As mentioned we signed an option for the BTO in August and had just a few weeks ago signed and paid for the lease agreement. While we had to sign the lease a month earlier as due to scheduling issues, a few things did catch me by surprise.
You cant extend the date of the signing of the lease. The lease document must be signed 4 months from the execution of the option. So in our case, signing up under the MGPS scheme meant we had booked a house earlier than the other residents, which meant less compounding of CPF by likely 3 months.
The other surprise was the higher than expected stamp fees. In our case, it worked out to be about 40% of the overall value of the down payment.
- Down payment = 5% x Price of flat
- Legal fees = (30 X 0.9) + (30 X 0.72) + ((Price of flat/1k) X 0.6)
- Stamp duty = (180K X 1%) + (180K X 2%) + ((Price of flat -360K) X 3%)
By simply looking at the formulas for the stamp duty we can see that, the higher cost of the property the higher the stamp fee is likely to be. The step is increasing and has no upper limit.
As stamp duties and other miscellaneous cost are considered expenses. (i.e. do not add towards the value of the flat) one must wonder how much more risk property owners who own a second property take on, as they have to pay ABSD on top of the regular stamp duty which I calculate to be >2.5% of the value of the house.
All that money for a document that most people would not spend time reading.