HDB | SGPD

A Guide to Selling Your HDB Flat

Shelwyn @ SGPD — Tue, 19 Sep 2023 07:33:57 +0000

What are the first steps if I am looking to sell my HDB flat?

Ensure first that you have fulfilled your MOP, then register your Intent to Sell on the HDB Portal.

Next, look for a property agent to help you list your flat for sale.

You can also choose to list your flat on your own, however you will be not be able to post on some popular agent-only portals, such as PropertyGuru and will have the manage the entire sale process yourself.

Some options to list your own flat for sale are Carousell or Facebook groups posts.

How should I prepare before I accept viewing appointments?

Declutter and keep your flat clean.

During the viewings, keep your home bright and breezy and replace any light bulbs that are not working.

These will potentially increase your chances of offers coming in from potential buyers.

Be prepared to answer questions on price negotiations and state upfront should you require a 3-month extension to continue staying in the flat upon resale transaction.

I would like to accept an offer, what's next?

Check that the buyer has a valid HFE letter and meets the EIP and SPR quota.
Issue an Option to Purchase (OTP) to the buyer after your have registered for an Intent to Sell for at least 7 days on the HDB Portal.
The buyer needs to pay you an option fee between $1-$1000.
In turn, you are not allowed to grant another OTP to another buyer with your acceptance of the option fee, unless this OTP is not exercised upon the expiry date.
Wait for the buyer to exercise the OTP within the option period of 21 calendar days.
To exercise the OTP, the buyer will have to pay you an option exercise fee of not more than $5,000, including the option fee that was paid to you previously.

After the buyer exercised the OTP, how do I complete the purchase?

Both you and the buyer are required to individually submit your portions of the resale application within the specified timeframes:

Within the designated number of days mentioned on page 4 of the OTP.
Within 7 days of each other’s submissions.

If both parties’ application and documents are in order, HDB will notify you and the sellers of their acceptance of the application.

Thereafter, it will take about 8 weeks to process the application and complete the transaction.

Upon the successful completion of the resale transaction, you are required to vacate the flat, unless of course, you have negotiated and signed the agreement with the buyer for a 3-month occupancy extension.

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SGPD 60-Sec Read: How to buy a resale HDB flat?

Shelwyn @ SGPD — Wed, 06 Sep 2023 06:05:43 +0000

What is the first step if I am looking to buy a resale HDB flat?

First of all, apply for the HDB Flat Eligibility (HFE) letter on the HDB Portal.

This letter will provide you with information about your qualification to purchase a resale flat, in addition to outlining the CPF housing grants and HDB housing loan amount you are entitled to.

If you are intending to take a home loan from a bank instead of HDB, then you should concurrently apply for an In-Principal Approval and subsequently get the Letter of Offer (LO) from the bank.

So I have the HFE letter, what's next?

Congrats! With the HLE letter in hand, you can now set a budget for your search. Your HFE letter is valid for 6 months.

PropertyGuru is by far the most popular portal where the latest resale listings are posted and updated regularly.

Start with a shortlist of about 3-5 resale flats and set up viewing appointments.

You should always visit the flats you like at least twice, preferably at once in the day and once in the evening.

This will give you a good idea if there are any night and day differences or if you spot any dealbreakers.

I would like to buy a resale flat that I like, what is next?

(A) Obtain an Option to Purchase (OTP):

Get an OTP from the seller or seller’s agent. The seller needs to have already registered for an Intent to Sell for more than 7 days before an OTP can be issued to you.
You will need to pay an option fee between $1-$1000 to the seller.
You will need to submit for a Request for Value by the next working day after you get the OTP.
You have 21 calendar days to decide if you would like the exercise the OTP. Exercising means you have decided to buy the flat.
If you are getting a home loan from a bank, you will need the LO before exercising the OTP.

(B) Exercise the OTP:

With the HFE letter (+ LO for bank loan) and HDB’s valuation, you may exercise the OTP if you decide to purchase the resale flat.
You will then need to pay the seller an option exercising fee of not more than $5,000, including the option fee amount that you’ve already paid.

