In February 2024, the government announced that it will double the supply of flats available under the Parenthood Provisional Housing Scheme (PPHS) to meet increasing demand. The government also introduced a one-year PPHS voucher during the Budget 2024 speech, aiming to help eligible Singaporeans defray rental expenses in the open market. HDB later revealed that the quantum for the voucher is set at $300 per month for one year.

As a recently married Singaporean who has been unsuccessful in applying for a PPHS flat (5 times and counting), I aim to shed some light about the considerations, the process, and the challenges that current applicants are facing.

Understanding The Current PPHS Framework

The Parenthood Provisional Housing Scheme (PPHS) allows married couples waiting for the completion of their Build-To-Order (BTO) flats to rent an interim flat directly from the Housing & Development Board (HDB). The scheme aims to provide eligible households with interim housing to meet their urgent needs, with a higher priority given to expectant married couples and married couples with children under 18 years old. Eligibility conditions, such as a combined income ceiling of $7,000 at the time of the BTO application, applies. The allocation of PPHS flats follows a similar ballot system as the BTO scheme, including the $10 admin fee per application. 

Applicants who wish to co-share a 3-room or larger PPHS flat with another eligible household who has a similar waiting time for their BTO flat can contact HDB to make the request. If you are willing to co-share, you will enjoy a higher priority in the ballot, and if either households are expectant married couples or married couples with children under 18 years old, your applications will enjoy a further priority.

Application for PPHS flats opens every two months, on even months such as February, April, June, and so on. When the window opens on the first day of even months, you will be able to look at the list of rental flats available for that particular application window. Typically, around 200 of such units will be available for each application window. You will have around two weeks to submit your application on the HDB portal, with the window closing on the 14th of the month at 11:59pm. Results of the application will typically be released within the two weeks of the following month.

PPHS rental rates are significantly more affordable compared to the open market, where whole flat rental rates for a 3-room HDB flat can go up to $3,500. The exact rates depend on the flat type and location. Families can stay in the PPHS flat until the completion of their BTO flats or for a maximum of three years, whichever is earlier. Extension of stay may be granted on a case-by-case basis.

This structure provides a balance between offering temporary housing support and encouraging couples to move into their permanent homes once they are ready. The affordable rental rates also help young families manage their finances more effectively, allowing them to save for their future home while enjoying a private and comfortable living space.

The flats available for PPHS also come with a site expiry, and you are advised to apply only if there are PPHS flats offered with a site expiry that is at least 4 months after the estimated completion date of your BTO flat. Which is what you should be doing. You wouldn’t want to have the PPHS site expire before your BTO flat is ready (after renovations) and end up having to look for interim housing arrangements again.

Challenges Faced By Current Applicants

Limited Supply of Units

One of the most significant challenges faced by current applicants is the limited supply of PPHS units. The demand for these temporary housing units often exceeds the available supply, resulting in long waiting periods for many, myself included. As mentioned, only around 200 units are made available in each application window, and application rates typically range between 2 to 4 – which means that there are 2 to 4 households vying for each available unit.

In the last application window, there were 578 applications and only 180 units available, translating to an application rate of 3.21. 

With that said, HDB has been steadily increasing the supply of such flats, and application rates have fallen from over 20 times in 2021 to about 2-4 in 2024.

No Direct Allocation of Flats Under PPHS

In our parents’ era, whenever they run into difficulties that they cannot resolve on their own, they will seek help from their Member of Parliaments (MPs). In true boomer fashion, my parents asked me to approach an MP when they learnt that we had trouble securing a flat (BTO back then, PPHS interim rental flat now). 

Well, I did just that – I emailed all three MPs in my constituency, and one of them replied almost immediately. I was asked to go down to one of the “Meet the People” sessions, and I explained my situation to the MP in person. The MP typed in his laptop the whole time while listening and asking questions, and ended the session by sending an appeal letter to HDB. A few weeks later, I received a reply from HDB and it was as you’d imagine. HDB said that while they were empathetic about my circumstances, they were unable to directly allocate a PPHS flat to me without going through the ballot process. Ultimately, it boils down to the luck of the draw. 

While HDB does evaluate appeals on a case-by-case basis, the only leeways for the application of PPHS flats are typically if there are changes in your financial situation (e.g income ceiling above $7k at the time of BTO application but below $7k now) or if you’re pregnant and want to apply for a higher priority in the ballot.

Recent Enhancements to PPHS

The state of the scheme is not as gloomy as I made it out to be – many families have benefited from PPHS over the years, especially married couples with kids waiting for the completion of their BTO flats. By way of crowdsourcing, it is estimated that 70% of such families get a PPHS flat on the first try.

Furthermore, the government recently announced some enhancements to the scheme.

Increasing Rental Flat Supply

Earlier this year, HDB announced that it will double the supply of PPHS flats from 2,000 units currently to 4,000 by 2025, with the bulk of these additional flats coming from the vacated SERS site at Tanglin Halt. These flats are slated to be demolished eventually, but since the blocks are not immediately needed for redevelopment, HDB has decided to let out these flats to meet the demand for PPHS flats.

Around 2,000 vacated flats across 17 blocks in Tanglin Halt will be spruced up before being progressively rented out to families, from the second half of 2025. This will likely have a significant impact, given that the supply is essentially doubled.

PPHS (Open Market) Voucher

The government also introduced a new subsidy scheme designed to help eligible families rent in the open market rather than waiting for a PPHS flat. This comes in the form of $300 monthly vouchers for a year to help defray rental expenses. While this is a step in the right direction, these vouchers may not do much for those currently applying for a PPHS flat. There are two main reasons why.

Firstly, the rental rates of 2-room PPHS flats range from $400 to $550 per month while 3-room PPHS flats go for $600 to $900 per month. In the open market, the average monthly rent balloons to $2,350 and $2,700 respectively. This means that the subsidy will cover less than 15% of the median rental cost of an HDB flat. Even with the vouchers, families are still required to bear a substantial cost – keep in mind that eligible PPHS families have a combined income of $7,000 or below (at the time of BTO application). And this cost will put a significant dent in any plans to save up for their remaining 15% BTO downpayment when the key collection comes along. An argument can be made that these families can go for room rentals instead of whole unit rentals, which could be tough for those who need more space. But even so, the vouchers will only cover less than 25% of the median room rental cost of an HDB flat.

Secondly, the scheme will only run for a year from July 2024 to June 2025. This means that only those who applied in July 2024 will fully benefit from the scheme. While the scheme may have been designed to help families tide until the Tanglin Halt rental flats are ready to be put up for application, having to relocate multiple times can be emotionally and logistically taxing.

Closing Thoughts

Over the years, the PPHS has made significant strides in supporting young couples and families in need of temporary housing while waiting for the completion of their BTO flats. Current applicants who are struggling to secure temporary housing may find some respite in knowing that more PPHS flats will be available next year, but we will have to hang tight for now until the new supply is ready. 

If you are in a similar situation and would like to explore rental options in the open market instead, do reach out to us here. Our experienced consultants will be more than happy to assist you in your search for a suitable property.

See you in the next one!

The post What You Need To Know Before Applying For HDB’s Parenthood Provisional Housing Scheme (PPHS) appeared first on Insights by PropertyLimBrothers.

Congratulations on beating the odds! With a fateful date for your First Appointment, you must have already seen the long list of documents and application forms you need to prepare before you select your flat.

Yet, sometimes even after ticking all the boxes in the document checklist provided, triple checking still falters to curb the nervousness and fear of blundering; and that was exactly how I felt as well. Going to the flat selection appointment alone was daunting, and I certainly made my fair share of mistakes. So, if you are as rattled and nervous as I was during my first appointment, here are some tips I have learnt along the way so you don’t have to make the same mistakes I did. 

1) Download Mobile@HDB for convenience

This tip is for the scatterbrained and disorganised. Mobile@HDB is a gateway for all that is necessary on the days of your BTO appointment. Instead of going through the HDB website and Singpass login, the application just requires your IC to access many functions, such as your personalised document checklist for the appointment and flats available in your selected project.

But most importantly, this application allows you to track your appointment. From adding the date to your calendar, all the way down to getting a queue number for your BTO appointments, this application certainly came in handy for my birdbrain. 

After registering through the application, it will even send a notification to your phone when it is your turn, so you don’t have to check the screen for your queue number constantly. Instead, you can take the waiting time to consider the Optional Component Scheme (OCS) before making the decision during the appointment.

2) Take a closer look at the OCS finishings before paying the price

OCS is an opt-in basis plan that includes the installation of essential fittings and fixtures, such as internal doors, flooring, and bathroom fixtures, to save some time and perhaps cost on renovation. Yet, even though this scheme is offered by HDB, the fixtures and components are not standardised across all BTOs. 

