What are the options when your HDB flat reach MOP?


 



what can you do after your hdb flat reach MOP

HDB flats are public housing launched by the Singapore Government to solve the housing needs of all Singapore Citizens.


As such, there is a minimum occupation period (MOP) imposed.


What is MOP?

Minimum Occupation Period (MOP), is a time frame the owners of the HDB flats have to stay in the unit from the day they took over the unit from the Housing Development Board (HDB), whether resale or built to order (BTO) flats.


Five years MOP means you must physically stay in the unit during these 5 years, and not the owning of the Flat for five Years.


Case study

Mr and Mrs Tan got their keys to their BTO flat on 1st January 2015, in the year 2018, they are posted oversea to work for 3 years from 1 January 2018. For a valid reason, they have gotten approval from HDB to rent out their flat during these 3 years when they are overseas.


3 years later, in the year 2021, when they are back in Singapore, they decided to sell their HDB flat since they have owned the house for 6 years but were rejected. Why?


me for the answer.


Why is MOP important?

In Singapore, the primary role of an HDB flat is to provide housing to qualify Singapore Citizens (SC) and Singapore Permanent Residents (SPR), not serve as an investment. The MOP seeks to prevent people from buying resale flats and reselling them for higher prices immediately.


A MOP prevents property investors from driving up the prices of public housing

The only exception to this rule is one-room resale flats that are purchased without any grants - these flats can be bought and resold without having to fulfil any MOP.


How long is the duration of the MOP?


The MOP duration differs depending on several factors: the date of your flat application, the flat type, and your mode of purchase.


The following purchase modes will see a MOP of five years:

· Your flat is purchased from HDB

· Your flat is a DBSS (Design, Build and Sell Scheme) purchased from a developer

· You purchased your flat under SERS with Portable SERS Rehousing Benefits

· Your flat was a resale, purchased from the open market with a CPF Housing Grant,

was a 2-room flat or bigger, and was applied for on or after 30 August 2010



Exceptions to the five-years MOP are as follows:

· Your flat was a resale, purchased from the open market with a CPF Housing Grant, and was applied for between 5 March to 29 August 2010 (3 years MOP)


· Your flat was a resale, purchased from the open market with a CPF Housing Grant, and was applied for before 5 March 2010 (2.5 years MOP with an HDB loan, 1-year MOP without an HDB loan)


· Your flat was purchased under the SERS (Selective En bloc Redevelopment Scheme). Your MOP will be either:


o 7 years from the date of flat selection, including the wait and occupancy time


o 5 years from the date of occupation


What restrictions during this period of MOP?



During the period within the MOP, HDB owners,

· They are not allowed to purchase any private residential property.

· They cannot rent out the whole HDB flats.

· They are not allowed to sell their HDB flat.


What are the options I can do after the MOP?

Jadescape, the garden home

There are several options you can do but never rush into any decision without any detailed strategized structure plan. It will be good for you to consult a professional to assist you in all your planning. Click here to schedule a one-hour free Property Wealth Planning consultation.


me if you need any assistance. I can go through with you the following and craft out the best suitable solutions for you.


Which Plan solution suit you most?

That depends on what kind of situation were you in when your HDB flats reach the MOP.


3 common approaches where HDB owners will consider :


Options 1: Remain staying in the HDB flat.


For this option, I will suggest you check whether your flat is currently appreciating or the price is depreciating.

For Built-to-order (BTO) flats, during the first three years, the valuation will be at its peak after MOP, the HDB flat is still new (only 5 to 7 years old in the resale markets), the renovation is still in good condition, some owners might consider exiting, so to obtain a higher profit.


Do consult a Real Estate professional or

me for a Free Property Wealth Planning consultation, or sign up here for the free consultation



Option 2: Proceed to buy a private residential


The buyer will need to pay an Additional Buyer's Stamp Duty (ABSD), and if you are still servicing your existing HDB housing loan, your Loan-To-Value (LTV) will cap at 45% for a second loan for your second property. You also need to pay ab ABSD of 17% on top of the normal BSD.


For this option, the buyer needs to have strong financial capital.



Option 3: Sell your HDB flat and upgrade to private property.

This option involves the selling and buying process, so you need a professional to assist you in structuring and planning.


me, I will go through with you how to go about it in detail.


There are a few ways to do this option.

· Buy first sell later.

· Sell first buy later.

· Sell and buy concurrently.



Buy first sells later.

For owners that are worried that they don't have a place to stay during the transition period will normally go for this approach.


The downside of this option is that they are liable to pay ABSD.

This might end up rushing to sell their HDB flat to apply for the ABSD remission.


ABSD remission only applies to a married couple, who jointly purchase their second residential property as their matrimony home, one of them must be a Singapore Citizen, and they have to sell their current flat within 6 months from their purchase of the second residential property.


Sell first buy later.

For owners that have a place to stay, you would most likely adapt to this approach.

You don't need to pay for ABSD for your next residential property, furthermore, you will have ample time to sell your flat.


Sell and Buy concurrently

For this approach, timing is the main factor.

You need to coordinate the buying and selling timeline correctly to avoid any hiccup during the transition.

I highly recommended you engage a trusted professional real estate agent to assist you in your planning.


me. I will be able to present you with a detailed, structured plan for your upgrading to your private residential property with a smooth transition during your buying and selling process.


Sell 1 buy 2

Last of all, if financially allow yourself by using your CPF and sale proceeds from your HDB flat, you might want to proceed to sell the HDB flat and buy 2 private residential properties for investment and generate passive rental income and capital appreciation.



Before you decide on which options, it's good that you have a proper plan.

In real estate, experiences, Knowledge, and structural planning are essential for a smooth and happy transaction.


me to understand more before you make any decision.


#propertywealthplanning #realestateguy #petertanchoonguan

 

The Author

Real Estate Guy - Peter Tan
Associate District Director with Huttons Asia Pte Ltd



Peter Tan,

The Real Estate Guy.


Since 1995, I’ve been providing professional consulting services to clients in Singapore and beyond.


From strategic planning to innovative solutions, my focus is always on building an efficient and results-driven relationship.


I’ll work with you to create a customized plan of action for yourself or your organization.


Get in touch to learn more about my vision consulting approach.