HDB suppressing the EC segment’s unethical practices
As reported in The Business Times, HDB said that executive condominiums developers are not permitted to offer incentives to buyers who have not booked a unit.
Although they can choose how they sell the units as well as engage marketing agents, the developers should sell their units fairly and transparently by complying with Tender Conditions and Building Agreement. They should also have an independent audit of their sales process to confirm they fulfill their duty.
An HDB spokeswoman said that the authorities would take action against errant EC developers and marketing agents.
The comments arose after The Business Times study of Executive Condominium projects that launched from 2014, which recorded high e-applications, but with poor sales. Half of the 14 EC projects did not attain even a 20% conversion rate in their launch weekend, which is deemed the lower end of a reasonable conversion. In their e-application, 3 projects had been fully subscribed and 9 oversubscribed.
Players in the industry have warned of a short-term oversupply especially for ECs launched at almost the same time within an area. These projects complete for buyers from the same pool, which may result to e-applicants overlaps.
Despite that, it had been rumoured that exaggerated e-application numbers have been used to portray high demand with developers offering supermarket vouchers and cash to agents to give incentives to e-applicants. Agents have also been said to sign up friends or relatives as e-applicants as well as the use of previous projects e-applicants in the latter projects.
EC Housing Scheme Regulations define an applicant as one who applies to buy an EC unit. This includes e-applicants.
“For e-applications, the system has built-in checks to make sure that applicants are eligible,” said the HBD spokesperson.
She also added that while developers manage and process these applications, HBD counter-checks the supporting documents and income submitted by purchasers to verify if they meet the said eligibility criteria.