Buying a Resale HDB
Updated: Oct 7, 2020
Home Ownership in Singapore
Do you know that about 90% of resident households in Singapore own their home? And that a good 78.6% of the resident households in Singapore stay in HDB. By sheer numbers alone, HDB will form the majority shareholder of the Singapore Property Market.
With over one million flats in Singapore, I mean if you were to go to any towns in Singapore, HDBs can be easily seen anywhere, even in the city core! They form the urban landscape of Singapore and indeed give the unique identity of Singapore.
Buying a Resale Housing & Development Board (HDB) Flat
Having given the introduction, Let’s go down to the proper article for today, the Purchase of an HDB flat. Before buying any property in Singapore, financial means will be the first step of any planning, to check on affordability and sustainability. Now, this is where the fun fact of the day comes in:
Do you know, you may only need to use minimum cash for the purchase of an HDB Flat, whether a build-to-order or Resale. Yes, you do not need to fork out any money to buy an HDB flat, as long as you qualify and have the necessary means to fund it. This is the top attractiveness of purchasing an HDB flat in Singapore as compared to other countries’ public housing!
Photo by Andrea Ang on Unsplash
Buying HDB Flat (Resale)
There are stringent requirements when buying public housing, especially with subsidies. As such, the conditions would be summarised into bite-sized information for ease of communication and understanding.
a. Eligibility – This is the first level of checks, on whether the couple can buy a resale flat under HDB’s policies and are as follows:
Income Ceiling – None for Resale HDB but will apply for CPF housing grants and HDB housing loans
Does not own any other property (HDB or Private Property)
A Singapore Citizen (SC) or Singapore Permanent Resident (SPR)
21 Years and above
Formed a family nucleus with spouse or children etc
Must have met the Ethnic Integration Policy (EIP) and SPR Quota
b. Schemes – These are the “relationship” categories that apply when purchasing a flat, namely “Fiancé/Fiancée”, “Single Singapore Citizen”, “Joint-Singles”. There are a lot of public schemes available to citizens, so I shall not cover them here.
c. Finances – Do you know that you may be able to use minimum cash out-front if you are eligible for grants which can be used to fulfil the down payment requirement. If you are taking HDB loan subject to your income ceiling, you may be able to use cash for the option fee and exercise fee for the resale flat while the rest of the remaining amount of the 10% down payment can be paid for by the grant given the government if you are eligible for it. The grants available for a first-timer couple are summarised as follows:
Photo by HDB, www.hdb.gov.sg
a. Family Grant up to $50,000 (income Ceiling @ $14000)
b. Enhanced CPF Housing Grant up to $80,000(Income Ceiling @ $9000)
c. Proximity Housing Grant up to $30,000 (Buying flat to live with parents or child or within 4km of their parents’ or child’s place of residence)
If you were to combine all three grants, this is a whopping $160,000 in total if you are eligible and able to draw the maximum amount for all grants!
Imagine if you are buying a resale flat @$460,000 with an $80,000 grant (Family + Proximity), you already fulfilled the bare minimum of 10% downpayment for the flat. You would need to use cash to pay for the Resale HDB Option fee & Exercise fee (up to maximum $5,000), and these can be negotiated with the sellers on the amount of cash for both. It is very enticing to look at resale flat right now because of the recently implemented family grant of $50,000.
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