12/10/2020
New Condo Developers Not Allowed to Re-issue Option to purchase (OTP) – How Does This Impact The Residential Property?
Upgraders, or people who need to sell their existing property before buying a new condo, will be the group that is most affected by this new rule. First-time buyers, on the other hand, will be less impacted since they do not need to sell their property.
When developers are able to re-issue OTP, upgraders will have time to sell their existing property while ‘reserving’ their preferred new launch unit.
The new rule means that upgraders will have to sell their existing property before they can buy the new condo, otherwise they will be subject to the additional buyer stamp duty. Selling their property first before buying a new unit may be difficult, since by the time they sell their existing property, their preferred units in the new condo launch may already be taken up, or the prices of the condo may have changed.
While this is not exactly a cooling measure, it does dampen upgraders in getting a new condo.
On a net basis, this rule should not have too much impact on the overall sales. Upgraders will just have to live with the new rule and after a while as it becomes the norm, people will adjust to it. Just as people have adjusted to paying additional stamp duties on their 2nd, 3rd property.
