Breaking up after getting an EC: How much money do you lose?

It's always a terrible experience when you go through a breakup but it's worse when you both already bought a property together. This time your emotional and psychological wellbeing is not just affected but now, you also have to worry about your finances and how much you've lost. 

Even though you may have thought you'd spend the rest of your lives together, which is why you bought a property together, things can happen and people may change. How much money you may lose depends on how far you are in your property purchase process. 

We've already done a piece on the financial costs of breaking up after applying for a HDB BTO flat. 

Now, we're taking a look at the cost of breaking up after buying an executive condominium (EC).

While ECs are developed by private developers and come with the luxurious amenities that a condo has, they are still sold under HDB and hence fall under the HDB rules and regulations. 

Naturally, the cost of ECs are more expensive than HDB BTOs, and there are some slight differences in the purchase process between an EC and BTO that can set your finances back even further. 

We take a closer look.

Disclaimer: ECs are bought from property developers, not from HDB. So for the most accurate breakdown of costs for your EC, please check with your respective property developer.

Stage 1: Cost incurred when a couple breaks up after getting a ballot 

You lose: Nothing!

The EC purchase process works a bit differently from the HDB BTO one as you have to apply for the EC from the property developer. Depending on the developer, they may offer the choice of computer balloting or walk-ins. 

Once you get your ballot number, you can visit the EC showroom to select your unit. 

No payment is needed at this stage yet, so if you decide to break up, there's no financial loss, just loss of time — which may or may not amount to financial loss depending on your own personal views. 

Stage 2: Cost incurred when a couple breaks up after booking an EC unit

You lose: 25 per cent of the booking fee

When you book an EC unit, you’re required to pay an option fee or booking fee to obtain an Option to Purchase (OTP). This fee is five per cent of the EC purchase price.

If you choose to give up at this stage, you will be charged 25 per cent of the booking fee.

For illustration, let’s take a look at an EC launched in 2023, Altura at Bukit Batok. The cheapest unit was sold for $1.373 million, according 99.co. Based on this, the 25 per cent booking fee would be $68,650. You’ll lose 25 per cent of that, which comes up to $17,162.50.

Stage 3: Cost incurred when a couple breaks up after signing sale and purchase agreement 

You lose:

• Booking/option fee (five per cent of purchase price)
• Remaining downpayment (15 per cent of purchase price)
• Five per cent forfeit fee (depends on the developer)
• One-three per cent legal and stamp fees
• Cost of engaging a lawyer

This is where the costs start stacking up. After you've signed the sale and purchase agreement, you'd have paid for the remaining downpayment, which is 15 per cent the purchase price. This can be paid for using a combination of CPF and cash.

You would also have incurred one-three per cent of legal and buyer's Stamp Duty. Plus, you'd have had to engage a conveyancing lawyer to help you with exercising the sale and purchase agreement, the cost of which can range around $2,500 - $3,000.

If you break up now, the developer may also impose a five per cent forfeit fee on you. 

Using Altura as an example again, the rough costs would be: 

There may also be other clauses in the Sale and Purchase Agreement that the developer has to act on. 

Now if that didn’t wake you up already, we still have the next stage. 

Stage 4: Cost incurred when a couple breaks up after collecting keys 

You lose:

• Booking/option fee (five per cent of purchase price)
• Remaining downpayment (15 per cent of purchase price)
• One-three per cent legal and stamp fees
• Cost of engaging a lawyer
• Amount you’ve paid if on PPS 
• 5per cent completion of foundation work 

As your EC is being built, you’d have to pay back your loans either progressively or at one go, depending on which loan repayment scheme you’re on—either the Normal or Progressive Payment Scheme (PPS) or Deferred Payment Scheme (DPS).

The PPS is an instalment payment scheme that applies to houses or apartments under construction. At different stages, you have to pay back different amounts, all in monthly instalments. 

• Completion of property foundation – 10 per cent
• Completion of unit’s reinforced concrete framework – 10 per cent
• Completion of unit’s brick walls – five per cent
• Completion of unit’s roofing / ceiling – five per cent
• Completion of unit’s electrical wiring, internal plastering, plumbing and installation of door and window frames – five per cent
• Completion of car park, roads and drains serving the housing project – five per cent
• Temporary Occupation Permit (TOP) – 25 per cent
• Certificate of Statutory Completion (CSC) – 15 per cent

Whatever you’ve started paying for will go back to the bank. 

Whereas for the DPS, you only start repaying the loan after the property TOPs and you pick up your keys.

Under this scheme, you’d have to pay:

• 65 per cent in monthly instalments upon receiving your TOP (i.e. key collection)
• 15 per cent in monthly instalments upon CSC (i.e. the entire EC project is complete)

You may also have to cough up additional penalty fees imposed by the developer. 

As you can see, depending on the stage you’re at in the purchase process of your EC, the costs incurred will increase as you progress. The deposit will definitely be lost and with the cost of an EC, 20-25 per cent is a huge deal. 

If you’re not sure of your relationship or have cold feet, it’s better to split earlier than later. Of course, nothing is predictable and there are many different scenarios that could play out. 

Perhaps you and your partner could even mutually agree to co-habit and sell the EC after the five-year Minimum Occupancy Period (MOP). That’s certainly a way to earn even more money!  

ALSO READ: Is there an optimal holding period to maximise capital gains? We look at resale EC transactions in June 2023

This article was first published in MoneySmart.