Take the BTOs at Punggol for instance. Even though Punggol Point Woods and Punggol Point Cove are in the same cycle and are right next to each other, the finishing of the vinyl and tiles used are starkly different. As such, do take more than one look at your specific project because the colours and finishing may differ from the images provided online. And this may influence your previous decision, depending on whether the shade and style are aligned with your aesthetic preference. 

Even more so, feel the material to know whether they suit your functional needs. This applies especially to families with young children or elderly parents who might prefer anti-slip surfaces as a precaution. 

3) HDB considers full-time students unemployed

As a full-time student, your part-time jobs or ad hoc positions will not be considered by HDB. Your CPF statement may reflect your employer’s contributions and your bank account may show your salary, but to HDB, a full-time student is unemployed. That means when HDB asks for your gross monthly income, it will reflect $0.

This is important because it will affect your entire HDB Flat Eligibility (HFE) application. As a full-time student, you will not be eligible for Enhanced CPF Housing Grant (EHG), even when you have met all of its conditions. 

Furthermore, you will also not be eligible for an HDB loan, even when you have met the credit assessment criteria. As such, you cannot apply for an HDB Loan Eligibility (HLE) letter during your HFE. That being said, this only applies to couples who are both full-time students. 

On the bright side, couples who are both full-time students (or a couple consisting of a full-time student and a full-time National Servicemen) are both eligible for deferred income assessment.

On the other hand, if you are a full-time student and your partner has been working, and they meet the credit assessment criteria, HDB will only consider their income and issue the loan and grant accordingly. 

If you are like me, who only discovered that a full-time student’s income would be excluded, a few days before the appointment, I am glad this article found you. This will save you from the hassle of preparing any income documentation and allow you to rethink your repayment plans.

4) Your HDB loan amount will likely change

In the case where your HDB loan does not cover the entire cost of your flat during your application of HFE, do not panic, as HDB requires another income assessment closer to the date of key collection. 

You will be asked to reassess your loan eligibility based on your current income, and hopefully the combined income of your household has increased since your first appointment to secure a larger loan. 

At the same time, do not worry about your EHG. Once your EHG has been approved in your HFE application, it does not adjust based on the new gross monthly household income. HDB will inform you of its approval within 21 days of its submission, and before your first appointment. You will also know when your EHG is approved when you see the grant monies deposited into the corresponding CPF account, and it will be untouchable.

5) Do not worry about forgotten documents

While HFE streamlines the eligibility check for housing grants and HDB housing loans into one application before the appointment, there are still some documents you would have to submit during the appointment itself. If you happen to miss some out, do not panic as well. 

Your attending officer will advise you to submit these documents online and will usually give you a grace period of 2 weeks. However, if you find the duration too tight, do not hesitate to ask for an extension. 

During the period of my appointment, my partner was away for a month; as such we definitely needed more than 2 weeks to submit all the documents and signatures. A simple explanation of our situation was enough for the attending officer to understand and extend the deadline. Hence, do not hesitate to explain your circumstance.

Closing Thoughts

From the lack of information online to my own carelessness, I hope my mistakes have become lessons so you will feel more confident going to your first BTO appointment. If you have more enquiries, do not hesitate to contact us. 

All the best for your flat selection, may your desired unit be available!

The post I Went to My First BTO Appointment Alone, Here is What I Learnt appeared first on Insights by PropertyLimBrothers.

In Singapore, home ownership is an important goal for many as it provides a sense of security and belonging in a city-state where land is scarce. With the country’s high cost of living, it is not surprising that housing prices have also skyrocketed over the years. However, a recent phenomenon that has caught the attention of many has emerged in the real estate market – million-dollar HDB flats. 

These public housing flats, which are traditionally meant to be affordable and accessible to the average Singaporean, have been selling for over a million dollars in certain areas. While this may seem like an exorbitant amount for public housing, it has sparked a discussion about the evolving nature of Singapore’s property market and what it means for the affordability of homes for ordinary citizens. In this context, it is worth examining the reasons behind this trend and the implications it may have for Singaporeans who aspire to own their own homes.

In this article, we revisit some of the successful deals by the PropertyLimBrothers team to examine the factors that contributed to these flats crossing the million-dollar mark and breaking the record price.

Why Rarity Equals Value  

Just like any tangible assets that are limited by nature, be it sneakers, trading cards, or even cars – the rarer it is, the more expensive it will be. It all boils down to supply and demand. 

In the property market, certain properties and property types can command a higher premium because of their rarity. Even more so because of the scarcity of land in Singapore. In the HDB segment, flat types such as executive apartments, executive maisonettes, and terrace houses are examples. That is because they are no longer offered by HDB, meaning that there is no fresh supply for such flat types being injected into the market anymore. This leads us to recall a particular sale that occurred in 2021. 

At that time, a follower of PLB watched one of our signature home tour videos and contacted us to sell their property. It was a rare HDB terrace house located at Jalan Bahagia, in the Whampoa area. For the uninitiated, there are only 285 of such units left, with 200 of them situated in Whampoa. The unit that we were contacted to sell was also one of the 56 corner terraces, making it even rarer. The owners acquired this property and had pumped in around $250,000 for renovations back in 2011. As they had already purchased a new home, the owners wanted to sell this property as soon as possible while hitting their target price of $1.2 million. 

There were many obstacles that the team faced, and one of the biggest challenges was the balance lease. With only 50 years left on the lease, and a high asking price of $1.2 million, the initial concern was that buyers would not be too receptive. That is because the previous highest transaction was at $1.15 million while the market price at the time was around $800,000. Although it is a landed property, it still falls under HDB’s jurisdiction and getting a bank valuation was not possible. Because of that, the Cash-over-Valuation (COV) component might end up becoming a deal breaker. 

What caught the team by surprise was the overwhelming volume of enquiries that flooded in after our signature home tour video went live. Christina, one of the listing managers for this listing, joked that there were so many text messages coming in that her Mother’s Day plans had to be cancelled. Despite the initial worry about the balance lease, high quantum, and COV, we received over 100 enquiries for the property. This shows that there is demand for rare property types and buyers are still willing to pay the premium for such properties that are no longer in supply. 

However, since COVID-19 restrictions were in place, there were still logistical challenges that we had to overcome. For instance, the maximum permitted group size for social gatherings was still capped at five at the time. This made it a lot tougher to conduct viewings for all interested parties who enquired about the property. We had to qualify serious buyers before scheduling back to back viewings, activating a lot of manpower to do traffic control outside of the property in order to comply with the restrictions. 

After three weeks and 20 viewings, we received four offers that started from $1.1 million. Upon discussion with the owners, we conducted a closed bidding with three offers and eventually closed the deal at $1.268 million with a direct buyer – one of the highest HDB transactions at the time. But the job did not end there – we also assisted the direct buyer by becoming an HDB helpline, explaining the intricacies of an HDB transaction and the implications of buying a low lease property on CPF usage. 

This sale was conducted by Christina Tan and Felicia Cai, listing managers at PropertyLimBrothers. Through this experience, they mastered the art of handling a high volume of enquiries and viewings, and were reaffirmed of the importance of being transparent with all parties involved in the transaction.  

The Space-Value Relationship

In Singapore, we typically use per square foot (PSF) as a metric to evaluate the value of a property and determine its quantum. Because space is often a luxury in Singapore, properties that offer ample square footage are in high demand. In recent years, many HDB flats that have crossed the million-dollar mark were larger HDB flats, such as executive apartments and executive maisonettes, which are often considered a symbol of prestige and exclusivity. That is because they provide more room for families to live, work, and entertain, making them highly desirable to those who value spacious living. One example of this is a transaction that happened last year in 2022. 

We were contacted by a gentleman who was trying to help his aged parents sell their executive apartment at Bedok Reservoir Road. It was originally a 3-room and 4-room flat that were repossessed by HDB and combined into an executive apartment, with the lease refreshed. Because of this, it became one of the largest floor plates in the entire block with a lease balance of 69 years when the average lease balance in the area was all around 50+ years. Being a high floor north-south facing corner unit in a curved block, it has a nice clearing because of the low-rise HDBs in its surroundings. Not to mention that it was just a short walk from Bedok North MRT station. All these intrinsic attributes made the unit extremely attractive to modern homebuyers.

There were a few challenges that the team faced. Firstly, the owners had stayed for over 20 years and the unit was in its original condition. This means that the buyer will likely have to do a full renovation. On top of that, there is the COV component to worry about, which could be a barrier for young couples. With the owners being aged, they wanted to challenge the $1 million mark as this would likely be their last move to realise the cash appreciation in their property. The team empathised with this and went into the deal with that in mind. 

