Buyers will soon get the option of renting a property before deciding to buy, under the latest scheme unleashed by developers to rev up the market.
Programmes allowing buyers to move in after paying a small down payment have been tried at completed projects but TG Development is rolling out what it calls its experiential leasing scheme at an uncompleted development. It is being launched at Lloyd Sixtyfive, after an earlier version of the scheme was disallowed by the Urban Redevelopment Authority (URA).
Under the plan, the client signs a two-year lease and pays an advance rental of 10 per cent of the purchase price and a 2.5 per cent refundable deposit. He then moves in when the project is completed in the first half of next year.
If the client decides to purchase a unit, the developer will refund the full rental and deposit, subject to the availability of units. If not, the deposit will be refunded. TG Development is releasing only 20 one-bedroom and one-bedroom with study units under the scheme. The project near Somerset Road has 76 units in all.
Average pricing for a one-bedder is $2,760 per sq ft or from $1.62 million. So the rent works out to about $6,750 a month for a one-bedder.
The latest scheme is different from the earlier version in that the unit leased is not reserved for the tenant.
The URA had objected to the earlier version, noting that it was "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". The standard option to buy involves a validity period of just three to five weeks.
A TG Development spokesman yesterday said the scheme allows clients to have "ample time to plan for their finance".
"They could enjoy the experience of their stay without having to consider the interest of their loan as there is no loan required for the low upfront cash outlay."
The company is not at risk of incurring Additional Buyers' Stamp Duty (ABSD) or any Qualifying Certificate extension charges for the project, as it is a Singaporean firm and purchased the site before the ABSD was introduced.
Its move comes after buyers seem to have taken well to several flexible payment schemes offered by some developers.
CapitaLand is said to have sold about 50 units at D'Leedon and 30 units at The Interlace under its recent stay-then-pay programme, which allows buyers to defer full payment of the property.
OUE has managed to sell about 160 units at Twin Peaks, after it introduced a deferred payment scheme and another incentive with a longer option-exercise date in late March.