All About Deferred Payment Scheme (DPS) and Properties in Singapore That Utilize It

June 2, 2021

Whether it’s buying your dream home or expanding your assets through engaging in property investment, we all can agree the property market in Singapore comes with a hefty price tag. Oftentimes, the financial toll and lifetime commitment that comes with purchasing property are what foreign investors and homebuyers grapple with especially in uncertain times such as these during the COVID-19 pandemic.

To solve these issues, property developers have incorporated the Deferred Payment Scheme (DSP) into their payment plans. With a wide range of advantages that benefits both property developers and homebuyers, DPS potentially brings homebuyers and foreign investors a step closer to owning the property of their desire. Therefore in this article, we summarize all you need to know about DPS along with properties with DPS in Singapore.


So, what's DPS?

Fundamentally, when property developers buy land for developing new residential projects, it's mandatory for these developers to completely build and sell every single unit in the development within 5 years. This will grant the property developer eligibility for a remission of Additional Buyers Stamp Duty (ABSD) amounting up to 30% of land price. And if these property developers are unsuccessful, they'll need to pay the compulsory 25% ABSD, with an additional 5% of the payment going to the government.

Adding on to ABSD is the Qualifying Certificate (QC) regime which requires foreign investors to complete building development and sell all units within 5 years, or face up to a 24% penalty. 

Incentivized by high-cost penalties and extremely rigid timelines to sell all units to homebuyers, many property developers have chosen to utilize DPS to speed up the sales of their property.

Definitively, DPS is an agreement between the property developer and the homebuyer which allows the homebuyer to pay the initial down payment of 20% to 30% purchase price per unit and move in effectively immediately. For the next two to three years, the homebuyer will be exempted from loan repayments. The remainder of the payment will be initiated after the two to three-year duration lapses.

It's worth noting, property developers will practice variants of DPS such as the Stay-Then-Pay Scheme, Experiential Leasing Scheme, Preferential Payment Plan, and the Enhanced Payment Scheme. For discerning homebuyers, we encourage the practice of due diligence when researching available types of DPS in the property market to leverage on your agreement as much as possible.

DPS offers flexibilities to homeowners and foreign investors.


The arrangement of DPS allows major bonuses for foreign investors and homebuyers

One of the many appeals of DPS is the flexibility of the scheme. It solves the problem for specific homebuyers experiencing difficulty in upgrading their property with outstanding loans. With the benefits of minimal cash outlay and a long break from loan repayments, the homeowner will have ample time to manage their assets such as settling outstanding loans before applying for a new loan at full coverage.

Another facet of DPS foreign investors and landlords will find advantageous is the opportunity to rent the property and earn back their initial investment. Assuming the set rental income is $4000, foreign investors and landlords will be amassing $144,000 delivering high yield rental returns before their banks come knocking at their doors. 

However, it’s advised for foreign investors and landlords to inquire with the developer whether the property is allowed to be rented as DPS terms set by the developer vary differently from property to property.


The downsides of DPS are present but very few

Property developers tend to mark up the price of the unit around an estimation of 10%. For example, if the price of a unit is $3 million, the revised price under DPS will increase by $3.3 million.

Apart from that, the Singapore government has disallowed DPS for incomplete units citing the Deferred Payment Scheme as a contributing cause to the rise of property prices. Currently, only completed units issued with the Certificate of Statutory Completion (CSC) are allowed to implement DPS.

High proportion of buyers opted for DSP at OLA. Image Source: WeR1 Consultant


The booming trend of high-end condos via DSP transactions

In recent years, the growing preference among foreign investors and homebuyers towards choosing DPS has proven it's a top choice when it comes to property investment and home buying. This is reflected by the success rates of high-end condo transactions purchased through this option.

A 3-bedroom penthouse at One Balmoral, located at the junction of Balmoral Road and Stevens Road in District 10, was sold for S$4.48 million at $2,012 psf. The Singaporean investor who purchased the unit opted for the DPS option. Furthermore, within 6 months of launching the DPS at One Balmoral, a staggering 33 units were sold.

OLA, located in Sengkang, sold 167 out of 548 units at $1,135 psf on average over the first weekend of sales released by their property developer, Anchorvale. Moreover, it was revealed a high proportion of 38% of its buyers opted for DSP. The COVID-19 pandemic was cited as a driving force behind the homebuyer's preference for this option.