We addressed all foreseeable concerns in our signature home tour video, which helped a lot in justifying the price point for prospective buyers. During the viewings, we sold the rarity of the unit and the possibilities of the space – converting the large and underutilised foyer space to a potential fifth bedroom, different seating areas, an open concept kitchen, a study, or even a home gym.  

Demand was overwhelming as we received a constant stream of enquiries due to the rarity of the unit. We had a total of 28 viewings, with almost five groups of potential buyers viewing the unit each week. Three offers came in below $1 million before the eventual buyer made the fourth offer – the only one that crossed the $1 million mark. After some negotiation to push the limit for the best interests of the owners, we closed the deal at $1,048,888. The eventual buyer was a direct buyer who was in the market for a resale HDB that had ample space because they were used to their previous landed home. They were impressed by the size of the single floor plate and were willing to pay the COV and higher premium because the amount of space was rare for an HDB flat. This shows the demand for larger HDB flats. In fact, we still had enquiries coming in even after the sale was completed.    

This sale was conducted by Lee Jun Wei and Kevin Lim, listing managers at PropertyLimBrothers. Speaking about his experience, Jun Wei mentioned that the deal provided a confidence boost and helped him build authority as he was often underestimated because of his young face and status as a new agent. He added that he learnt a lot about empathy from this deal and established a good relationship with the sellers, whom he is still in contact with to date. 

Location Still King

The soaring skyscrapers that dot the city’s skyline stand as a testament to the insatiable demand for prime real estate in Singapore. The value of a property is often determined by its location, with properties situated near the city centre or near popular amenities commanding top prices. The closer a property is to key transportation hubs, prestigious schools, shopping malls, and vibrant entertainment districts, the higher its value tends to be. The convenience and accessibility of such locations are highly sought after – bonus if it comes with a nice unblocked view of the landscape or lush greenery.

In today’s property market, location is still the most important factor. We are compelled to recall a transaction that happened last year in 2022. 

It was a 5-room flat at City Vue @ Henderson that just cleared its MOP. What was unique about the unit was that it cleared its MOP in just 2.5 years instead of the usual 5 years because the seller obtained it through Selective En Bloc Redevelopment Scheme (SERS). It was also a high floor (above 40 storeys) and standalone corner unit with fantastic unblocked views of the Greater Southern Waterfront, Sentosa, the Singapore Flyer, and the central business district. Furthermore, it was situated in the highly sought after Redhill and Tiong Bahru area.  

The unit had no renovation done – everything was originally from HDB, simple curtains and furniture, and only lower cabinets were installed in the kitchen. In comparison, other units on lower floors in the same block were nicely renovated and listed at around the same asking price. There were also concerns that the upcoming BTO nearby with a higher plot ratio might block part of the view. Furthermore, because this was an open listing, the team had to move fast as there were other agents who were marketing and showing the unit. 

We quickly did some cleaning up and produced our signature home tour video to address the concerns, justifying the high price point with our analysis in the process. No filtering or qualifying was done for prospective buyers who wanted to view the property, since the team had to compete with other agents. Christina, one of the listing managers who conducted the sale, mentioned that one of the prospective buyers found our team more genuine and decided to engage us after finding listings by other agents marketing the same unit with rendered photos while our team used original ones. 

After several viewings and a couple of offers, the team closed the deal at $1.375 million. The eventual buyers were an elderly couple who downgraded from a private property to stay near their son. They were able to sign the option and exercise immediately without waiting for valuation since they were cash buyers. 

The deal was conducted by Christina Tan and Jeremy Yong, listing managers at PropertyLimBrothers. By replying to enquiries and conducting viewings in a speedy manner, the team managed to close the deal ahead of competitors while serving the needs of both the sellers and buyers.   

Closing Thoughts

When it comes to the factors that contribute to some HDB flats crossing the million-dollar threshold, three main factors stand out: rarity, space, and location. Rare HDB flat types, such as executive apartments and maisonettes, are highly sought after and command higher prices due to their scarcity. The availability of space, both within the flat and in the surrounding neighbourhood, is also a key consideration for buyers, and larger flats or those in more spacious areas are often valued more highly. Finally, location plays a significant role in determining an HDB flat’s price, with proximity to amenities and transportation infrastructure being a key factor. 

Given these factors, it is no surprise that some HDB flats have crossed the million-dollar mark, and this trend is likely to continue as demand for quality public housing in Singapore remains strong. However, as we continue to propagate in our podcasts and webinars, these million-dollar transactions that make the headlines are outliers and make up a small percentage of total transactions. There are still affordable options that are within reach for Singaporeans, now with even more support from the government in the form of additional grants. 

If you are on the hunt for your next home and want a second opinion, feel free to contact us here. PropertyLimBrothers, always happy to show you the place.

Any burning questions?

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The post Sold at Record Price — Factors Contributing to Million Dollar HDB Deals appeared first on Insights by PropertyLimBrothers.

Singapore’s residential market has come a long way since independence. Off the top of your head, what are the two main types of properties? You are right if you mention HDBs and private properties. They form the main categories of residential properties in Singapore. Under these umbrellas, did you know there are over 15 different housing units? 

This article will introduce you to past and present HDB schemes and cover some limited-edition housing types!

The Past & Present of HDB Schemes

Since its inception, the Housing Development Board has enacted numerous schemes to meet the different needs of the community. Although HDB focuses on public housing, HDB has teamed with the private sector and property developers to offer various accommodations. Here are the four significant schemes with flats available in the market:

1. Build-To-Order (BTO)

Many millennials may be familiar with the phrase “BTO ai mai?”. After reaching a demand quota, HDB begins the construction of developments, thus the term ‘Build-to-Order’. The BTO exercise is one of the ways HDB sells new units with intact leases after the end of HDB’s Registration for Flats System. A unique housing type you can find is Community Care Apartments, HDB’s latest joint offering with MND and MOH. BTO launches within specific areas, such as the city centre, will fall under the Prime Location Housing Model. Despite being termed a ‘housing model’, housing types available are the same as in other locations.

2. Housing and Urban Development Company (HUDC) Scheme

Housing and Urban Development Company (HUDC) Co. Pte Ltd set up the scheme in 1974 to accommodate Singapore’s ‘sandwich class’ who did not qualify for HDB flats or could afford private properties at the time. Subsequently, the HDB took over the scheme’s management and privatised the projects under the scheme. Braddell View was the last of the 18 HUDC projects privatised in 2017.

What makes these developments different from HDB flats? HUDC flats had larger square areas than typical HDB flats and amenities reminiscent of private properties at the time. Some projects have maisonette units which are no longer built today! Although these projects are no longer public housing, some have en bloc and redeveloped into some of Singapore’s iconic developments, such as D’Leedon and The Interlace.

3. Executive Condominium (EC) Housing Scheme

Enacted in 1999, the EC scheme also serves the middle-class population of Singapore who is not eligible for HDB flats but finds private properties hard to reach. Executive Condominiums are public-private hybrid models of subsidised housing by the government while being built and sold by private property developers. 

This scheme seems to be a newer and improved replacement of the HUDC scheme, where owners can enjoy more facilities and have the opportunity to sell to foreigners in the future.

You can expect full condominium facilities like tennis courts and swimming pools from EC developments. Unlike owning private condominiums, EC owners are subject to eligibility conditions and restrictions by HDB until the 11th year. Once the 11-year mark is hit, ECs become private condominiums and fall under private properties.

4. Design, Build and Sell (DBSS) Scheme

“DBSS Flats? Are they related to the bank?” DBSS or the Design, Build and Sell Scheme was a short-lived scheme between 2005 to 2011 where private developers would design and build the flats while HDB would sell the respective units to buyers. Constructed with unique architectural facades, DBSS owners must abide by specific guidelines when renovating their units. 

Despite being HDB flats, you can find condominium-like features like balconies and study rooms. You can find these 13 DBSS developments across Singapore, with Tampines having the most projects.

Having explored the various schemes HDB enacted, the age-old question is…

How many types of HDB are there? 

1. Community Care Apartments          

As Singapore’s ageing population grows more prominent, HDB seeks programmes to keep up with the needs of seniors. Community Care Apartments are one of them. This collaboration with the Ministry of National Development and the Ministry of Health aims to provide assisted living and encourage independent living amongst seniors above 65 years old. Creating the development with seniors in mind, you can expect wheelchair-friendly washroom facilities, built-in wardrobes and plenty of communal spaces for seniors to interact with each other.

