Previous records were smashed this year when we saw the five-room HDB DBSS flat in Bishan being sold for $1.295 million. Juxtaposed with the previous high of $1.268 million just three weeks before, it is easy to notice a trend here. These transactions come against the backdrop of steadily rising prices for HDB resale flats. 2021 in itself has been a record year for million-dollar flats.
Following the tightened Covid-19 measures, the demand for HDB resale flats remained strong as people realised the importance of having a spacious house with their time increased at home. The pandemic is not standing in the way of home buyers buying their dream home but instead perpetuating it. In fact, July saw the thirteenth month in a consistent rise of prices for resale flats.
The ongoing pandemic has obstructed the supply of public housing with numerous Built-To-Order (BTO) projects being delayed. With the disruptions in the supply chain for construction materials and restrictions on the entry of foreign labour, many projects have been put on hold or heavily delayed. Consequently, it has led to increasing demand for resale flats.
For those of you who are thinking of selling your HDB flat, this may be an opportune time to go for it. However, it is important to get educated about the important regulations of selling a HDB resale flat before embarking on that journey.
Fulfilling the Minimum Occupation Period (MOP)
What is MOP?
The MOP, imposed by HDB, refers to a period of time, usually five years, during which you are not allowed to sell/rent your entire house out, or buy another property. During this period, you are physically required to live in your house. Different types of housing have different MOPs. For example, flats bought from HDB have a 5-year MOP period, while flats bought under the Fresh Start Housing Scheme have a 20-year period.
What is the purpose of MOP?
The MOP stands as a preventive measure to keep HDB flats in Singapore as a form of affordable public housing and not for it to serve as an avenue for investment. With a MOP, people are unable to buy resale flats or BTO flats and immediately resell them for higher prices. The MOP framework also prevents property investors from driving up the prices of public housing.
Situations where you can bypass MOP
However, there are several circumstances in which the MOP can be overruled.
Bankruptcy: If selling your flat and downgrading would help you to avoid bankruptcy, HDB might allow you to do so, depending on each situation and approval is to HDB’s discretion.
Divorce: This is one of the major reasons for needing to circumvent the MOP. Both you and your spouse will be allowed to sell the house and then divide the proceeds.
Inability to pay the home loan: HDB may allow families to sell prematurely if their sole breadwinner is unable to earn money.
Terminal illness: These are evaluated on a case-by-case basis.
Loss/ renouncement of citizenship: If you are planning to move abroad permanently, or are mandated to do so, HDB may give you permission to sell your flat early. You’ll also be able to get your CPF money back.
Adhering to the Ethnic Integration Policy (EIP)
What is EIP?
The EIP quota seeks to maintain a balanced mix of ethnic groups in all HDB estates. By doing so, HDB estates are able to avoid racial enclaves from forming, as there will be a balanced proportion of ethnic groups within each neighbourhood. If you are looking at selling to someone of a different race, you must check if the quota for your buyer’s race has exceeded in the neighbourhood.
You can do so by using the HDB website to check if you are eligible to sell an HDB flat to a buyer of a particular race under the EIP and SPR quota. The proportions and SPR quota is updated on the first of every month based on all completed resale applications received in the preceding month.
Adhering to the Singapore Permanent Resident (SPR) Quota
What is SPR?
The SPR (Singapore Permanent Resident) quota ensures SPR families can integrate well into the local community. You will not be able to sell your HDB flat if it leads to the neighbourhood’s EIP and/or SPR quota exceeding. Malaysians are exempt from this quota due to their close cultural similarities with Singaporeans.
EIP/SPR quota can be checked on the HDB Resale Portal after you have registered your Intent to Sell.
While you might make a profit by selling your HDB flat, don’t forget that part of your sales proceeds will have to be deposited back into your CPF account. Before you get to make a profit, you will have to repay whatever that is left of your outstanding mortgage loan, the amount of CPF funds previously used to purchase the flat (with accrued interest) and a possible resale levy if you are intending to buy a resale flat or Executive Condominium next.
Still feeling confused about the many regulations and calculations regarding the sale of a HDB Flat? Simply leave all the administrative work and minute details in the trusty hands of Home Property Agent. Find out more about our unique selling methods on our website now.