Buying Process · 2026

Buying property under construction: progressive payment risks

By Winfred Quek · 11-minute read · Last reviewed May 2026

Quick answer: Buying a Building Under Construction (BUC) property in Singapore means buying off-plan from a developer and paying through the Progressive Payment Scheme, where payments are drawn down as construction reaches defined milestones over a two to four year build. The cashflow advantage is that mortgage instalments start small, because the loan is only partially drawn early on, and rise as the building progresses. The risks to price in are build delays, the upfront stamp duty due within 14 days of signing the Sale & Purchase Agreement, and the rising interest cost as more of the loan is disbursed.

Facts verified: May 2026 · Sources linked below

Key Takeaways

• A BUC purchase pays via the Progressive Payment Scheme, drawing down as construction hits milestones over two to four years.
• Early instalments are small because only part of the loan is drawn; they rise as the building progresses.
• Buyer's Stamp Duty and any ABSD fall due within 14 days of signing the Sale & Purchase Agreement, paid in cash or CPF.
• Build-delay risk is real; your move-in date or rental income can slip if the project runs late.
• Interest during construction is unavoidable; budget for instalments that climb each year toward completion.

A BUC purchase is a different commitment from buying a completed resale property. You are buying a unit that does not yet physically exist, and you pay for it in stages as the developer builds it. For the right buyer it is a sensible, cashflow-friendly route. But the risks are specific, and they deserve to be understood before you book a unit.

How Does the Progressive Payment Scheme Work?

When you buy a uncompleted private property from a developer, payment follows the Progressive Payment Scheme. Rather than paying the full price at one completion, you pay in instalments tied to construction milestones.

According to the URA, the sale of uncompleted private residential property is governed by the prescribed-form Sale & Purchase Agreement under housing developer rules, which sets out the staged payment schedule. The general shape of a BUC journey:

Booking: You pay a booking fee, commonly 5% of the price, and receive an Option to Purchase from the developer.

Sale & Purchase Agreement: The developer delivers the prescribed-form S&P, usually within about three weeks. You sign it. Within 14 days of signing, stamp duty falls due.

Within ~8 weeks of the OTP: You typically pay up to 20% of the price in total (the booking fee counts toward this).

Construction milestones: Further instalments are called as the developer completes defined stages, foundation, reinforced concrete framework, brick walls, roofing, car park and so on.

Temporary Occupation Permit (TOP): When the project is ready for occupation, a further payment falls due and you can collect keys.

Certificate of Statutory Completion: The final retention sum is paid, typically about a year after TOP.

The key feature is that your bank loan is drawn down in step with the milestones. Early on, only a small slice of the loan is disbursed, so your monthly instalment is small. As construction progresses and more of the loan is drawn, the instalment rises.

What Is the Cashflow Advantage of a BUC?

The progressive structure is genuinely friendly to a buyer's cashflow in the early years. Compare it with a completed resale, where the full loan is disbursed at completion and you pay the full instalment from day one.

Aspect	BUC (new launch)	Completed resale
Loan drawdown	Staged with construction milestones	Full amount at completion
Early instalments	Small, only partial loan drawn	Full instalment from completion
Time to keys	~2 to 4 years	~10 to 12 weeks
Stamp duty timing	Within 14 days of signing S&P	Within 14 days of exercising OTP
Rental income during build	None, the unit does not yet exist	Possible from completion

Indicative for 2026. Confirm the payment schedule in your Sale & Purchase Agreement.

For an upgrader still living in and paying for their current home, the small early BUC instalments ease the overlap. That is the structural appeal. But the advantage is front-loaded, and the back end of the schedule is heavier.

What Are the Real Risks of Buying Off-Plan?

The progressive payment structure solves an early cashflow problem but introduces three risks a resale buyer does not face.

Build-delay risk. A BUC project depends on the developer completing on schedule. If construction runs late, your move-in date slips, and so does any rental income you were counting on. The prescribed S&P sets out the developer's obligations and the buyer's remedies for delay, which is one reason to read it carefully with your lawyer.

Rising interest during construction. Because the loan draws down progressively, your interest cost climbs through the build. At a bank mortgage rate of around 1.5% in 2026, the early instalments are modest, but by the time most of the loan is disbursed near TOP you are paying close to a full instalment. Budget for the climb, not just the starting figure.

No rental yield during the build. An investor buying a resale unit can rent it out from completion. A BUC investor earns nothing for the two to four years of construction while still servicing rising instalments. The investment case has to absorb that holding cost.

Plan the cash, not just the rate: Buyer's Stamp Duty and any ABSD are due within 14 days of signing the Sale & Purchase Agreement, in cash or CPF. According to IRAS, this deadline applies where the document is signed in Singapore. On a $2M unit, BSD alone is $69,600. ABSD, if it applies to your profile, is additional and far larger. None of this is financed by the loan.

Who Is a BUC Purchase Right For?

A BUC suits a buyer who values the gentle early cashflow and can wait two to four years for the property. That often describes an upgrader timing a move, or a buyer who wants a brand-new unit with a developer's defects liability cover.

It suits less well a buyer who needs to move in soon, or an investor who needs rental income from day one. According to MAS, property loans are subject to the Total Debt Servicing Ratio of 55%, and the bank assesses your capacity to service the loan, so an investor must be able to carry rising instalments through a build with no offsetting rent.

Winfred's Take

The mistake I see with BUC buyers is anchoring on the small first-year instalment shown in the brochure. That number is real, but it is the easiest year of the schedule. The honest question is whether you can comfortably carry the instalment in year three and four, when most of the loan is drawn and you are close to a full payment, possibly while still holding another property. Model the back end of the Progressive Payment Scheme, not the front. If the heavy years work, the BUC works. If only the light years work, it does not.

Frequently Asked Questions

What does BUC stand for?

Building Under Construction, a private residential project sold by a developer before it is physically completed, paid for through the Progressive Payment Scheme.

When do I get my keys for a BUC?

At Temporary Occupation Permit (TOP), which is typically two to four years after booking, with a payment due at that stage.

Can the developer's completion date slip?

Yes, build delays do happen. The prescribed Sale & Purchase Agreement sets out the developer's obligations and the buyer's remedies, which is why you should read it with your lawyer.

Is stamp duty cheaper on a BUC?

No. Buyer's Stamp Duty is tiered the same way regardless of whether the property is new or resale, and any ABSD depends on your buyer profile. It falls due within 14 days of signing the S&P.

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