As the world recovers from the economic downturn imposed by the COVID-19 pandemic, we forecast a steady change in the transactional habits of foreign investors and homebuyers favoring DPS compared to other payment plans. This is largely due to the flexible features of DPS allowing them more financial control and sustainability in an unpredictable time.


Properties in Singapore with DPS

Here are several properties in Singapore which offer appealing DPS options.

Corals at Keppel Bay. Image Source: Keppelland

Corals @ Keppel Bay

  • Minimal cash outlay
  • Two DPS options
  • Staggered payment

Corals at Keppel Bay offer two DPS.

Under DPS1, homebuyers are charged with a 1% booking fee and will need to exercise their option to purchase (OTP) within two weeks by paying a 19% balance of the deposit. Furthermore, stamp duties such as ABSD and BSD including property tax and six months of maintenance fee need to be settled before moving in. 

Once completed, homebuyers will be able to move in three weeks from the exercise date and the 80% balance of the purchase price will be paid after a two-year deferment.

For DPS2,  homebuyers will need to pay a 1% booking fee and exercise the OTP by settling a remaining 9% deposit. Apart from that, homebuyers are also entitled to pay stamp duties such as ABSD and BSD including property tax and six months maintenance fee before the key handover.

When fulfilled, homebuyers can assume possession of the unit three weeks from the exercise date and 90% of the purchase price will be payable two years later.

Reflections @ Keppel Bay

Reflections @ Keppel Bay

  • Long deferment period
  • Coveted residential enclave
  • High rental yield

The DPS under Reflections at Keppel Bay is the Stay-and-Pay Scheme.

For this scheme, a booking fee of 1% followed by a 19% deposit to exercise the OTP needs to be settled within two weeks. Homebuyers will receive the keys three weeks from the exercise date and the remaining 80% of the purchase price will be payable after two years.

South Beach Residences

South Beach Residences

  • Different DPS options
  • Staggered cash flow
  • Rest of Central Region

There are several DPS options for South Beach Residences.

Under DPS1, homebuyers will need to pay a 1% booking fee and are required to pay the 19% deposit remainder within two weeks to exercise the OTP. Upon the proof of stamp duty payment, maintenance fee, and property tax, homebuyers are allowed to move in three weeks after the exercise date and pay the balance of the 80% purchase price within a year from the exercise date.

For DPS2, the stipulations are the same except for the deferment period of two years.

Marina One Residences

Marina One Residences

  • Central Business District 
  • Much sought after Marina Bay area
  • Prospective rental yields

Marina One Residences runs a standard DPS plan.

Under this scheme, homebuyers will be required to pay a booking fee of 1% and exercise the OTP by settling the remainder of the 19% deposit within a period of three weeks. Homebuyers will receive the keys and assume possession of the unit within three weeks of the exercise date and will start paying the 80% balance of the purchase price after a year of deferment.

Additionally, property tax and six months of maintenance fees are payable before vacant possession and stamp duties such as ABSD and BSD must be paid within two weeks of the exercise date.

8 St Thomas

8 St Thomas

  • Freehold development
  • Core Central Region
  • Two different DPS options

The DPS under 8 St Thomas is the Stay-and-Pay Scheme and Reservation Scheme. 

With the Stay-and-Pay Scheme, homebuyers are opted to pay a 1% booking fee with the remainder of a 19% deposit due in three weeks to exercise the OTP. Through this, the homeowners will be able to move in immediately. The remaining 80% of the purchase price will be payable two years later.

As for the Reservation Scheme, homebuyers will be able to reserve the unit by paying a booking fee of 1%. They will then be given a period of three to four weeks to exercise the OTP by paying a 9% deposit. The homebuyers will then be given a duration of three months to clear the 90% balance of the unit before moving in immediately.

Interested in DPS properties? Here are some available properties with the most attractive DPS prospects in the market.

Reflections at Keppel

Marina One Residences

8 St Thomas

Additionally, if you want expert help in purchasing a property with the correct DPS scheme for you, please don’t hesitate to contact Property Giant at +65 6100 6199!

Disclaimer: The listed DPS in this article are subject to changes and are accurate at the time of publication.

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