Reviewing Rationale for Executive Condominiums

Mr Lim Biow Chuan asked the Minister for National Development whether the Government will consider (i) reviewing the policy intent for having Executive Condominiums (ECs); and (ii) imposing restrictions on developers of ECs to prevent the sale of flat units which are excessively large or which are too highly priced.

Ms Irene Ng Phek Hoong asked the Minister for National Development (a) whether the recent prices of the Executive Condominiums (ECs), including a penthouse which eclipsed the $2 million mark, subverts the purpose of the Government-subsidised EC housing to cater to the "sandwich class"; and (b) whether tighter measures should be put in place to regulate the EC market, such as a clause in the EC contract to prevent developers from building large penthouses and over-pricing units.

Mr Ang Wei Neng asked the Minister for National Development (a) whether the Executive Condominium (EC) housing scheme has met the objective of providing affordable quality housing to households with a monthly income of between $10,000 to $12,000; (b) what is the estimated amount of Government subsidy per EC unit, including land cost subsidy; and (c) whether the Ministry will consider tweaking the EC housing scheme to maintain the intent of the EC housing scheme.

Mr Zaqy Mohamad asked the Minister for National Development (a) whether the recent prices of Executive Condominiums (ECs) are making them less accessible to those in the targeted income group; (b) whether there are similar trends between EC prices and market prices of private condominiums; (c) what measures will the Ministry consider if the principles of EC sales are not adhered to and if the prices of ECs are out of reach for interested buyers, especially those with limited options; and (d) whether the higher EC prices have resulted in any increase in Government subsidies to make new ECs more affordable to interested buyers, especially first-timers.

The Executive Condominium (EC) Housing Scheme serves a useful purpose of meeting the aspirations of higher income Singaporeans to own private housing in an affordable way. This is done by imposing on EC buyers certain initial eligibility and ownership restrictions which are similar to those for subsidised HDB flats. As a result of these restrictions, EC developers are able to secure the land cheaper than otherwise. The land cost savings are very substantial, sometimes up to 40%. With further assistance from the CPF Housing Grant, many citizen households have gained access to private condominiums through the EC Scheme.

However, some developers have taken to building super-sized ECs and, in some instances, also by taking advantage of some URA planning rules. Last week, we announced two measures to correct this. First, we now impose a size cap of 160 square metres for each EC unit. Second, we now count Private Enclosed Spaces (PES) and roof terraces as gross floor area (GFA), which will be subject to Development Charge or Differential Premium. These GFA cannot exceed 10% of the Master Plan stipulated gross plot ratio.

Related to this is the issue of dual-key ECs. We have allowed such design innovation as it supports multi-generational families by offering privacy. However, the concept has now been taken advantage of by some buyers, who buy dual-key units for immediate rental yield. To address this, we now require

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buyers of dual-key EC units to be multi-generational families.

In addition, we have also announced a fourth measure to delay EC developer sales. For new EC land sales, developers will only be allowed to launch units for sale 15 months from the date of award of the sites, or after physical completion of foundation works, whichever is earlier. This should help moderate EC land bids, as bidders will now have to take a longer term view of the property market and can no longer pass on such market risks to EC buyers soon after securing the land.

Taken together, this package of four measures should return ECs to their original intent, and ensure developers build ECs to benefit the intended target buyers.

Mdm Speaker, I thank the Minister for the clarification. In my Parliamentary Question I also asked about the subsidies given for ECs. I understand that ECs are subsidised. I have three supplementary questions: (1) How has it impacted Government subsidies in light of the run-away EC prices?; (2) Was this within the subsidies that the Government budgeted for; that is, what has been spent; and (3) How do we protect our interest such that developers do not profit from Government subsidies?

Madam, that is why we introduced the four measures that will protect our interest and make sure the scheme returns to its original spirit.

Madam, if I may ask the Minister, in view of the household income cap of $12,000, would MND also consider a price cap for ECs such that buyers will not be unduly stretched financially? Perhaps, this will also ensure that developers do not build opulent or ostentatious ECs and try to keep them affordable for Singaporeans.

Madam, the selling price of ECs will very much depend on the size of the EC. By capping the size of the EC, I think, automatically, the price will become more sober.

Madam, I think the huge popularity of dual-key units is largely among buyers who are not really multi-generational families. They were taking advantage of this planning rule which we have now fixed.

Madam, I have two supplementary questions: one is whether official approval has been sought by the developers when they marketed the expensive ECs, like the now infamous $2 million EC. Second, if official approval has been sought and granted by the Ministry, would it be a violation of the good intent and spirit of the EC programme? And why was the approval given by the Ministry?

Madam, all developments are subject to planning approval, and the same applies to ECs. Those earlier plans were approved because those were the planning rules at that point in time. But as soon as we realised that the planning rules were being taken advantage of, we fixed them, and I think such deviations should soon be history.

Madam, I thank the Minister for his answer. Do the recent prices for ECs not suggest that those purchasing can afford to purchase private property? And, if so, how can the Government ensure that even with the new rules, that ECs are only intended for those that the scheme is designed to benefit? If they cannot ensure that, should it even continue with the EC scheme?

Madam, I have expressed an opinion on ECs before. It is really a wonderful scheme. It protects middle income Singaporeans from competition and ensures a very market-friendly way of allowing them to buy condominiums at affordable prices. If I may give an analogy – it is like offering you a Lexus at Corolla price, but only Singaporeans have this privilege of doing so and they know that, in due course, the price will go up to Lexus and above Lexus level. So, I think it is a very good scheme. We should try to ensure its continuance because it is relevant. As to the abuse or it being taken advantage of by families who can actually afford private properties coming in to take up ECs, such buyers were very much encouraged by these huge EC units, and caused this phenomenon. Even though we have fixed this rule, I will continue to be vigilant. If, the abuse continues, then we may have to think of other ways of fixing this problem.

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Mdm Speaker, I would like to inform the Minister that I have residents who requested for the reintroduction of these multi-generational flats because they could not afford to buy from the open market. In fact, I think that there is demand because I have residents who came to appeal for it.

I thank the Member for the feedback. We will take a look.