After exercising the OTP, how do I complete the purchase?

Both you and the seller are required to individually submit your portions of the resale application within the specified timeframes:

Within the designated number of days mentioned on page 4 of the OTP.
Within 7 days of each other’s submissions.

If both parties’ application and documents are in order, HDB will notify you and the sellers of their acceptance of the application.

Thereafter, it will take about 8 weeks to process the application and complete the transaction. This is the earliest possible date to complete the transaction.

You may possess the flat after transaction is completed, unless you have agreed to give an extension (maximum up to 3 months) to the seller.

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SGPD 60-Sec Read: How To Check Annual Value of Your Property

Shelwyn @ SGPD — Fri, 25 Aug 2023 09:54:03 +0000

What is Annual Value (AV)?

Annual Value (AV) represents the approximate gross annual rental income the property would generate if leased, excluding furnishings, furniture, and upkeep charges.

It’s calculated using estimated market rental rates of comparable properties.

Factors affecting Annual Value (AV)

There are multiple factors IRAS consider when determining Annual Value (AV):

Rentals of similar or comparable properties in the vicinity
Size of property
Location of property
Condition of property
Other relevant physical attributes

How can I calculate Annual Value (AV)?

There is no reliable way to calculate Annual Value (AV) on your own, as there’s no guidance as to how “furnishings, furniture, and upkeep charges” are calculated.

Where can I check Annual Value (AV)?

You can check the AV of your property using IRAS digital service: View Property Dashboard.

If you need to check AV of any property that doesn’t belong to you, you can also use the service Check Annual Value of Property at a fee of $2.50 per search.

Median Annual Value (AV) for HDB and Private Property

The latest published median Annual Values for residential property in Singapore is for 2021.

Case study

Shelwyn owns a 1-bedroom apartment (1BR) at 5 Siglap Road with a size of 830sqft.

She rented out her property at a gross rent of $4,800/mo from 1 Jan 2023.

From our analysis, comparable properties within the development are fetching monthly rentals ranging from $4,300 to $5,250/mo.

After providing a reasonable allowance for furniture, furnishings and maintenance fees, we derived the AV of his property at $36,000 ($3,000/mo).

Note

Your gross rental amount may not necessarily be used in calculation
There is no fixed amount for “furniture, furnishing and maintenance fees”
For the most updated AV of your property, always use IRAS digital service: View Property Dashboard

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Step-by-Step Guide: What You Need To Do When Selling Your Property

Shelwyn @ SGPD — Fri, 25 Aug 2023 03:22:03 +0000

Selling a property can be an exciting yet complex process.

Whether you’re a first-time seller or have prior experience, taking the right initial steps can set the tone for a successful and smooth transaction.

In this article, I will guide you through the important steps to take when selling your property.

1. Assess Your Reasons for Selling

Before diving into the process, it’s crucial to determine why you’re selling.

Are you upgrading to a bigger house to accommodate a bigger family? Focus on Livability.

Are you downsizing in preparation for retirement? Focus on retirement goals.

Or are you looking for great investment opportunity? Focus on Investability.

Understanding your motivations can help shape your approach to the sale.

2. Research the Market

Conduct thorough research on the current real estate market in your area.

This includes understanding recent property sales, price trends, and demand for properties similar to yours.

This information will help you set a competitive asking price.

Set the Right Price

Pricing your property correctly is essential.

Consider getting a professional valuation to determine a reasonable and competitive asking price.

By understanding your situation, a professional agent can determine the urgency of sales and provide the necessary advice and strategies on how to fetch the best price possible.

3. Prepare Your Property

Your property’s appearance matters.

One of the biggest mistake is not presenting your property at its best. Customers are less willing to pay for a “dirty and old” looking house.

On the other hand, customers will often place a premium on houses that appear well-maintained, even though they might be doing a full renovation of their own. It’s all about the first impression.

Clean, declutter, and make necessary repairs or improvements to enhance its appeal.

