Cases under Restriction on Re-issue of Option to Purchase for Same Unit to Same Purchaser
Ministry of National DevelopmentSpeakers
Summary
This question concerns Mr Chua Kheng Wee Louis’s inquiry into the statistics and regulations regarding the re-issuance of Options to Purchase (OTP) for identical housing units. Minister Desmond Lee reported that since January 2019, 5,500 transactions involved re-issued OTPs, with 70% exercised within six months and only 1% eventually lapsing. He detailed new URA restrictions prohibiting developers from re-issuing OTPs to the same purchasers within 12 months or providing upfront re-issuance agreements. Minister Desmond Lee noted that while prior commitments will be honored, the URA will now grant OTP validity extensions to assist purchasers needing more time. These measures are intended to encourage financial prudence and ensure purchasers have secured necessary resources before committing to new property purchases.
Transcript
72 Mr Chua Kheng Wee Louis asked the Minister for National Development with regard to URA's announcement on the Restriction on Re-issue of Option to Purchase (OTP) for the Same Unit to Same Purchaser, what is (i) the total number of such cases over the last two years (ii) the average length of time taken to exercise OTPs for successful cases (iii) the number of cases that were eventually aborted (iv) the current number of cases outstanding and (v) the average number of weeks that developers have committed to purchasers for the re-issuance of OTPs.
Mr Desmond Lee: Since January 2019, 5,500 private housing transactions had Options to Purchase (OTPs) for the same units re-issued to the same purchasers. Close to 70% of these re-issued OTPs have been exercised, on average less than six months from the date the first OTP was issued. Only about 1% of the re-issued OTPs eventually lapsed.
Given the current economic uncertainties, it is even more important for purchasers to be financially prudent and to secure the necessary financial resources before they commit to new property purchases. To reduce risk to purchasers, URA has, from 28 September, prohibited developers from (i) providing upfront agreement to purchasers to re-issue OTP, and (ii) re-issuing OTP to the same purchaser(s) for the same unit within 12 months after the expiry of the earlier OTP. Nevertheless, to minimise the impact on existing purchasers, URA will allow developers to honour their previous commitments to the purchasers, which were made prior to these changes.
For purchasers who require more time, such as to complete the sale of their existing property to finance the new property, URA is prepared to grant extensions of OTP validity, so there is no need for the developer to reissue the OTP.