If your parents bought you a condo at age 23, that could be seen as a real indulgence; or at least worth major bragging rights. But this week, we spoke to someone who had that exact thing happen to them – and it turned out to be a major disaster. Not every “gift” is one you should accept lightly. Here’s how everything unravelled:
The youngest owner of a condo in her office
SY was 26 years old and still at her first job, when her parents called her good news: she was going to be the owner of a resale condo, in the prestigious area of Holland Village. But it wasn’t without an ulterior motive:
“It was in 2013 when the Additional Buyers Stamp Duty (ABSD) had just been raised,” SY said, “My parents had intended to buy a condo as a second property, but they were too late as the ABSD happened while they were still deciding.
My dad’s brother advised him to buy the property under my name, so they wouldn’t have to be the ABSD, which was seven per cent at the time. This would have saved my parents around $77,000.”
SY admits that her financial literacy and savvy were poor at the time. Her only “real world” experience out of school was an administrative job, handling inventory for a retail chain.
“When I heard it I was quite excited,” SY says, “And I was the youngest person in my office who could say I owned a condo.”
SY even pitched in to help with the decorating, and she was able to enjoy the property for about two months.
“I would use the pool and the gym,” SY recalls, “And I had a nice housewarming party there. Although even then my parents had said that it would be up for rent; the intention was to pass the property down to me after a few decades.”
But problems started to occur, when SY’s father suffered a loss of income
“Previously my dad was posted to China,” SY says, “And because of his overseas posting his pay was higher. But his company closed down the branch in Shenzhen, and he came back to Singapore; and after that his pay was reduced as he was no longer overseas.”
Although the condo was rented out at the time, the rental income was not sufficient to pay for the maintenance fees plus the entirety of the mortgage. Her mother was in favour of selling the property, but SY’s father had an “old school mentality.”
“My dad has a very traditional mindset,” SY says “That money you invest, or that you put in a bank, can never be touched. Once you buy land, you must never ever sell the land. Just like when you deposit money, even if you are starving and your rice bowl is empty, you must suffer rather than take out even one cent. So he refused to sell the house.”
But SY was on her father’s side in this scenario anyway. She enjoyed being able to say she owned a condo, and also fought to keep it.
“It was two against one so we got to keep it,” SY said, “I lied to myself and said I was looking out for my parents, because the property market was in a downturn at the time; so I said to myself that I was saving them money.”
It was SY’s persuasion that led to her parents turning down a profitable offer for the condo. Had she not interfered, the condo would have been sold, and her subsequent issues would not have happened.
Meeting the right person and wanting her own home
It was in her mid-thirties before SY began to realise the full impact of private property ownership. At this time, she was convinced she had met the right person; and along with the decision to get married, she was interested in having her own home.
SY then asked her parents if she could move into the condo with her fiancé.
“This led to a lot of quarrels,” SY said, “As my mum and dad both disagreed. My mum said we couldn’t afford to keep the condo if it was not rented, but my dad wanted to keep to his original promise of handing it down to me.”
SY felt especially bad about this, as she was the one who had instigated her parents to keep the condo. While SY was eager to have her own place to settle down, she didn’t want it to be at the cost of her parents’ relationship.
This led to SY deciding to try for an HDB flat, but then realising it was impossible.
“Before the whole situation I had no interest in housing or HDB issues,” SY said, “But then when I wanted to buy a flat, it was only then that I realised I couldn’t own an HDB flat. Because there was a private property under my name.”
SY says her parents were also unaware of this:
“I think if my dad had gone to a proper lawyer to check all these details, there wouldn’t have been this situation; instead he just followed his brother’s advice. But he’s not the only one to blame, as I was also the stupid one who told him to keep the condo.”
In any case, SY’s father was adamant about never selling houses; and he soon had one more reason:
By July 2018, the ABSD rate had risen to 12 per cent
If SY’s father sold the condo, then the next time he bought a second property, he would have had to pay 12 per cent ABSD – even higher than the seven per cent he managed to avoid the first time around.
He felt that if he sold the condo now, he would not be able to own a second property again in future.
In light of this, SY’s father asked if she and her fiancé would consider helping to pay for half of the monthly costs. This would allow the family to comfortably afford the condo unit, without having to take on tenants.
“He did point out that the condo would be mine eventually,” SY said, “And of course a condo in Holland Village is not an easy thing to come by; so it was in our combined interest to hold on to it.”
Unfortunately, SY’s fiancé was not too happy with such an arrangement.
Her fiancé felt that, if he was going to pay for housing, it should have been for a property that he would have some ownership in.
SY says this resulted in friction with her fiancé as well:
“He was quite firm that he would go and buy a resale flat on his own income, under his own name, rather than basically pay rent to his in-laws. Also, his own family was not happy that he wouldn’t get his own place, or that he wouldn’t have a share in our matrimonial home.”
Finally selling the condo, after a lot of avoidable squabbling
Ultimately, SY says it was her mother who got things going. Already against keeping the condo in the first place, her mother made a solo decision to call a property agent, and present the possible gains from selling.
“My mum basically rescued me,” SY says, “Because she knows how to persuade my dad, who is naturally very stubborn. Eventually he was persuaded to sell, as the agent showed him a way to buy a second property without the ABSD*, which could be possible when his other assets mature later.”
Eventually, SY did buy a resale flat about the sale of the condo; but by then substantial damage had been done to her family relations. SY says her in-laws are still wary, feeling she had tried to “force” their son into an unfair deal over the condo. Her father also holds a grudge against her husband, feeling that his reluctance was part of the reason they had to give up the condo.
Above all, SY still feels badly about her “flip-flopping,” first fighting to keep the condo, and then fighting to sell it. She says:
“When we hear things that are too good to be true, like buying houses without ABSD, we should take a closer look at the real cost. We shouldn’t assume that we’re smart and found a loophole; there must be reasons why it’s not done.”
For more stories about money and asset management, reach out to us on Single-Digit Millionaire. You can also contact us for any money questions or help you may need, and we’ll put you in touch with a relevant expert.
*This was to decouple their existing home, transferring his share to his wife and then buying a second property under his own name. This is a process that requires a law firm, so speak to a conveyancing lawyer for details.