First impressions count, so consider investing a small amount of money in staging to showcase your property’s potential to buyers.

4. Gather Documentation

Collect all relevant documents such as property deeds, property tax documents, survey documents, and any warranties related to appliances or repairs.

These documents will be required during the sale.

5. List Your Property

List your property on reputable online real estate platforms and work with your agent to market it effectively.

Ensure accurate and complete information in your listings.

6. Arrange Showings and Open Houses

Coordinate property showings and open houses to allow potential buyers to view your property.

Create a welcoming and well-maintained environment for visitors.

7. Respond and Accept Offer

Once you receive offers from potential buyers, carefully review and consider each offer.

Negotiations may follow, and it’s essential to respond promptly and professionally.

Once you’re satisfied with an offer, accept it.

8. Complete the Sales Contract

If you are self-representing, find a legal professional and work with them to draft and finalise the sales contract.

Ensure all terms, conditions, and obligations are clearly stated.

9. Close the Sale

As the closing date approaches, gather necessary paperwork, arrange for inspections, and address any contingencies outlined in the contract.

On the closing day, you’ll sign the necessary paperwork and ownership transfer procedures.

Congratulations, your property is officially sold!

Do You Need a Real Estate Agent?

Hiring a real estate agent to sell your property can offer several benefits, especially given the complexities of completing a property transaction.

Here are some areas that can be challenging to handle on your own:

Market Expertise in Pricing

Real estate agents have a deep understanding of the Singapore property market.

They can provide insights into current market trends, property values, and the competitive landscape.

This knowledge is invaluable when pricing your property competitively.

Marketing and Exposure

Real estate agents are skilled in marketing properties effectively.

They can create professional listings, use various marketing channels, and leverage online agent-only platforms (eg. Propertyguru) to showcase your property’s best features.

High-quality photos, detailed descriptions, and virtual tours are required to make your property stand out in online listings.

All these will lead to more inquiries and potential offers.

Network and Connections

Experienced agents have an extensive network of potential buyers, other real estate professionals, and industry contacts.

This network can help expose your property to a wider audience, increasing the chances of a quicker and more successful sale.

Time and Convenience

Selling a property involves numerous tasks, from coordinating viewings to handling paperwork.

With an agent, you can save time and effort as they take care of these details, allowing you to focus on other aspects of your life.

Legal and Documentation Expertise

Real estate transactions involve legal contracts and documentation.

Real estate agents are familiar with the legal requirements and paperwork involved in Singapore property transactions, reducing the risk of errors or oversights that can delay, or sometimes even resulting in a failed transaction.

Property Presentation and Staging

A good property agent can provide advice on how to prepare your property for viewings.

They know what potential buyers are looking for and can suggest staging techniques that enhance your property’s appeal.

Access to Data

Real estate agents have access to data and resources that may not be readily available to the general public.

This information can help you make more informed decisions about your sale.

Solving Unexpected Problems

If unexpected challenges arise during the selling process, such as issues with the property’s condition or negotiations, a real estate agent can provide guidance and solutions based on their experience.

Too often, when potential buyers learn that the seller is self-representing, they are likely to:

Make unreasonably low offers
Misrepresent their financial situation and intention
Make excessive demands and nitpicking
Back out last minute
Renegotiate agreements
Appear aggressive and confrontational

Conclusion

Selling a property involves a series of well-coordinated steps.

By starting with a clear plan and understanding each phase, you can navigate the selling process confidently and achieve your goals.

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How will new Prime, Plus and Standard Flats Impact Both Buyers and Sellers

Shelwyn @ SGPD — Mon, 21 Aug 2023 04:00:41 +0000

TLDR

Buyers of new Prime and Plus BTO Flats will see lower investability and rentability, and will also be limited to a smaller buyers’ pool due to an imposed income ceiling for resale buyers.

Existing HDB flat owners located at “Prime” and “Plus” locations may have their resale value increased further as supply for flats, especially newer flats without the actual Prime and Plus restrictions will continue to decrease.

