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You'll Spend More Money When You Buy a Sub-Sale Unit. True or False?

Updated 25 Sep 2020 – By Team Loanstreet

A question that often troubles first-time home buyers: "Should I purchase a new or a sub-sale house?".  It is important to know their pros and cons in details as both of these property types serve different purposes. Here is a ready guide to help you make the decision. 


What Are the Differences Between New and Sub-Sale Properties?

New Property

Advantages Disadvantages
  • Easier on the pocket. Due to the softening of the market and stiff competition between developers, it is common for developers to offer discounts to purchasers in the form of rebates, waiver of legal and disbursement fees, etc. 
  • Better value appreciation. Newly launched property is often more affordable and value upon completion of construction varies depending on the quality of work, reputation of the developer as well as location and demand of the property.
  • Warranty provided. A new property usually comes with a standard 18-month defect liability period where the homeowner will need to check for any damage, defects and poor or faulty workmanship within their unit. These include but are not limited to leakages, wall cracks, loose doors and etc. Any issues on defects need to be reported back to the developer to get them repaired free of charge. 
  • Easy access to property information. Interested homebuyers can easily obtain all the necessary information directly from the developer’s sales gallery or office.
  • Completely new. You get to enjoy fully or partially furnished new fittings provided for free by the developer as well as enjoy staying in a new community with new amenities.
  • Higher risk. Home buyers of new launches might bear the risk of the developer abandoning or delaying a project due to cash flow problems. 
  • Additional commitment. Purchasing a newly launched property typically means that you are legally obliged to begin your loan repayment when the structural framework of the development begins. In the case of buying a high rise property, you will continue to make the same amount of loan repayment, until the development reaches your floor. Hence purchasers that bought units on the lower floors will need to begin their next stage of instalment earlier than those who bought units on the higher floors.
  • Final product discrepancy. The quality of the final product may not turn out as per the brochure’s illustrations or from what was previously observed in the building model and show house gallery.
  • Long waiting time. A new development usually takes about 2 years to be completed. However, sometimes the waiting time for the completion of the construction could be from 3 to 5 years. This means you will be taking higher risk than buying a sub-sale unit and it will require more work from you, as the buyer, to ensure that the development is progressing according to plan.


Sub-sale Property

Advantages Disadvantages
  • Immediate use when buying existing properties. Once you purchase an existing property, it usually takes 2 - 3 months for the legal paperwork to be finalised before you can move into the property. There is no risk of delay in handover like what some new properties (under construction) are facing. 
  • Can inspect the property. You get what you pay for i.e. you will know the exact view, noise, smells, everything. In other words, the actual condition of the property you are planning to buy. This will be useful as you can roughly estimate a cost for repairs and use that to your advantage to negotiate for a better selling price.
  • Know actual transacted prices/ market value. You will also know if the unit is selling at below or above market value. Comparative prices with nearby competitors (neighbours and other units in the area) are also backed by actual transacted data, not projections, says Property Investor, Dexter Lim who has co-authored a best-selling book: Start from 0! 3 Years to a RM10 million Property Portfolio with his mentor-cum-partner, W.T. Kam.
  • No Forecasting Needed. According to Property Investment Coach, Director & Co-Founder at Bricksmen Group, Tony Yap, no statistical forecasting is needed when you buy a completed home as you can always check the existing property capital gain growth rate and the surrounding amenities by yourself. You can also immediately calculate your monthly rental (or Return of Investment) with the current rental market. 
  • Choose your ideal location. You will have plenty of choices to pick the location of your home. In addition, before buying a completed home, you will be able to assess how active and mature the neighbourhood is, as well as the accessibility to your new home. Some new developments may not be located in densely populated and well-connected areas.
  • Higher cost to purchase. There is no flexibility in payment when you purchase a sub-sale home and you will need to settle in full for payments such as booking fee, 10% deposit, stamp duty etc.
  • More legal work and documentation. Ready to move in properties usually require a lot of legal work and paperwork for property transfer and ownership as compared to buying an under construction property. This might become a hassle to new home buyers as they might need to make several visits to the Land Registry Office. 
  • Quality of construction. Buying a completed home brings in a promise of higher price appreciation. However, new home buyers may have no idea about the quality of raw materials used or the strength of foundation and if the house has not been maintained properly, it will start looking old within the few years, leaving not much room for further increase in value. 
  • Limits on modification. There is a little scope of modifications and alterations that can be done to the layout of a completed home. Although minor internal modifications can still be carried out, it would be costly for you to completely refurbish a whole house. 


Should You Buy a New or Sub-Sale Property?

Before you decide to buy a new home or a sub-sale property, you need to first understand your purpose of buying a home - whether you are an investor, an end-user or an end-user looking for a return on investment.

From an investor's perspective, investing in under-construction property is more lucrative. During the construction stage, the capital value is at its lowest but increases as construction progresses.  Meanwhile, as an end-user, you can opt for both new and sub-sale property. However, if you are looking for immediate possession, choose sub-sale property. This will help you to reduce the waiting time to move in; from 2-3 years to just a few months. 

That aside, whether you're looking for a new or sub-sale property, make sure you check if you can actually afford the loan amount and the monthly repayment via our Home Loan Eligibility & Affordability Calculator. You can also check out the Home Loan Comparison page to see which banks offer the best perks.

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