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Decoupling of Home ownership

Decoupling of Home ownership


What if you visited a showflat today and saw something attractive and wishes to commit to the purchase, but you want to work your way around Additional Buyers’ Stamp Duty (ABSD) and the Loan-To-Value (LTV) restrictions. Can you book instantly? What is the timeline for decoupling of ownership?

DECOUPLING FOR HDB

For HDB cases, the term used is actually ‘Transfer’. A transfer of flat ownership is only between family members by way of gift on grounds of love and affection. Therefore, there is no monetary consideration involved. Below are a few types of transfer:

  1. Inclusion of another co-owner (eg. A to A & B)
  2. Deletion of existing co-owner (eg. A & B to A)
  3. Substitution of co-owner (eg. A & B to A & C)
  4. Outright transfer of owner (e.g. A to B)

The eventual owner has to satisfy HDB’s prevailing eligibility rules and conditions to own a flat. This includes the regulation of 30-months barring period after disposal of a private property. Stamp duty is payable and whatever CPF monies utilised from outgoing owner has to be returned with accrued interest from the eventual owner. However, this procedure can be done at any HDB branch office and takes approximately 3 months to complete. Another thing to note is that the outgoing owner has a 3 to 5 years time bar from applying for another subsidised housing. From 2016 onwards, HDB will also be more stringent when it comes to approving transfers. Only on grounds of deceased, divorce or change in financial situation will be considered for approval. Change in financial situation are loss of income for at least 12 continuous months or bankruptcy.

DECOUPLING FOR PRIVATE PROPERTY

For private property, the timeline for decoupling takes about 1 month, which means, you can actually commit immediately when you see the BUC property you like. You will need to request for Sales & Purchase Agreement to be sent as late as possible, perhaps the 12th day from option date, so that it buys you more time for the decoupling. For private property, decoupling takes place in the form of ‘Fraction Purchase’. A valuation has to be done for the property for computation of Buyers’ Stamp Duty. Thereafter, the remaining owner will have to engage a conveyancing lawyer for the purchase and the outgoing owner will engage a separate conveyancing lawyer for the sales. This is also provided that remaining owner is financially capable of meeting restrictions under Total Debt Servicing Ratio should any loan be required. Once Option to Purchase (OTP) is issued by outgoing owner, remaining owner may exercise the option in a few days by paying the exercise option fee , balance downpayment and Buyers’ Stamp Duty. Once stamp duty is paid with a stamp certificate generated, outgoing owner is considered 1 property less and he/she may exercise the other option for purchasing the next property.