Knowing HDB: What is Enhanced Contra Facility (ECF)

The process of buying and selling a home can be a complex and financially demanding endeavor. In Singapore, the Housing and Development Board (HDB) has introduced a valuable scheme known as the Enhanced Contra Facility (ECF) to assist homeowners in managing this transition more seamlessly. Let’s delve into the details of what ECF entails and how it can benefit those looking to sell and purchase HDB flats simultaneously.

What is the Enhanced Contra Facility (ECF)?

The Enhanced Contra Facility (ECF) or commonly know just as Contra is a scheme introduced by the HDB in Singapore to facilitate homeowners who are looking to sell their existing HDB flat and purchase another one. The unique feature of ECF allows individuals to use the sale proceeds and refunded CPF savings from the flat sale to buy another resale HDB flat at the same time. The primary goal is to alleviate the financial burden associated with out-of-pocket payments, reduce housing loan amounts, and minimize monthly installment payments.

Application Process:

Applying for the ECF is a straightforward process. During the submission of resale application, the contra party—the person applying for ECF—needs to state the request for ECF and provide the addresses of the flats they are selling and buying. It’s important to note that there are three parties involved, and two separate applications must be submitted.

The three parties are:

1. The Contra Party – You – the Seller and Buyer (you sell and buy),

2. Your Buyer (the party who buys from you) and

3. Your Seller (the party who sells to you).

Two separate applications are:

1. Your selling application,

2. Your buying application.

Do note that while the refunded CPF savings and cash proceeds can be used for the new flat purchase, they cannot be utilized for stamp duty and legal fees.

Benefits of Contra and why use it:

The Enhanced Contra Facility offers several benefits for homeowners in Singapore:

1. Reduced Cash Outlay: ECF allows individuals to sell their existing HDB flat and purchase another one simultaneously. This reduces the need for significant out-of-pocket payments, making the transition more financially manageable.

2. Lower Mortgage Burden: By using the sale proceeds and CPF savings for the new purchase, homeowners may find themselves with a reduced housing loan amount. This, in turn, can lead to lower monthly installment payments.

3. Flexibility in Housing Transitions: Whether homeowners are upgrading, downsizing, or simply relocating, ECF provides a flexible solution to meet various housing needs.

Knowing Temporary Extension of Stay

When discussing Contra, it’s crucial to consider a significant aspect. Given that both selling and buying occur simultaneously, the question arises: where does the Contra Party stay if their new house hasn’t undergone renovations? Options include finding temporary accommodation during the renovation period or requesting a Temporary Extension of Stay from the buyers. This highlights the practical challenges individuals may face in ensuring a seamless transition between their old and newly acquired homes.

HDB offers a scheme known as the Temporary Extension of Stay, which allows sellers to extend their stay in their flat for up to three months after the resale completion. This scheme is designed to help ease the transition for sellers moving to their next home. Giving time for sellers to renovate their new place at the same time staying at the existing sold house. Extension will start only after the actual completion of the buying and selling.

How Does the Temporary Extension of Stay Work?

If you’re selling your HDB flat and have committed to buying a completed property in Singapore, you may need more time to move out. In this case, you can arrange with the buyers for a temporary extension of stay in the flat for up to three months after the resale completion. This extension is subject to the buyers’ agreement. Most of the time, this would have to be discuss and agreed upon by the buyer before granting the Option to Purchase.

How to Apply for the Temporary Extension of Stay?

To apply for the Temporary Extension of Stay, both the sellers and the buyers must state in their respective portions of the resale application that there is an arrangement for the temporary extension of stay. If there is a subsequent change with the arrangement, the sellers may write to MyRequest@HDB to drop the request if they have applied for it.

What Are the Terms and Conditions?

The buyers must state in their portion of the resale application that there is an arrangement for the temporary extension of stay. They need to pay an administrative fee of $20 (inclusive of GST) for the request, being the future owners of the flat agreeing to the extension.

As legal owners of the flat, buyers must pay for the costs and expenses relating to its ownership from the resale completion date, including the period of the extension of stay by the sellers. Some payments include monthly installment for housing loan, Service & Conservancy Charges (without rebates during the extension period), and property tax (at non-owner-occupied rates during the extension period).

Typically, sellers commonly refund buyers a $20 administrative fee for the Extension of Stay, along with a pro-rated amount for Service & Conservancy Charges and property tax accrued during the extension period. However, variations in this arrangement may occur if mutually agreed upon otherwise.

Temporary Extension of Stay is a helpful scheme for HDB flat sellers who need more time to transition to their next home. However, it’s important to discuss this arrangement with the buyers before granting the Option to Purchase, as it requires their agreement. By understanding how this scheme works, sellers can navigate the process of selling their HDB flat with greater ease.

In Conclusion

The Enhanced Contra Facility (ECF) emerges as a practical and beneficial scheme for homeowners in Singapore navigating the complexities of buying and selling HDB flats. Understanding the intricacies of ECF and Temporary Extension of Stay empowers individuals to make informed decisions, ultimately streamlining the process and ensuring a smoother transition between homes. As Singapore continues to evolve, initiatives like ECF contribute to a more accessible and efficient housing landscape for its residents.

To know more about this topic you can check out here in HDB website