HDB piloted the programme in 2021 at Bukit Batok, and the second release was recently in the November 2022 BTO exercise alongside 751 other units at Queensway Canopy. Each apartment unit is around 32 square metres after factoring out the air conditioner ledge. In a typical apartment floor plan, there is no wall between the rooms; instead, residents can use a sliding partition whenever they want. 

A unique feature of these flats has to be the mandatory basic service packages for residents. Under the basic package, a community manager supports seniors’ living experiences. Depending on the needs and preferences of the seniors, they may also opt for additional services such as housekeeping and meal service.

So far, there is yet to be any news of a third instalment, but who knows? We might see Community Care Apartments all around Singapore in the future. 

2. Studio Apartments, 2-room & 2-room Flexi Flats

Before the 2-room Flexi Flats we know today, there were two schemes: Studio Apartment and 2-room flat schemes. As HDB stopped producing small flats in 1998, the creation of studio apartments served as smaller, short-leased housing options for seniors. HDB re-introduced the production of 2-room flats in 2006 to accommodate lower-income families and singles but subsequently merged the initiatives. While you can still purchase 2-room flats in the market, any new units from 2015 are considered Flexi flats. 

Created as an option for seniors above 55 years old, the ‘Flexi’ in the namesake refers to flexible short-term leases. Seniors are guaranteed at least 40% of the 2-room Flexi flats in BTO exercises, with half of the quota reserved for those eligible for the Senior Priority Scheme. Those who do not fit the criteria of the Short Lease Scheme but may continue to purchase 2-room Flexi Flats will be subjected to the full 99 years lease. Do note that owners of short-leased flats cannot sell their properties in the open market and must return the flat to HDB.

On HDB’s website, you may notice two types of Flexi flats available. What is the difference between Type I and Type II flats? As seen in the floor plans below, Type II flats are slightly bigger than Type I ones but overall, both share a similar layout.

3. 3-room to 5-room Flats

3-room to 5-room flats make up the majority of residential dwellings in Singapore. Did you know that not all developments offer all the room types? Despite the difference and term difference, both 4-room and 5-room flats offer 3 bedrooms with 5-room coming with a suggested study. If we are referring to the chances of balloting each type of unit in a BTO exercise, you will find a higher success rate with 3-room flats. Observing the past exercises, you will notice that the application rate of 4 & 5-room flats are typically higher than 3-room ones.

4. Maisonettes

Maisonettes are rare in the market. It is a two-floor unit in our high-rise buildings. HDB offered these flat types in new flats from 1983 to 1955, spread across 23 towns in Singapore. Together with Executive Apartments and Jumbo flats, they form the trio of the largest flats developed by HDB. The floor plan resembles that of a landed property with a kitchen, living room and dining room on the first floor and bedrooms on the second floor.

Three types of maisonettes are available in the market; penthouse, executive and 5-room. Penthouse maisonettes are, as you imagine, located on the top floors of developments and have an open concept on the second floor. Executive maisonettes include a balcony area; you can find a study or bedroom on the first floor of 5-room maisonettes.

Check out Charline who introduces us of a top-floor executive maisonette near Potong Pasir MRT!

5. Loft Units

While not officially a HDB type, loft units are newer and more ‘evolved’ versions of maisonettes that you can find in more recent BTO developments. Although not as big as its predecessor, loft units are generally larger than other BTO flat types. When resold, they are considered regular 4/5-room types depending on the bedroom types.

Unit layout-wise, bedrooms are located on both floors of loft units, while most maisonettes in the market have only bedrooms on the first floor. While there is no compiled list of loft units in Singapore yet, you can find these rare units at:

• SkyTerrace@Dawson (26 loft units out of 758 total units)
• Treelodge@Punggol (14 loft units out of 712 total units)
• Punggol Sapphire (23 loft units out of 760 total units)

Check out Skyterrace @ Dawson’s loft units as Caline, Adrian & Jesley bring you on Signature Video Home Tours!

6. Executive Apartments (EA)

Offered as a bigger alternative to 5-room flats from 1984, you can find EA across mature and non-mature estates in Singapore. It has three bedrooms and two bathrooms. Similar to maisonettes, you can find some units with balconies and extra space for a possible study or bedroom.

Check out Angela in a bleubricks 5-room executive unit home tour!

7. 3 Gen Flats

To support the needs of extended family staying together, HDB introduced 3 Gen flats in BTO from 2013 onwards. Built with four bedrooms, 2 with adjoining bathrooms, 3 Gen flats are bigger than average BTO 5-rooms but smaller than Maisonettes and EA. This flat is exclusive to multi-generational families where the bedrooms with adjoining bathrooms are located on opposite ends of the unit. Even after MOP, owners cannot rent out the unit and may only sell to other multi-generational families. 

8. Jumbo Flats

Jumbo flats are the largest square area units in the resale market, either pre-built by the government or part of HDB’s Conversion Scheme. The government merged over-supplied flats in 1989 as a one-time effort to deal with unsold units. Mainly situated in Woodlands, some units go up to 7 rooms! Today, you can also find these 2,900-odd flats in Yishun, Tampines, Bedok and Jurong East. 

Did you know President Halimah Yacob and her family lived in a Yishun jumbo flat for over 30 years? Initially intending to stay at her flat for her presidential term, we can tell that she enjoyed the amenities Jumbo flats offer.

Under HDB’s Conversion Scheme, adjoining flat owners may convert two 3-room or smaller units into one if they meet the eligibility criteria. Note that you cannot subdivide converted units again, and a resale levy will apply when selling these houses. 

Overall, the vast space available allows for multi-generational living, and renting out parts of a jumbo flat can serve as passive income. Check out how Christina & Melvin sold a Jumbo unit in 4 weeks! 

9. Terrace House

Landed public housing. Can you believe it? There are 285 HDB landed properties, 200 of which are in Whampoa and the rest in Stirling. Before HDB, the British Government set up Singapore Improvement Trust (SIT) to develop public housing our the early days. 

SIT developed and managed these landed housing before Singapore’s independence. When HDB came into existence, they took over the houses and issued homeowners fresh 99-year leases in the late 1960s. Leases in Whampoa started in 1972, while leases in Stirling began in 1968.

A fun fact is that if you retrieve a floor plan for one of the units, you will notice that it is classified as a maisonette. Like their high-rise counterparts, terrace owners have public parking spaces and block plates on the side of the building. With renovations done to some units and the availability of corner terraces, you might not recognise these limited edition properties from private terraces.

Discover this HDB landed home tour by Jesley!

Final Thoughts

We hope you have learned a thing or two about Singapore’s numerous public housing types. From two-floor units to ultra sized Jumbo flats, there is sure to be a unit that suits your needs. 

Over the years, we also see HDB creating different schemes and floor plans to keep up with our societal needs. In the 1970s, HUDC schemes provided options for Singapore’s sandwich class, and in line with our current ageing population, seniors may purchase Community Care apartments, studio apartments or flexi-flats. These changes in our public housing landscape emphasise how HDB has carefully planned and become more inclusive. It is no wonder that Singapore’s public housing and home ownership are recognised globally!

Stay tuned for articles covering private housing types and a deeper dive into your favourite housing type. Till next time!

The post The A to Z of Singapore’s Public Housing: Your Ultimate Guide appeared first on Insights by PropertyLimBrothers.

The November 2022 BTO ballot results were recently released. For those who were successful in your applications, a huge congratulations to you! For first-time homebuyers, this marks an exciting chapter in the next phase of your lives and the start of your property journey. 

As the excitement settles, you might find yourself having many anxieties and questions regarding the process from here on. But fret not, we are here to help! In this article, we take you through the different stages from your first appointment to the key collection for your new flat.

Before The First Appointment To Select Your Flat

After you have received your BTO queue number, you will typically have to wait for a few months before you get another email to inform you of your appointment date to head down to HDB hub. This depends on your queue number – if your queue number is further back, you will have to wait for other couples to choose their flats first.

Apply for your HLE letter. The first appointment will be to select your unit and assess your grants and loan eligibility. Therefore, the first and most crucial step to take before your first appointment is to apply for your HDB Loan Eligibility (HLE) letter if you intend to take the HDB loan. Be thorough when applying for your HLE letter as this can drastically affect the maximum loan amount you can get from HDB. 

If you are still studying full-time or in National Service (NS), you can defer the income assessment until the key collection appointment. The advantage of doing so is that you will qualify for higher grants since there is low to zero income at this time and a higher loan quantum later when your combined incomes are assessed in a few years’ time. However, the downside is that you will need to fork out more cash during the first downpayment since your CPF OAs will likely not have sufficient funds.

