CONDOMINIUMS OR SERVICED APARTMENTS? 7 THINGS YOU MUST KNOW BEFORE YOU BUY!

Below are the 7 things to take note when buying a condominiums or service apartment:

wealth conference 2016
wealth conference 2016

1. You pay different utility charges

Because of their land status, serviced apartments are charged commercial rates for utilities, which are much higher than residential rates. Deposits collected by utility companies are also higher. Some developers do try to work around this by negotiating with utility companies for lower rates. They may or may not be successful, so it pays to confirm this with the developer.

2. You pay different tax rates

Quit rent and assessment rates for serviced apartments are also calculated at commercial rates, much higher than condos. Some developers try to get lower rates by finding some loopholes in zoning laws to reclassify the apartments. But again, they may or may not succeed in doing so, so do check and make sure.

3. You will be living in different environments

Condos are designed for privacy, and security controls the flow of unknown persons into the property.

Most serviced apartments are attached to a shopping mall or retail shops. You have no control over the type of businesses there and the flow of non-residents in the area. But if you like the idea of convenience, where you live upstairs and can just hop into the lift to go downstairs for dinner or a movie, this is a great plus point.

But there are also some serviced apartments that are not attached to any malls or shops. This could be because the developer had converted the land status from “residential” to “commercial”. Why would they do this? Well, maybe the next point might shed some light.

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4. You will have different population densities

Residential developments are built based on units or population per land size. However, commercial developments are based on plot ratio, which is the total built-up area per land size. This affects the number of neighbours you will have.

For example, say a developer gets permission to build a condominium based on a population of 1000 people per acre. Assuming 5 people live in a 1,000 square foot unit, a developer can only build a maximum of 200 units per acre of land.

One the other hand, let’s say a developer gets permission to build serviced apartments based on a plot ratio of 1:10. Now, for the same one acre of land (measuring about 44,000 square feet), the developer is allowed to build up to 440,000 square feet. That means developers can now easily build 400 units of 1,000 square foot apartments! Or even more, if they build smaller units.

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5. You MAY be governed by different laws

The Housing Development Act (HDA) places strict standards on developers of residential properties to protect home buyers. Although serviced apartments are built on commercial land, they have been classified as residential properties, so buyers are protected by the HDA as well.

BUT…the HDA may NOT cover developers of certain types of “residential” properties built on commercial land, such as SOFOs, SOVOs, or Flexi/Designer Suites.

These may be marketed as residential cum office space, but they may be legally classified as office/commercial properties, which do not come under the HDA. Do check these properties’ status to be sure what type of property you are actually buying.

6. There is no standard S&P for commercial properties

Under the HDA, developers and buyers sign a standard S&P agreement. The agreement’s terms are set by law and non-negotiable. This applies to both condos and serviced apartments. However, there is no standard S&P agreement for the other types of properties mentioned above, if they are classified as office/commercial properties.

The only legally-binding conditions on such commercial property developers are found in the S&P agreement. So if you do decide to go ahead and buy such a property, read the agreements carefully to make sure they are fair.

7. You MAY be regulated by different Ministries

If buyers of condos or serviced apartments under HDA have problems with the developer, they can go to the Ministry of Housing and Local Government for help. However, the Ministry may not be able to help buyers of properties that do not come under the HDA. If problems crop up with developers of office/commercial units mentioned above, the recourse is usually to go through lawyers or the courts.

lobbySource: PropSocial

SO, IS IT BETTER TO BUY A CONDOMINIUM OR SERVICED APARTMENT?

It depend on what you really wanted and your priorities.

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