What is Sub Sale?
Buying a new launched property directly from a developer but wish to sell it before its completed? If is done before completion, the transaction of a unit between the original buyer and new buyer is called ‘Sub sale’. Simply term,, a sub sale is the secondary sale of a unit before it is completed.
Lets refer below guide on the process of a sub sale for under development private properties in Singapore.
In Singapore, the Urban Redevelopment Authority (URA) defines a sub sale as the sale of a unit by one who has signed an agreement to purchase the unit from a developer or a subsequent purchaser before the issuance of the Certificate of Statutory Completion and the Subsidiary Strata Certificates of Title or the Certificates of Title for all the units in the development.
What is the condition for a Sub Sale?
When you’re in a sub sale situation, the original purchaser must have already signed a Sale & Purchase Agreement (S&P agreement) with the developer, and have paid the stamp duties due.
The original purchaser must first inform the developer (most of the time their appointed agent) of the proposed sub sale to a subsequent new purchaser. After informing, then the original purchaser will enters into a Option to Purchase with sub sale clause with the new purchaser.
Thereafter at the request of the new purchaser through their lawyers, the developer is obliged to enter into a new S&P Agreement with the new purchaser at the exact property purchase & terms offered to the original purchaser. The term and conditions of the new S&P agreement must place the developer and the new purchaser in the same position as if the new purchaser were the original purchaser in the Original S&P agreement.
Once the new buyer signs the fresh S&P agreement that is in their name, they will becomes the owner and will proceed to receive the keys from the developer upon the Notice of Vacant Possession of the unit.Why do Sub Sales happen?
When the financial standing of the original buyer changed after they signed the S&P agreement with the developer, and they have no choice but to sell the unit. Such cases, the original buyer usually suffers a financial loss, after taking all stamp duties and fees into account.
During a hot market, the original purchasers may find that it makes sense to cash in and realise capital gains by selling the new launch properties they bought. And also during the tail end of their liability for Seller’s Stamp duty (SSD) or have exited their 3 year liability period. In this way, it is possible to realise higher capital gains by avoiding SSD.
However, if you are a married couple and were counting for remission for Additional Buyer Stamp Duty (ABSD), you cannot get an ABSD refund for sub selling your under development property. This is because the ABSD refund is only applicable for the disposal of your first property and the sub sale is your second property in this scenario.
If you want to buy Sub Sale properties?
In a cool market status now, the purchasers might discover sub sale units that are good value at otherwise sold out projects. The purchasers also no need to wait so long for temporary occupation period. And in a cool market, the developer might give more deep discounts for purchasers at new launches. As a purchaser, please do ensure to look everywhere and weight your options and needs before you commit, or engage a property agent to advise and assist you.Visit New Launch Sg Property Homepage for other new launch condo!