Shortlist your ideal flats. Depending on your queue number, there will likely be many applicants ahead of you. This means that the good units (high floors, corner units, units with unblocked views, units closer to certain amenities) will likely be taken up first.

In the days leading up to your first appointment, you can log into the HDB flat portal and go under Flat Applications to check on the flat details and availability. This way, you will be able to see which units are still unselected before heading down to HDB hub. Shortlist a few in the event that some of those that you have shortlisted get snapped up before your turn.

Discuss whether to opt in for OCS. Before your first appointment, you should have a discussion with your partner to decide whether you want to opt in for the Optional Component Scheme (OCS). 

Under the OCS, the cost of necessary fixtures and fittings such as internal doors, flooring, and bathroom fixtures will be added to the final price of your BTO flat. As these finishes will be completed by HDB by the time you collect your keys, it will save you some time on renovation and you might be able to move in earlier. Additionally, since the cost of these fittings is included in the final price of your flat, you are able to pay for it using your CPF and mortgage loan.

Forfeiting your queue number is not recommended as additional chances that you have accumulated from previous unsuccessful applications (in non-mature estates) will be reset. If you really have to forfeit due to unforeseen circumstances, rest assured that you will still be considered a first-timer in your next application. However, if you reject a second chance to select a flat after getting a queue number, your first-timer priority will be suspended for a year and will be considered a second-timer if you apply during the same year.

Appointment #1: Flat Selection

Big day and the moment you’ve been waiting for – it is time to select your unit and get into debt with your partner.

Bring along your NRICs, appointment letter, and HLE letter. The selection of flats strictly follows the queue number, so you might be required to wait if the couple ahead of you in the queue has not selected their unit yet. While waiting, you may want to visit the My Nice Home Gallery showflats located within HDB hub to check out the latest flat designs, as well as interior design and renovation ideas.

When it is your turn, an HDB officer will walk you through the process of selecting your flat and other administrative matters involving your grants and loan. At this point, your grant eligibility will be assessed and you will be required to submit your HLE letter if you are taking the HDB loan. 

After you have selected your unit, you will be required to pay a maximum of S$2,000 in cash as the option fee. This option fee will form part of the downpayment and total cost of your flat.

And there you have it. Congratulations to those who are reaching this milestone! Don’t forget to take a photo together with your partner at the photo wall to commemorate the moment and shake on the deal.

Appointment #2: Signing of Lease & Downpayment

Prior to this second appointment, your CPF Housing Grants would have already been disbursed into both your CPF OA accounts. The good news is that you will be able to use the grants for your downpayment.

This appointment, which will be several months after the first, will be to sign the agreement of lease and to make your first downpayment, stamp duty, and legal fees. Remember to bring along your agreement of lease letter, which will specify the payment amount, when heading down to HDB hub.

During this appointment, the amount of downpayment you have to pay will depend on the type of loan you have chosen to take. 

For those taking HDB Housing Loan, under the latest cooling measures, you will be required to pay a downpayment of 20% of the flat’s purchase price. However, couples who qualify for the Staggered Downpayment Scheme will be able to make the downpayment in two instalments – 5% of the flat’s purchase price during this appointment and the remaining 15% during the key collection appointment. You can use CPF OA, cash, or a combination of both to pay for your downpayment.

At this stage, if you and your partner have sufficient funds in your CPF OA after taking into account the CPF Housing Grants, you will not need to fork out any cash. However, if you have deferred your income assessment and have not received your grants, be prepared to fork out more cash.

For those opting for a bank loan, you will be required to pay a downpayment of at least 25% of the purchase price. 5% of it needs to be paid in cash while the remaining balance can be paid for using CPF OA, cash, or a combination of both.

Decide on ownership status of the flat. During this appointment, you will also be asked to choose between Joint-Tenancy or Tenancy-In-Common. The former will allow both owners to have an equal stake in the flat, no matter how much each party contributed to buy the flat. For the latter, each party will hold a separate share of the flat.

And that sums up the second appointment! Now the waiting begins. Look for Facebook or Telegram groups that provide and share regular updates for your BTO project. You may even get to know some of your future neighbours through these groups. 

For those who have more urgent housing needs while waiting for your BTO flat to be built, you may wish to check out HDB’s Parenthood Provisional Housing Scheme (PPHS) or look towards the rental market.

Appointment #3: Key Collection

Congrats once again! Your BTO project is officially completed. This should be a few years after your first two appointments. By now, your excitement should be at its peak knowing your flat is finally ready after the long wait. Head down to HDB hub to finish the process of your BTO journey. 

Before heading down for key collection, you will be asked to do a second HLE to reassess your loan eligibility based on your current income regardless of whether you have deferred your income assessment. If your combined income has increased since your first appointment (which it should have), your loan amount will be increased accordingly. 

For those who opted for the Staggered Downpayment Scheme, this would also be the time to pay for the balance downpayment. You may use the funds and leftover grants (if any) in your CPF OA, cash, or a combination of both to pay for this downpayment.

After you have completed all the necessary payments and paperwork, the HDB officer will hand you a bundle of keys to your new home. Once again, you may want to take a photo at the photo wall to commemorate this milestone and special occasion.

Once all that’s done, it’s time to visit your new home! Traditionally, Chinese couples would bring along a pineapple to welcome wealth and prosperity by rolling it into the house. But over the years, we’ve seen this custom being practised by other races as well. 

You might also want to start looking around for defects, or choose to engage a professional to do so.

Conclusion

We hope that this article has given you a comprehensive understanding of the whole process after getting your BTO queue number. As you begin executing your interior design plans and renovation works for your dream home, we encourage you to exercise prudence and not overspend. 

For those who didn’t manage to get a queue number this time, do not lose hope! If you have more enquiries or want a second opinion about your property options, do not hesitate to contact us. See you at the next one.

The post We Got Our BTO Queue Number… What’s Next? A Step-By-Step Guide To Navigating HDB Appointments appeared first on Insights by PropertyLimBrothers.

 

Recently, you may have heard of an absurd number of resale HDB flats being sold for millions of dollars. A few months back, PLB likewise successfully closed resale flat deals above the million-dollar mark.

With more than 14,000 HDB flats reaching Minimum Occupation Period (MOP) status, it will no doubt generate a surplus in the resale market if owners choose to sell their MOP-ed units after occupying their homes for five years. So how will this surplus affect prices?

In this article, we will explore the impacts of an enormous amount of HDB MOP flats entering the resale market and how this surplus will serve those waiting for their Build-To-Order (BTO) flats. We will also put out essential considerations for those thinking of right-sizing.

How and Why will this impact the Resale Market?

Before we dive right into the impacts on the resale market, we need to know where the surplus of the HDB MOP flats is located.

We zoomed in on the number of freshly MOP-ed units in each district throughout 2022. Overall, Punggol, Jurong and Choa Chu Kang in districts 19, 22 and 23 respectively have the highest MOP flats. Coincidentally, these three districts are all non-mature HDB estates.

Typically, non-mature HDB estates are less than 20 years old and are less developed than mature HDB estates. Eventually, non-mature HDB estates will be more equipped with amenities and infrastructures, maturing over time. Recently, more people gravitate towards non-mature estates for the following reasons:

1. More upcoming developments such as the Punggol Digital District, Jurong Lake District and Jurong Region Line at Choa Chu Kang

2. More affordable price points

3. Higher number of newer clusters with a longer balance lease

4. High growth potential

The prices of resale flats in non-mature estates are becoming more and more comparable as smaller bedroom types are outpacing those in mature estates. This hints that there is a growing preference for flats in non-mature estates, contributing to the rise in prices. Generally, we see a similar increase in median prices across all flat types in both mature and non-mature estates. 1-room flats are omitted because they are usually rented out. The median prices of all flat types in mature estates supersede those in non-mature estates except for 2-room flats, which are more expensive in non-mature estates. Why is this the case?

Back in September 2013, a change in HDB policy allowed singles aged 35 and above to purchase BTO 2-room flats. This new policy mitigates the housing needs of singles previously who could only buy a BTO or private property. As such, a significant number of 2-room flats were built mainly in non-mature HDB estates such as Punggol to meet the surge in demand. This addition to the supply of HDB flats trickles down to the HDB resale market upon reaching its MOP. The high prices of the 2-room resale flats in non-mature estates can be attributed to the rising proportion of singles who remain single by choice or get married later.

The bulk of the HDB flats to reach MOP was the greatest from March to May this year. How would this impact resale HDB prices? Will prices continue to rise? Moving forward, we foresee a spike in resale HDB prices due to the reduced number of MOP-ed flats in June and July compared to the previous months.

Generally, the median resale HDB prices increase over time for 3, 4, 5-room and executive flats.

