Do you want to learn more about Option to Purchase in Singapore? Follow this article to find out the option period, fees, and other Option to Purchase details.

Option to Purchase in Singapore
Property purchase price


Singapore’s property market is dynamic and has several layers that buyers must know before investing.

Potential buyers have to consider factors such as ABSD, LTV, and other things to ensure that the property purchase decisions are on point.

However, as property deals in Singapore can get complex, buyers often ignore small things like the Option to Purchase (OTP), which can become a menace in the long run.

This article will help you understand the dynamics of Option to Purchase, including the basic information required for an OTP.

Basic information required for an Option to Purchase (OTP)

An Option to Purchase is a legal agreement issued to a prospective buyer by a property seller.

This agreement contains crucial information that outlines the conditions of a property deal and highlights the grants offered to a buyer.

Here is the basic information required for an Option to Purchase:

Property address

An Option to Purchase must include the address of the property in question with precise information about the original owner.

In short, only legal owners can issue Option to Purchase agreements to prospective buyers.

Property purchase price

An OTP includes the agreed property purchase price settled between the seller and the buyer.

Option period

The option period indicates the validity of an OTP based on the agreement settled between the buyer and the seller.

For instance, the option period of time for Singapore’s HDB flats is 21 days, while private properties get a 14-day option period.

However, you can increase the duration of an option period if both parties agree to extend the term for private properties.

Option fee

An option fee is an integral part of an OTP as it allows the seller to establish faith during upfront agreements.

The option or booking fees for private properties are usually 1%, while the option fee for HDB flats cannot exceed $1000.

However, private property sellers can negotiate and opt for a higher fee if the buyer wants to extend the option period.

This higher option fee safeguards a seller’s interest and prevents the buyer from backing out of the deal.

On the other hand, option fees for HDB flats are non-refundable and get deducted from the final property amount if a buyer exercises his OTP.

However, a buyer will require an OTP granted by the seller to seek HDB valuation.

Furthermore, the seller’s lawyer will have to draft an OTP agreement for properties, while you can get a prescribed form for HDB flats.


Like all other legal documents, an OTP agreement requires a witness during the negotiation process.

Anyone can become a witness, provided he is a Singapore permanent resident or citizen and has attained the age of 21.

However, a witness can only indulge in OTP agreements and is not essential for property transactions or sale proceeds.


What is OTP?

An Option to Purchase or OTP is a legal agreement between sellers and buyers for property transactions.

An OTP is an integral part of a Housing and Development Board flat or private property transaction and is a must under Singapore’s Housing and Development Act.

OTPs also safeguard a seller’s interest and allow buyers to establish exclusive claims on a particular property and negotiate more on their property transactions.

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What to do before exercising Option to Purchase?

An Option to Purchase allows buyers to establish an exclusive claim on a particular property.

However, buyers must understand the dynamics of an OTP first, as they may lose their money if they fail to fulfill the agreement terms.

Here are the things you need to consider before exercising Option to Purchase.

1. Research

Research is an integral part of property investments as it allows buyers to evaluate the value and sale price.

In short, whether you are buying HDB flats or private homes, researching information regarding a resale transaction and estimating the value of your targeted property is crucial.

Furthermore, conducting thorough financial prudence saves you a lot in the long run and will help you reap benefits.

2. Identify the best home loan package

Having extra cash before signing an OTP will save you time and help you tackle payment cycles.

For instance, housing loans are excellent for purchasing properties in Singapore as they allow you to become financially strong before property investments.

However, home loans are not readily available, and you will have to fulfill various property cooling measures to secure one.

In short, identifying the best home loan package is crucial for property deals and is a must before signing an OTP.

3. Upfront payments

Understanding your financial discipline will help you cover upfront payments while signing an OTP agreement.

For instance, buyers will have to prepare cash for Buyer’s Stamp Duty, ABSD, legal conveyancing fees, property tax, and other costs after signing the legal agreement.

In short, buyers will require a lot of cash, so preparation is vital before exercising an OTP agreement.

4. Renovation costs

Renovation costs for uncompleted properties can escalate your overall investment and force you to acquire an additional loan.

Since properties in Singapore are expensive, this additional cost can put a lot of financial pressure on the buyer.

So conducting thorough research on renovation costs will help you understand and estimate your investment.

Thankfully, housing developers must comply with the Controller of Housing department’s guidelines and regulations, helping buyers secure an uncompleted or common property with minimal fuss.

5. Valuation report

Getting a valuation report from a property agency or agent should be one of the priorities before exercising the Option to Purchase, as it can minimize excessive investments.

Property agents have in-depth knowledge about property deals and can guide you to reap benefits with your investment.

However, you will have to get a valuation report from the Housing and Development Board if you want to secure home loans from HDB.

When to grant OTP?

After registering the Intent to Sell request, sellers have to download a prescribed HBD form from the official portal.

This OTP form comes with a unique serial number that sellers must provide while submitting their resale applications.

Furthermore, sellers have to sign the OTP form after negotiating an option fee, ranging from $1 to $1000.

However, sellers must ensure that the sum negotiated between the seller and the buyer is acceptable to both parties as it is non-refundable.

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What happens after granting an OTP?

After granting an OTP to a particular buyer, sellers cannot deal with a second buyer as the first buyer will have exclusive rights on the property for a specific duration.

However, a seller can exercise his rights after the option period expires, which usually lasts up to 21 days, depending on the property type.

What if the buyer doesn’t want to proceed with the purchase?

Sometimes property deals may not have a happy ending as buyers may opt to back off before securing the sale licenses.

Although situations like these can be annoying, a seller will retain the option fee and wait for the Option to Purchase agreement to expire.

However, you cannot issue or grant a different OTP within the option period and will have to wait for 21 days to give a new OTP.

How long is OTP valid HDB?

Unlike private properties like the Sandy Palm in Singapore, which allows buyers to get a minimum of 14 days as an option period, HDB flats offer more time.

For instance, a buyer can get up to 21 days of option period to complete all the requirements of his OTP agreement.

If the buyer fails to fulfill the terms or backs out of the agreement, the OTP will expire after 21 days.

Furthermore, option fees are non-refundable, and buyers can only pay up to $1000 as their booking fees.

Can the seller withdraw after OTP?

Property deals can be tricky, especially when you meet unreliable sellers.

Thankfully, property laws in Singapore are excellent and ensure that buyers get the most out of their property investment.

For instance, a seller cannot withdraw a deal after signing an OTP, safeguarding the buyers’ interest.

Additionally, a buyer can file a lawsuit by engaging a law firm and sue the seller for compensation.

Can the buyer have 2 OTP?

Unlike sellers who have to wait for the OTP to expire, buyers can have multiple OTPs according to their needs.

However, you cannot exercise different OTPs to purchase an HDB flat as Singaporean law prohibits property buyers from owning two HDB flats under the same name.

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