Knowledge Highlights 7 October 2020
On 28 September 2020, the Urban Redevelopment Authority (“URA”) issued a circular on “Restriction on Re-Issue of Option to Purchase for the Same Unit to Same Purchaser(s)” (“Circular”). Pursuant to the Circular, the Controller of Housing (“COH”) will impose new conditions (“New Conditions”) in sale licences issued to housing developers with effect from 28 September 2020 to:
- restrict developers from providing an upfront agreement to purchaser(s) to re-issue an option to purchase (“OTP”); and
- restrict developers from re-issuing an OTP to the same purchaser(s) for the same unit within 12 months after the expiry of the earlier OTP and to inform purchasers of this condition upfront.
This development comes about as the URA has observed that there have been instances where the OTP is re-issued multiple times to the same purchaser(s) for the same unit, which lengthens the option period significantly.
Existing agreements between developer and purchasers on re-issuance of OTP
In the Frequently Asked Questions annexed to the Circular, it is stated that for OTPs that have already been issued prior to the effective date of the licence conditions and where the developers have an existing agreement with purchaser(s) to re-issue the OTP for the same property up to a specific period, the developers may continue to honour their commitment to the purchasers.
It is further stated that for OTPs issued from the effective date of the licence conditions, developers are not allowed to re-issue the OTP to the same purchaser(s) for the same unit nor commit to any OTP re-issue. Developers should explain to these purchasers that no re-issue of the OTP for the same unit will be allowed within 12 months after the expiry of the earlier OTP.
Extension of OTP validity
Despite the restrictions imposed under the New Conditions, the Controller has stated that it is prepared to extend the validity period of the OTP by up to 12 weeks from the OTP date if COH consent is obtained and both the purchaser and developer are agreeable to the extension.