Singapore Property Options to Purchase: What Buyers Must Know
Signing an Option to Purchase (OTP) is the moment a Singapore property deal becomes legally real, yet many buyers treat it as a formality rather than the binding commitment it truly is. Understanding what the OTP does, what your obligations are, and what can go wrong will save you from costly mistakes.
What Is an Option to Purchase?
An Option to Purchase is a legal document that gives a buyer the exclusive right — but not the obligation — to purchase a property at an agreed price within a fixed period. The seller grants this right in exchange for an option fee paid by the buyer. During the option period, the seller cannot sell the property to anyone else.
Two broad categories of OTP exist in Singapore:
- HDB OTP — used for resale HDB flat transactions, governed by HDB's prescribed format. Both buyer and seller must use HDB's standard template.
- Private property OTP — used for resale condos, landed homes, and commercial properties. The format is less prescriptive, though industry conventions and the Law Society's guidelines shape most of them.
New launch condos use a separate instrument called a Sales and Purchase Agreement (SPA) issued directly by the developer, not an OTP.
The Option Fee and Option Exercise Sum
When the seller grants you the OTP, you pay an option fee. When you decide to proceed and "exercise" the option, you pay a further option exercise sum. Together, these form part of your eventual down payment.
| Transaction type | Option fee (typical) | Exercise sum (typical) | Total at exercise |
|---|---|---|---|
| HDB resale | S$1 (symbolic, up to S$1,000 by HDB rules — verify current caps with HDB) | Up to 9% of agreed price | ~1–9% combined |
| Private resale | Negotiable, commonly 1% of price | Commonly 4% of price | ~5% of price |
Important: These figures reflect widely cited market conventions. Always verify the exact amounts in your specific OTP, and check HDB's current prescribed limits at HDB.gov.sg.
If you exercise the OTP, both amounts are credited towards the purchase price. If you do not exercise the OTP, you forfeit the option fee — the seller keeps it as compensation for taking the property off the market.
The Option Period: How Long Do You Have?
For HDB resale, HDB prescribes the option period — check the current duration on HDB's website, as it has been updated over the years and is subject to change.
Frequently asked questions
- What is an Option to Purchase (OTP) in Singapore property?
- An Option to Purchase is a legal document that grants a buyer the exclusive right to purchase a property at an agreed price within a fixed period, in exchange for an option fee paid to the seller. If the buyer exercises the option within the deadline, both parties are bound to complete the transaction; if not, the option lapses and the seller keeps the option fee.
- What happens if I forfeit my option fee on a Singapore property?
- If you pay the option fee but decide not to exercise the OTP before the deadline, the option lapses and the seller keeps your option fee as compensation. You are not obligated to proceed with the purchase, but you lose the fee paid — so confirm your financing and intentions before handing over any money.
- How long is the option period for a private resale property in Singapore?
- For private resale properties, the option period is negotiable between buyer and seller and is typically around 14 days, though it can be shorter or longer depending on what both parties agree. For HDB resale flats, HDB prescribes the option period — check the current rules at HDB.gov.sg as they are subject to change.
- Do I need a lawyer when exercising an Option to Purchase in Singapore?
- It is strongly advisable to engage a conveyancing solicitor for any private property OTP, as the document can include negotiated clauses that carry significant financial and legal implications. For HDB resale transactions, HDB provides a standardised OTP, but a lawyer still helps ensure the process goes smoothly and that stamp duty deadlines are met.
- When must I pay Buyer's Stamp Duty after exercising an OTP in Singapore?
- BSD (and ABSD if applicable) is generally payable within 14 days of signing the instrument if the document is signed in Singapore, though you should verify the exact deadline with IRAS as rules can be updated. Your conveyancing lawyer will typically arrange payment on your behalf, but the legal obligation and cost remain yours.