Resale HDB flat buyers who are keen in buying in “Prime” and “Plus” locations without the new restrictions may have to buy earlier than later as prices will continue to increase to meet the decreasing supply.

New Categorisation of HDB BTOs - Prime, Plus and Standard

On 20 Aug 2023, PM Lee has announced that the existing categorisation of Mature and Non-Mature estates for new BTOs will cease to exist by second half of 2024. They will be replaced by new categories known as Prime, Plus and Standard. These will not be tagged to existing or flats booked before 2H 2024.

Think of it as tiering – Prime will be the best-located HDB flats and it tiers down accordingly to Plus and Standard.

But instead of just making Prime the most expensive, Prime will have the most resale and rental restrictions and these restrictions scale down for Plus and Standard, respectively.

Below is a table summary of the new categories from MND.

What this means for Buyers of the new Prime and Plus BTO Flats

Prime BTO Flats

With the tightest restrictions, buyers must understand that Prime units come with lower investability – you can only sell 10 years later, you have to return a certain % resale money to the government (if you took subsidies) and resale buyers’ pool will be limited to those who meet the prevailing BTO income ceiling (currently set at $14,000 for families and $7,000 for singles).

If you own a private property, you will have to sell your private property and wait for 30 months before you can buy a Prime resale flat.

These flats will come with minimal rentability as well – you cannot rent the entire flat at any juncture – so you can only rent bedrooms.

These factors will limit you if you are looking to upgrade your property in the future.

Plus BTO Flats

Plus BTO flats are sort of a middle-ground, you don’t get the tightest restrictions but are nonetheless limited with the 10-year MOP and you also have to return a certain % resale money to the government but lower % than Prime (if you took subsidies).

Investabiity is only slightly better than Prime – because all restrictions are similar other than lower subsidy clawback and a higher income ceiling ($14,000) for singles for resale transactions.

Plus flat owners will not be able to rent out the entire flat at any time and Plus flats resale buyers also have a wait-out period of 30 months.

Rentability is definitely better than Prime since you will be able to rent out the entire flat after your 10-year MOP but make no mistake, you still have to wait for 10 years.

Standard flats will have similar restrictions with the existing HDB BTO rules (eg. 5 years MOP, no income ceiling for resale buyers).

What this means for existing Flat Owners located at "Prime" or "Plus" areas

If you currently own a flat that could fall into the category of a Prime or Plus location, especially if your flat is still undergoing the 5-year MOP period, your future resale value could increase further after this new categorisation.

The reasons are simple – you enjoy a wider buyer pool who doesn’t have to meet the prevailing BTO income ceiling, and is not impacted by a longer MOP or rental restrictions while the location is considered a choice location.

It is all about demand and supply. Let’s say I’m a buyer looking to buy a well-located resale flat, I will gravitate towards buying a flat that doesn’t come tagged with multiple restrictions because they provide more options for me on either investability or/and rentability.

Refer to the below map from MND to get an idea where your existing flat may be located. We will likely have a better idea as we monitor HDB BTO launches from 2H 2024 onwards.

What this means for Resale Flat Buyers who are looking to buy in "Prime" or "Plus " Locations

The new Prime and Plus BTO Flats will start to populate the HDB resale market in about 14 years’ time. That may seem like a long time but the fact is that, new flats in these choice locations with only 5 years MOP will cease to exist in less than 6-7 years’ time.

As mentioned above, the resale value of well-located newer flats without these new restrictions will start to go up as demand for them increases.

Resale flat buyers who are keen to buy newer flats in “Prime” or “Plus” locations may have to buy sooner than later as supply for these flats will only start to dwindle and prices will increase to meet the demand.

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Buying a HDB Flat: What is the HFE Letter and when should I apply?

Shelwyn @ SGPD — Sun, 20 Aug 2023 08:16:29 +0000

Starting from 9th May 2023, HDB has introduced an updated document called the HDB Flat Eligibility (HFE) letter.

This new letter is designed to offer prospective flat buyers a comprehensive evaluation of their housing and financial possibilities prior to embarking on their home purchasing endeavour.

