase Agreement
When the S&P is sent to you or your lawyer, get your lawyer to go through it with you so you’re aware of all the key terms. You’ll want to note key dates such as the day by which you can expect the Temporary Occupation Permit (TOP) to be released, ie. when you can pick up your keys.
Your lawyer will advise you on all the documents and payments that will need to be submitted in order to successfully exercise the S&P.
You generally have 3 weeks to exercise the S&P from the date on which it is received by you or your lawyer, which isn’t a long time.
To exercise it, you’ll have to sign the S&P and pay Buyer’s Stamp Duty (BSD) as well as any ABSD you might be liable for. Your lawyer might also want you to pay your legal fees at the same time.
4) Pay the balance down payment
You have 8 weeks from the date of the OTP to pay the balance downpayment of 15%.
You can pay this using a combination of cash and CPF. As the amount payable is likely to be a huge sum, you don’t want to wait till the day before it’s due to begin looking for the money.
5) Progress payments begin
Once the OTP has been exercised and you’ve paid your full deposit, it’s time to play the waiting game as your property is being built.
Behind the scenes, the bank that’s granted you your home loan will be dispersing the money each time a progress payment is called for at the various stages of construction. These disbursements will be sent directly to your lawyer who’ll then forward them to the developer.
While there’s no need to worry about payments to the developer, you do need to worry about making your home loan repayments to the bank, which will begin when the first disbursement is made.
6) Pick up your keys and inspect your new home
Finally, after a long wait, your lawyer will notify you that the TOP has been released and that it’s time to collect your keys.
Before you start merrily shopping for furniture, make sure you inspect your home thoroughly, and remain on the lookout for any defects. That’s because there’s a defects liability period of one year from the date of TOP, during which you can get the developer to rectify any defects free of charge.
Do you have any questions on buying a BUC? Ask them in the comments!