When the Covid-19 pandemic struck in 2020, the median prices across all flat types soared, with 3-room flats showing the most significant increase in prices of 31.6%. Median resale HDB prices increased by 14.6%, 20.9% and 21.6% for 4, 5-room and executive flats respectively. This demand fuelled by low-interest rates propped up prices further.

Regarding resale transactions, 4-room flats have the highest transaction volume, but this may result from a larger proportion of 4-room flats being built compared to smaller room types. Usually, a smaller proportion of 1-room flats would be constructed as it would most likely be rented out.

So does the surplus of freshly MOP-ed flats meet the rising demand for resale flats? Focusing on MOP-ed flats, the 4-room flat type accounts for the most considerable proportion of the entire bulk (42.2%). Other dwelling types soon hitting MOP include 1, 2, 3, 5-room, executive, jumbo and terrace HDBs.

Last year, there was a sizable number of HDB MOP flats amounting to more than 20,000. Dipping this year to slightly more than 14,000, the reduction in the resale flats’ supply may push prices up further as demand remains strong. How would this year’s supply of resale HDB flats serve those waiting for their BTOs? This brings us to the next section of the article.

What does this mean for people waiting for their BTOs? 

Since the beginning of the Covid-19 pandemic, most BTO projects faced delays owing to the stricter border measures, manpower crunch and supply chain disruptions. Unfortunately, some contractors have pulled out of their respective BTO projects due to financial difficulties. This is seen in the Marsiling Grove project, where the contractor Greatearth discontinued operations. This has stirred concerns amongst those waiting for their BTO flats, disrupting their life plans. The Housing and Development Board (HDB) has been actively searching for a replacement to continue operations without compromising the safety and quality of the BTO flats. Even though the waiting times of BTOs are projected to be reduced in the next few years, the construction sector has not fully gotten back on track to pre-Covid 19 days.

The surplus of HDB MOP flats can be a potential alternative for those considering letting go of their BTO bookings due to the long waiting times or those looking to move in immediately. Why consider these freshly MOP-ed HDB flats? The newly MOP-ed flats will serve the BTO pool of buyers searching for a relatively new house with minimal renovations. There is a much higher chance of fitting one’s desired location because these resale flats can potentially be found at all locations. They are sold in the open market and the transaction duration is much quicker than waiting for a BTO. In contrast, BTO flats typically have limited location choices and buyers often cannot get a flat in their desired town unless they are very lucky.

In a past article, we mentioned that if you have found your “dream home”, we advise against timing the market but snag up that particular property as no two properties are the same.

Are you considering Right-Sizing?

Are you fully utilising all the rooms in your house? Or have your children moved out, leaving you with some empty rooms? If your answer is yes, perhaps it is time to consider right-sizing. Before we dive into right-sizing, we have to point out that there is a difference between right-sizing and downsizing. Commonly associated with negative connotations, downsizing is often seen as undesirable. However, suppose you view it as right-sizing. In that case, you are trying to find an environment that best suits your needs without stressing yourself out with the unsustainable debts you have taken to finance your purchase of an enormous house. It is all about figuring out what you need. Do you really need a huge house? It only translates into higher maintenance costs and utility bills. So if you are thinking about right-sizing from a landed property or private condominium into a freshly MOP-ed HDB flat, this section is for you.

As they say, less is more! Right-sizing allows you to save on your homeownership fees and most importantly, free yourself of financial commitments. It may seem like a compromise initially, but it is beneficial in the long run. Apart from cost savings, it also brings your family closer together. Usually in a large house, everyone just goes straight to their rooms without much interaction. The common areas promote family bonding because of a more compact layout by right-sizing from a landed property, condominium, or a larger HDB unit to a smaller HDB unit.

Motivated by the elderly, the government has implemented several schemes, such as the Deferred Downpayment Scheme (DSS). This scheme assists them by deferring their downpayment until the keys to their next home are collected. This is especially beneficial for elderly homeowners, easing their cash flows and smoothening their right-sizing process. On top of that, flat buyers intending to use their sale proceeds from their existing home to fund their purchase without taking up any loans are eligible for the Temporary Loan Scheme (TLS). This scheme not only eases cash flows, but it also facilitates the seamless transition from their existing home to their next one.

Final Thoughts

We have looked at the possible impacts of a vast surplus of HDB MOP flats, how it serves the BTO buyer pool and right-sizing. The question is, should you sell your HDB now? Knowing where your property stands on the property market cycle is crucial in making an informed decision.

Following the property cooling measures back in December last year, the tighter Total Debt Servicing Ratio (TDSR), higher Additional Buyer’s Stamp Duty (ABSD) and the lower Loan-To-Value (LTV) ratio was implemented to curb the heated property market. However, it was not enough to curb price increases. Demand remains resilient. Hence, prices are set to increase for ready-made houses.

From an investment standpoint, we support the hold decision rather than the sell decision. Of course, this depends on the unique traits of each property, your financial circumstances, and your life goals. The property market is predicted only to get hotter, escalating prices and allowing you to reap more profits further down the road.

If you have any questions about the specific property you are holding or want customised analysis and advice on your situation, you can contact our experts here. We hope this helps on your property journey!

The post 14,000+ HDB MOP Flats in 2022: How will the Surplus Affect Price? Should I sell my HDB now? appeared first on Insights by PropertyLimBrothers.

As over 14,000 Build-to-Order (BTO) flats reach their maximum occupancy period in 2022, buyers looking for resale flats should anticipate a medley of potential homes up for grabs soon. Yet do not be mistaken, as much as BTO and resale flats are both considered HDB housing, they have entirely different buying processes and costs.

One crucial difference between BTOs and resale flats is the role HDB valuation plays in the transaction. Unlike BTOs where the prices are predetermined by HDB, resale flats have to consider two numbers – the selling price and HDB valuation.

Unfortunately for buyers, the desirability of resale flats has only driven the selling price up and likewise only increased the prospect of forking out cash over valuation (COV).

COV is another unique feature in the resale market as it refers to the amount you have to pay in cash when the selling price is higher than the HDB valuation.

In fact, 2021 saw a sharp increase in buyers paying COV, from 1 in 5 flat buyers in 2020 to 1 in 3 buyers in 2021. This means more and more resale flats are sold above their HDB valuation, and buyers have to pay more cold, hard cash in their real estate transactions.

Know your worth. In this article, we will cover the significance of HDB valuation to unravel how it influences the cost and payment of your potential home. On top of that, we will also break down the valuation process and what you should do subsequently, as knowing the valuation of your flat is only scratching the surface of your resale journey.

Significance of HDB Valuation

As mentioned, there are two numbers that you need to pay attention to during the buying phase – the selling price and HDB valuation. These numbers will influence the amount you eventually have to pay, be it by cash or loan, and the means of financing your new home.

Minimum Cash Payment

When you buy a resale flat utilising the full 75% Loan-To-Value via a Bank Loan, you will have to pay for certain portions in cash, one being the 5% down payment and another being COV (if necessary).

However, since 2014, HDB stopped publishing the valuation of flats to encourage a sale price that is agreeable to both buyers and sellers. Yet, the missing valuation sum instills an element of uncertainty as you might end up negotiating a higher selling price than its valuation.

Clearly, the valuation matters. Even though the selling price was the same in the examples, you will have to pay $47,500 more in cash for the latter scenario. This makes it easy to understand why some transactions fail, as the disparity between HDB valuation and the selling price may be too steep to follow through.

Loan Amount

Beyond your cash payment, the maximum amount you can loan from HDB or the bank is also dependent on the valuation. Principally, your loan amount is contingent on the loan-to-value (LTV) ratio, and this amount is hinged on either the valuation or the selling price of the flat, whichever is lower.

Both HDB and banks use different LTV ratios – HDB at 85% and banks at 75% for the first loan. To find out which you should use, check out our in-depth article on HDB Loan Versus Bank Loan to make the savviest choice.

Hence, if your HDB valuation is lower than the selling price, the amount you can loan is also lower, and you will have to find other means to service your property expenditure.

CPF Withdrawal

Fret not, because one way to ease your financial burdens is through CPF withdrawal. Yet, the maximum amount that can be withdrawn is based upon HDB valuation, not the selling price.

In order to withdraw the full valuation amount, the remaining lease of the flat must be long enough for the youngest buyer to reach 95 years of age. Otherwise, the amount you can withdraw will be pro-rated. It will then depend on the number of lease years remaining and how close they are to when the youngest buyer hits 95 years old.

With all these components, it is not difficult to comprehend the importance of HDB valuation. But it is not enough to just understand the significance of HDB valuation; you should also know how to get the valuation and what to do after.

