SINGAPORE — Picture this: you are young and in love with your partner. You decide to commit to building a life together by buying a home.
After all, land is scarce, property prices can appreciate rapidly, and wait times for completion take years. Securing a Housing and Development Board (HDB) Build-To-Order (BTO) flat or Executive Condo (EC) unit early seems like the smart thing to do.
But not all relationships end with a "happily ever after", and in Singapore, breaking up can have serious financial consequences – especially when a joint application has been made for a public housing flat.
Such was the case for Jane Chang, who requested for her name to be changed, and her then-partner, whose break-up cost them a whopping S$50,000. The couple had been dating for 18 months before deciding to apply for an EC under the fiance/fiancee scheme. Securing a public housing unit under this scheme implies that a marriage proposal would come at some point before collecting the keys, as being legally married is a condition for eligibility.
Like many young Singaporean couples, the plan for them was to secure a flat and then get married before the completion of the unit, which was expected in four to five years. The couple also wanted to seize the opportunity to invest in what they thought was "a good, profitable buy" at the time, after considering the unit's pricing and the unit's location in Canberra.
At the time of application, Chang was 24 years old, and her ex-boyfriend was 26. Six months after signing the sales and purchase agreement, the relationship was over.
Speaking to Yahoo Finance Singapore, Chang said, "You think you know it all at that age, but actually you don't."
Getting cold feet
Buying a home triggered doubts for Chang. Did she really want to spend the rest of her life with her then-partner?
"It wasn't the fear of commitment. It was the fear of committing to this person. I realised that I didn't want to get married to him," said Chang.
While ECs are a hybrid of public and private housing, these units are subject to HDB eligibility conditions when first purchased. ECs cater to those who earn above the HDB income ceiling but are priced out from private condominiums. A 3-bedroom EC unit typically costs between S$800,000 and S$1.2 million.
Couples who apply for these units but break up before collecting the keys stand to lose a lot more than if it were a regular BTO flat. That's because EC units are priced higher than an average BTO flat (which generally does not exceed S$500,000 for a 3-bedroom unit) and are sold by private developers who reserve the right to forfeit a sum equal to five per cent of the sale price if the transaction does not go through.
The 3-bedroom EC Chang and her partner bought was priced at about S$940,000. The couple paid a 20 per cent downpayment using their personal savings and some monetary help from family members. They also had CPF housing grants totalling some S$30,000.
Financing the downpayment also became a source of tension, with Chang contributing more than her ex. She paid "about S$100,000" while her ex-boyfriend put in "over S$60,000".
"Instead of paying half-half, I actually paid more because I started working earlier. I think a lot of insecurities came up on his end," said Chang.
In the end, the couple lost a total of about S$50,000, or five per cent of the sale price including legal and stamp duty costs. They also returned all the grants they received.
A house shouldn't hold a couple together. If you truly love someone, you don't need a house.
When they decided to part ways, Chang and her then-partner wrote to the EC developer's legal team to inform them of the break-up. Any excess payment after the penalty deduction was then refunded to the couple. It took about a month for the money to be refunded.
The losses were split evenly between the couple, although initially, Chang's ex tried to make her pay more for the losses.
"He asked me for more because I was the one who asked for a break-up, but I was firm [on splitting the losses equally]," Chang shared. "I didn't hold a gun to his head to sign the papers with me. You have to be responsible for your actions and mistakes. I was responsible for mine."
Buying a BTO or EC unit: What's the rush?
Chang readily admitted her mistake in going through the process despite not being sure of the relationship. Now, she said, she will never go through HDB's fiance/fiancee scheme again, and will "never get a house until I'm actually married to the person".
"I don't think what happened made me pessimistic, just more wary and cautious. I'm still hopeful about love," said Chang.
On hindsight, Chang feels that schemes such as the fiance/fiancee scheme can be "like gambling on our relationships".
"I think the minimum age should be higher. But of course, if you bump it up higher, a lot of people will be very angry because now, they see it as 'the earlier you apply, the earlier you may get a house'," said Chang. Currently, the minimum age to apply for a BTO or new EC unit in Singapore is 21.
Chang also feels that there is a "cultural problem" in Singapore – where couples who are uncertain about their relationships bid for a slice of public housing "in order to feel like adults", given that applying for a BTO flat or EC is akin to a marriage proposal.
"I think a lot of young people just want to get a house to feel like they have it all. It's not that they are ready to get married, they're just ready to be an 'adult'," said Chang.
"A house shouldn't hold a couple together. If you truly love someone, you don't need a house."
If you have an interesting True Singapore HDB story to share, email us at firstname.lastname@example.org