HDB flats are public housing launch by Singapore Government to solve the housing needs for all Singaporean.
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 units from the day they took over the unit, whether resale or built to order (BTO) flats.
Why is MOP important?
In Singapore, the primary role of an HDB flat is to provide housing, 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 are 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 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 can I do after MOP?
There are several options you can do, but never rush into any decision without any details strategized structure plan.
Which 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 owner 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 a Built-to-order (BTO) flats, during the first three years, the valuation will be at its peak after MOP, the HBD 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 for advice and in-depth understanding before you made any decision for advice and in-depth understanding before you made any decision.
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.
Buyer needs to have a strong financial capital.
Option 3: Sell your HDB flat and upgrade to private property.
This option involves selling and buying process, so you need a professional to assist you in structuring and planning.
There are a few ways to do in this option.
· Buy first sells later.
· Sell first buy later.
· Sell and buy concurrently.
Buy first sells later.
For owners that worried that they don't have a place to stay during the transition period will normally go for this approach.
The downside for 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 to adopt 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 factors.
You need to coordinate the buying and selling timeline correctly to avoid any hiccup during the transition.
I highly recommended you to engage a trusted professional real estate agent to assist you in your planning.
He/she will be able to present you a detail, structure 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 you by using your CPF and sale proceeds from your HDB flat, some owners might 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, structural planning are essential for a smooth and happy transaction.
Contact me to understand more before you make any decision.
Hi, I am Peter Tan,
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.
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