Steps to Check your HDB Valuation and What to do After

1) Obtain the Option to Purchase

It goes without saying that before you hunt for your dream home, you need to check whether you are eligible to buy a resale and work out your budget. Only then should you register your Intent to Buy. Upon HDB’s approval, you and the seller can start negotiating on the selling price of the flat.

When an agreement is reached, you will have to pay an Option Fee of (usually) $1000 for the seller to grant the Option to Purchase (OTP).

An OTP is a legal agreement that grants the buyer the exclusive rights to purchase the flat. The contract typically extends over 21 calendar days (including weekends and public holidays), and this duration is known as the Option Period.

This means the seller cannot look for other potential buyers and, of course, cannot sell the property to someone else during the Option Period. This buys some time for you to consider the deal before actually making the purchase and also obtain an HDB Loan Eligibility (HLE) letter if you intend to take an HDB Concessionary Loan.

2) Submit Valuation Request to HDB

On the following working day after the Option Day (as stated in the OTP), you will have to submit a Request for Value to HDB.

The Request for Value is a compulsory submission that will give you the actual valuation of your flat. And as mentioned above, it is a crucial step in calculating your loan quantum and total cash payment.

After filling out the application form, you need to pay an admin fee of $120. HDB will subsequently determine the value of the flat and release its valuation in 7 business days.

Take note that the value of the flat is only valid for three months from the day it is made known. Should you not submit a Resale Application (see step 4) within the same three months, you will have to submit a new Request for Value (i.e. paying another $120 to HDB for the same process).

This not only incurs more cost and time but it will also affect the loan amount granted and the CPF savings that can be used. All of these factors will be recalculated based on the latest value of the flat determined through the new Request for Value.

3) Exercise the Option to Purchase (or not)

After knowing the valuation of the flat, you have the option to purchase or decline the deal during the Option Period. If you do go ahead with the sale, you will need to pay an amount that does not exceed $5,000 (inclusive of the amount used for the Option Fee) to actually exercise the OTP. Once the option is exercised, you are legally bound to buy the property and cannot pull out of the deal.

If you choose not to exercise the OTP, you will have to forfeit your Option Fee (or what is agreed upon in the OTP). This is a rather rational move if the disparity between the valuation by HDB and the agreed sale price is too significant, and you find difficulty affording it in cash.

4) Submit the Resale Flat Application

If you choose to go ahead with the deal, both you and the seller will need to submit the resale application within 7 days of each other. As such, you have to discuss your submission date with the seller, as submitting beyond seven days will result in the cancellation of your application and a forfeit of your application fee.

When the application is accepted, HDB will notify both parties via SMS or email. In the notification, HDB will provide a list of documents that need to be endorsed (eg. CPF withdrawal, conveyance fees, admin fees and so on) within six days.

As such, you should visit your loan provider in the meantime to formalise your loan terms. Any delays in the endorsement will result in the postponement of your resale completion date.

After HDB receives your supporting documents, it will take them approximately another two weeks to process and approve your application. During this window, HDB will also arrange for a technical executive to inspect your flat and ensure the seller has not made any illegal modifications to it. Commonly reviewed fixtures such as windows and/or window grilles (if they have been installed or replaced) will be scrutinised as these need to be done by a HDB Approved Contractor or HDB home shelters where at least 1 ventilation panel has to be left open for ventilation purpose.

During the same 2 weeks, you should also purchase an obligatory fire insurance policy (if you are loaning from HDB). The Certificate of Insurance has to be produced at your final appointment before the handover.

5) Attend Resale Completion Appointments

About 8 weeks after your resale application has been processed, HDB will schedule an in-person appointment to complete the resale transaction. Remember that you and the seller or your private law firm representatives have to be physically present at the Resale Completion Appointment.

With that, you just unlocked your new home!

Closing Thoughts

Opportunity only knocks once. As more resale flats enter the market, knowing how to cop your perfect home is increasingly important. This article has shown how influential HDB valuation plays in deciding and financing your home, and what the resale buying process is like.

If you are still unsure about the procedures for buying a resale HDB, feel free to contact our experts here. They will be happy to ease your buying process and secure the perfect home for you.

The post Unlocking your Resale Flat: How HDB Valuation Holds the Key to your New Home appeared first on Insights by PropertyLimBrothers.

 

You may be looking to buy a HDB resale flat and this question was posted to you, are you taking a HDB loan or a Bank loan? In today’s article, we will be exploring this topic: HDB loan versus bank loan when it comes to buying a HDB resale flat.

For a little bit of context as to why this has been a recently hotly-discussed debate, this was because the bank interest rates were trending at a very low 1 – 1.2% just last year. Compare this to the 2.6% interest rate of the HDB loan, suddenly it makes a lot more sense to take on a bank loan when purchasing a HDB resale flat. Of course interest rates have steadily climbed recently, in line with the US interest rates hike announcements as well. In this article, we will be looking at several key components such as eligibility, loan-to-value ratio, tenure, interest rates, sequence of disbursement and their main differences between a HDB loan and a bank loan.

The Loan Eligibility

In terms of HDB loan eligibility, the borrowers need to fulfil several requirements. These include a household of having at least 1 Singaporean, household income ceiling of not more than $14,000, haven’t taken 2 or more housing loans from HDB before, as well as not owning any other properties locally or overseas.

On the other hand, for the application of a bank loan, as long as you haven’t been defaulting on your loans and you have a good credit score is sufficient to warrant a loan from the bank.

With regards to how much you can borrow, this will depend on your income, the total debt servicing ratio (TDSR) and the mortgage servicing ratio (MSR) restrictions framework that are put in place by the government to ensure that people do not borrow more than what they can afford.

The Loan-to-Value Ratio

Based on the latest cooling measure back in December last year, the amount of HDB loan-to-value was reduced from 90% to 85%. However, it is still 10% more than the 75% LTV that you can get from a bank loan. This essentially means that as your loan-to-value ratio for a HDB loan is at 85%, with a large portion of the payment coming from the HDB loan and CPF, your initial cash outlay will not be as high as a bank loan.

Maximum Loan Tenure

The maximum tenure for a HDB loan is 25 years. Conversely instead of 25 years, you can take up to a maximum tenure of 30 years for a bank loan. Assuming the loan amount is the same, it can mean a lower mortgage payment per month as you are given more time to pay off your housing loan, but do note that the total interest paid will be higher since it is an additional 5 years of repayment.

Interest Rate

The interest rate for the HDB loan is pegged to the current CPF OA interest rate + 0.1%. Hence, as the current CPF interest rate is 2.5%, it makes the effective rate for a HDB loan 2.6%. This interest rate has also largely remained stable vis a vis the more variable interest rates from the bank. Bank interest rates have largely hovered in the 1% – 1.3% range last year. It has now shifted slightly upwards to the range of 1.5% – 1.8%. Depending on the market conditions, bank loan rates are usually more variable. This applies to loan packages that are pegged to fixed interest rates as well. After a lock-in period of two to five years, these so-called fixed-rate home loans follow a floating rate.

Actual amount of loan and the sequence of disbursement

For the HDB loan, many people have the misconception that they will be loaning the full 85% of the valuation by choice. Actually this is not the case for most of the time. There is a particular sequence of disbursement which ultimately will then equate the amount of HDB loan that you will be undertaking.

Starting from the very beginning when you put in the downpayment consisting of the option fee as well as the exercise fee, these 2 components are purely from the cash component for a resale flat. These are typically in a $1000 (option) + $4000 (exercise) arrangement. After you have exercised the option for the purchase of the resale flat, it is mandatory to wipe out your CPF in the Ordinary Account, with the option to keep up to $20,000 per buyer in the CPF OA should you wish to. Only after all these, then the remaining balance amount will be covered by the HDB loan. If there are eligible grants for the buyers, these further reduce the amount of HDB loan that they need to take.

For example, let’s have this the scenario of a married couple Michael and Georgina who wish to purchase a resale 5-rm flat which costs $750,000. For simplicity sake, we assume that valuation matches.

Both of them have a combined amount of $200,000 in their CPF. They make the decision to keep the maximum of $20,000 each in their CPF OA, hence utilising $160,000 from their CPF.

After lessing off the $5,000 option and exercise fees and the $160,000 from their CPF, the remaining $585,000 which is 78% of the price will then be the amount that falls under the HDB loan. As mentioned, this is less than the maximum 85% loan-to-value ratio for a HDB loan.

