Developers should comply with rules when offering incentives- URA reminds.
URA to developers: Don't get carried away with incentives
Developers of uncompleted projects were reminded yesterday to comply with the rules when offering incentive schemes to buyers. The notice from the Urban Redevelopment Authority (URA) comes in the wake of the increasing use of ever more creative incentives by developers to move units.
And as if to underscore the reminder, has just disallowed a new scheme which would have let a potential buyer of a Lloyd Sixtyfive unit to effectively rent it for about two years before deciding whether or not to buy it.
Under the proposed scheme, the potential buyer at the River Valley project would pay 10 per cent of the total value of the unit and a 2.5 per cent security deposit to live in the property. At the end of two years, he could decide to buy, or leave and get just the security deposit back.
"This scheme is akin to giving the tenant an option of up to 20 months from the commencement of the lease to decide if he wishes to purchase the unit," a URA spokesman told The Straits Times.
Housing Developers Rules state that the standard option to buy involves a validity period of just three to five weeks from the option date, although this may vary if the developer applies to the URA beforehand.
Lloyd Sixtyfive's developer, TG Developments, said yesterday it is considering the URA's comments and "thinking of other solutions which will work for the Controller of Housing and for us". A property watcher said that while developers should stick to the rules, they could also be given more leeway.
Many of these schemes deal with a grey area - developers don't know if these are allowed or not until the authorities later say so, he noted. While this could be resolved if developers submitted every scheme for approval before introducing it, that could complicate matters if the developers wish to be creative, and could take up too much time, he added. For many schemes, the developers are assuming additional risks. And if these do not hurt the consumer, or do not involve going against the cooling measures or rules, the URA could afford to be more flexible.
Adapted from: The Straits Times, 8 June 2016