Replacing the previous HDB Loan Eligibility (HLE) letter, the HFE letter will furnish flat buyers with:

Upfront information regarding their qualification for either a new or resale flat purchase
CPF housing grants, and
HDB housing loan. This will encompass details about the grants and loan sums applicable.

HLE will no longer be used moving forward.

When will I need the HFE letter?

You must have a valid HFE Letter when you want to:

Apply for a flat directly from HDB when they are selling new flats (Build-to-Order a.k.a. BTO) or opening bookings for available flats (Sales of Balance Flats a.k.a. SBF).
Get an Option to Purchase (OTP) from someone selling their flat and when you send an application to HDB for buying a resale flat.

When should I apply for HFE Letter?

If you plan to buy a flat, make sure to apply for an HFE letter ahead of time. Remember to consider the time HDB needs to process your application and the information you provide in the letter.

HDB can take up to 21 days to process your HFE Letter application.

If you’re thinking of getting a loan from a bank, you can also apply for an In-Principle Approval from them while you’re getting your HFE Letter. This letter will also give you an estimate of how much they might let you borrow.

How do I apply for the HFE?

Getting an HFE Letter is a simple process with just two steps.The HDB Flat Portal will guide you through both steps. To make the process smoother, have the required information ready, like your Singpass login and details of all applicants and occupants.

Step 1

After you provide your information, you’ll receive a quick assessment of your eligibility for buying an HDB flat, getting CPF housing grants, and taking an HDB housing loan.

Step 2

Make sure to apply for the HFE Letter within 30 days after you start the Preliminary HFE Check. If you don’t, you’ll need to do the Preliminary HFE Check again.

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Selling Your HDB or EC: The Importance of Minimum Occupation Period (MOP)

Shelwyn @ SGPD — Thu, 17 Aug 2023 11:49:49 +0000

Singapore’s thriving real estate market has long been a topic of interest for both locals and investors alike.

Among the various regulations and policies that govern property ownership in the city-state, the MOP stands as a critical facet.

Whether you’re a first-time homebuyer or an astute investor, understanding the ins and outs of the MOP is essential to making informed decisions in Singapore’s property market.

What is the Minimum Occupation Period (MOP)?

The Minimum Occupation Period, commonly referred to as MOP, is a period of time imposed by the Housing and Development Board (HDB) in Singapore.

It determines the minimum duration that a HDB or Executive Condo (EC) property owner must reside in their newly purchased property before being allowed to sell, rent out the entire unit, or transfer ownership.

You are allowed to rent out bedrooms provided you are residing in the flat or EC as well.

MOP Duration

The MOP duration varies based on the type of property:

HDB Flats & Executive Condominiums (ECs): For HDB flats (new & resale) and new ECs, the MOP is typically set at 5 years. During this period, the owner must reside in the property as their main place of residence and is not allowed to rent out the entire house.
Prime Location Public Housing (PLH): New HDB flats launched under the new PLH model will have a longer MOP period of 10 years.

MOP is calculated from the date of keys collection.

Consequences of Breaching the MOP

Failure to adhere to the MOP can have serious consequences.

If a property owner sells, rents out, or transfers ownership of their property before the MOP expires, they may face legal penalties, including fines, and the new buyer or tenant could be evicted.

Navigating the MOP: Tips and Considerations

Understand the Rules: Before purchasing a property, especially an HDB flat or EC, thoroughly familiarize yourself with the specific MOP duration and rules attached to the property. This will help you plan your living arrangements accordingly.
Financial Planning: Factor the MOP into your financial planning. Consider your long-term living situation, family plans, and potential career changes that may arise during the MOP period.
Investment Strategy: If you’re purchasing a property as an investment, be sure to consider the MOP’s impact on your investment timeline. Opt for private properties if you seek more flexibility in renting or selling your property.
Plan for the Future: If you foresee changes in your circumstances that may require you to sell or rent out your property before the MOP ends, it might be prudent to explore alternative options to avoid complications.

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