For a bank loan, you can take a loan up to a maximum of 75% of the valuation. Assuming that your income meets the criteria, you will be granted the full 75% amount. Lessing off the 5% fees in cash, you will then have a choice of how much CPF or cash you wish to portion in terms of payment for the 20% balance. Some people may choose to use more cash if they deem the 2.5% interest rate which they can earn through CPF to be attractive. This also means more current available funds in CPF for their monthly mortgage payments moving forward. Alternatively, if they choose to use more CPF funds, this can then free up more cash for their other investments.

Early repayments differences

For HDB loans, if the borrower suddenly has a large sum of funds and wishes to pay off the mortgage loan, they can pay off however much they want without incurring any penalty. But for a bank loan, there is usually a penalty fee if the borrower decides to make early repayments or do a re-financing within the lock-in period.

Closing Thoughts

Although it may seem like a good thing that you can borrow more funds from a HDB loan, getting a bigger loan could mean you end up paying more interest in total. Borrowing less from a bank loan could also mean saving more in the long run. Henceforth, weighing both out, if you have the cash finances to cover the initial outlay, it makes more sense to take the bank loan due to the lower interests. However, it’s good to remember that the attractive bank loan interest rates are only locked in for three to five years, after which they tend to get more expensive. Another thing to note is that you are able to refinance from a HDB loan to a bank loan should the bank loan terms favour you, but not vice versa.

We would advise that if you want to continue maximising savings and enjoying competitive interest rates, you can consider to proactively do a refinancing each time your lock-in period ends. Do bear in mind the legal fees involved when doing a refinancing. However, if you are conservative and want to splash out less cash outlay, have less uncertainties and perhaps be more hassle-free, then take the HDB loan, but note that your CPF will be heavily utilised and you will pay a higher interest rate.

All in all, there is no right or wrong as everyone’s financial plans and life situations are different. If you’re looking for professional and easy help to finance your next home, we found that PropertyGuru Finance has comprehensive tools to help you get the best mortgage rates across all major banks. You can get objective, unbiased advice from PropertyGuru Finance mortgage experts and save more in the long run. Alternatively, should you need a more comprehensive discussion, do feel free to reach out to us here.

The post HDB Resale Flat: HDB Loan Versus Bank Loan appeared first on Insights by PropertyLimBrothers.

 

For owners of HDB flats and Executive Condominiums (EC), the Minimum Occupancy Period (MOP) is one of the big dates to be excited about. Once the MOP has been met, the HDB or EC can be sold on the open market. What’s next after you sell your home? Do you have a proper exit plan?

Most owners of HDBs or ECs might be tempted by the mouth-watering appreciation gains and look to make a sell decision before thinking elaborately about their next step. Are you going to buy another BTO, Resale HDB, EC? Or are you going to rent? Stay with your parents? Maybe venture into private property? What choice will you make?

This article will try to map out what might be the next step for you. Before you decide you hastily sell your HDB or EC, read this article to see which might be a better next step to take.

#1 Going for Round 2 (BTO or EC)

Feeling lucky? Some owners of HDBs and ECs might want to go for a second round. Perhaps a Prime Location Public Housing (PLH) BTO caught your eye? Or maybe you just like the new BTO or EC launches. Others might go for this option if they are not in a rush and don’t mind waiting a couple more years for another round of MOP capital gains. We have an article here that covers how capital gains look like for ECs after MOP.

The key thing to look out for when you are doing this is the timeline. You may only ballot for a new BTO or EC after the MOP is over. You may not do it during the MOP. Because of the balloting system, there is some uncertainty over whether you might get the project and unit that you want. This translates to a longer and potentially undefined waiting period before making your next property move. The plan for round 2 is all centred on the assumption that you get lucky with a favourable queue number for the next property.

Once you get a good queue number and plan to commit to the decision, you need to know that:

1. Once you have booked the flat, you will have 4 months to signing the lease agreement (where the down payment is due)

   • If you intend to use the proceeds from the sale of your existing HDB or EC, you have a short runway to liquidate your home. We do not recommend this as BTO down payments are typically more affordable and the short timeline might be too risky.

2. After the lease agreement is signed you will have 3 to 5 years to wait before collecting the keys. Once the keys have been collected you will have 6 months to dispose of your previous property.

   • If you are not using the proceeds from your current HDB or EC sale for the down payment, you have plenty of time to dispose of the property.

3. ABSD will not apply since the government knows that your previous property will eventually have to be sold.

4. If you have taken grants for your previous HDB or EC purchase, a resale levy will be deducted from the proceeds of your sale.

   • If you previously purchased a resale HDB or EC on the open market without grants, this will not apply.

You can see here that the timeline is rather messy, and timing is of the utmost importance in this exit plan. Since most Singaporeans like to bankroll new property purchases with the gains from the previous sales, the timeline might be very tight (4 months) to sell the property. If there are no good offers from buyers, this might lead to a less than ideal sales price for your property. Knowing this in advance and having a marketing and staging plan would definitely help reduce the lead time to selling your property on time.

For people who want to avoid potentially stressful situations with timing, it might be better to fund the down payment with cash or CPF. This way there will be a leeway of approximately 3 years and 10 months to sell your property. Plenty of time. Note, however, that you will need to have plans for your accommodations before your new BTO or EC is completed and ready to move in. With construction or renovation details, this might be for quite a long duration. If you plan on going for round 2, we wish you all the best for favourable ballot results!

#2 Resale HDB or EC

For resale HDBs, the process is a lot simpler. There is no balloting involved, and the timeline is less complicated. Simply put, you have to dispose of your property within 6 months of receiving the keys to your new Resale flat. The key difference is that you do not have to pay the resale levy if you’re not taking any grants for your resale purchase.

The perks of this option is that there is less uncertainty as compared to BTOs or new EC launches. Since resale flats are already constructed, there is less uncertainty over construction delays. Furthermore, you may move in (hopefully) after your purchase is complete if there are no hiccups with the seller moving out.

The issue here is that if you choose to only sell your existing home after the collection of keys, you still have a tight timeline to work with. 6 months to sell your home might be a challenge if the market sentiments are bearish or faced with cooling measures. Nonetheless, this option acts as a good in-between affordable option for people who do not want to take their chances with a new BTO or EC and do not want to go for the private property option.

#3 Private Property

This option appeals to HDB or EC upgraders who do not wish to be hit by another round of MOP. Unlike the previous options, for private property the key limitation is the seller stamp duty (3 years). With this option being 2 years shorter than the 5 year MOP, there is a little more flexibility for investors looking to exit sooner in their property moves. Again, the 6 month timeline applies once you have exercised the option to purchase the private property whether it is a new launch or a resale private property. Remember that ABSD will apply if you are not able to sell your previous property in time.

The key perk of going into private property is that you may rent out the entire property immediately from purchase. A popular strategy that you would have heard of is decoupling: have 1 condo under each spouse’s name, one for ownstay and the other for rental income. Regardless of whether you are going for a new launch or resale, we strongly recommend a detailed study into your family’s personal financial situation.

While this option seems to be the least restrictive, it is also complex in the sense that it is difficult to make an optimised investment decision. Should you decouple in the first place? Can you afford to? Or should you focus on buying a bigger and more comfortable home (which will inevitably be more expensive)? Making the right decision seems harder for private property. There is less margin for error and the risks might be higher. There are more variables here in making the right decision and there should be sufficient analysis that shows your plan is resilient.

If you have even an ounce of doubt or uncertainty, you should spend more time to consider if you are making the right decisions. If you do decide to go with the decoupling strategy, make sure that you are not over-leveraged and taking on more debt than your family should. Just like how you shouldn’t max out your credit cards, you shouldn’t max out your TDSR. It will put you in a dangerous zone should either spouse lose their jobs or be unable to foot the mortgage (touch wood).

One way we recommend dealing with this issue is to make sure the private properties you pick have strong intrinsic value with good prospects to appreciate. Factors such as distance from MRT, schools, and other amenities would matter in helping the property act as a good store of value. At PropertyLimBrothers, we do an elaborate study using our MOAT analysis to give a rating on the property in question. Check out the article here and the video in this link.

Closing Thoughts

To summarise what we have discussed so far, here are the things you should look out for when you decide to sell your HDB or EC after MOP:

1. Note down the timeline of when you have to sell the property

2. Check if resale levy applies

3. Have proper accommodation plans to make sure you don’t end up without a place to live

4. If you intend to bankroll the down payment with your previous property, you will need to seek out alternative living arrangements while waiting for your new place

5. Watch out for potential delays in your plans to move in to your new place

6. Do a detailed analysis of your next property to make sure it has strong intrinsic value

If you need an expert opinion to help you out with your own situation, contact us here!

The post Selling your HDB or EC after MOP? What’s Next? appeared first on Insights by PropertyLimBrothers.