When you purchase an HDB flat, the Minimum Occupation Period (MOP) requires you to occupy your flat for a set period of time before you can consider selling your flat and upgrading to a different home. Regarding HDB MOP rules, the MOP is usually five years for most HDB homebuyers, but there are other considerations as well.
This is regardless of your personal circumstances or even if you have the means to purchase a much more expensive property. Maybe you have a couple of kids now and a 3-room flat is too small. Or you need to move closer to your ageing parents.
Whatever your considerations, we want to help you better understand how to go about buying your next home. So, we’ve put together a list and answered some common questions HDB upgraders may have about the MOP.
1. When Does My Minimum Occupation Period (MOP) End?
|Type of flat||Minimum Occupation Period (MOP) duration|
|Flat bought from HDB and HDB resale flat bought on the open market||Five years (for PLH flats, it is 10 years)|
|DBSS flat||Five years|
|SERS flat||For SERS sites announced on/after 7 April 2022, five years from collecting your keys|
For SERS sites announced before 7 April 2022, seven years from the date of selecting your replacement flat or five years from collecting your keys, whichever is earlier
|Fresh Start Housing Scheme HDB flat||20 years|
The first question probably have is when exactly your MOP ends. This may be confusing because even within the same BTO project, different households collect their keys in different phases, and move in at different times. To answer, for those with BTO flats, your MOP end date is five amount of years from the date you collect your keys to the HDB flat. So according to HDB MOP rules, if you were one of the earliest to move in, congrats! You’re one step ahead.
If you don’t want to sieve through documents on the date you collected your keys or calculate how long it’s been, you can simply log in to the My HDBPage website to find out your MOP end date. But if not you can look at the table above.
In November 2021, the Government announced the new Prime Location Public Housing (PLH) model which you may be familiar with by now. BTO projects launched under the PLH model have a 10-year MOP to fulfil. And unlike typical HDB flats, these HDB MOP rules stipulate that homeowners of said PLH flats are not allowed to rent out their entire flats even after the MOP has been fulfilled.
Are There Any HDB MOP Exemptions?
If you’re looking to appeal to HDB to waive your MOP, know that you should have a strong valid reason. The decision for MOP exemptions is subject to HDB’s discretion and is assessed on a case-by-case basis.
Reasons for cases that were approved include “financial hardship, divorce, or the demise of the owner”. If you have clear evidence, there is a good chance HDB will seriously consider your case. If not, HDB MOP rules should be followed and we do not advise you to try to bend these HDB MOP rules!
2. Can I Apply for a Second BTO Flat or EC If the Completion Date Is after My MOP?
You might be wondering: since a new BTO or Executive Condominium (EC) would take years to be fully completed, can you apply for a new home before the MOP is up? What about if the new BTO flat’s or EC’s completion date is after your MOP?
Unfortunately, you can only apply for your second BTO HDB flat or EC after you have fulfilled your MOP for your current HDB flat. No earlier, no exceptions.
That means you probably won’t be able to move right after the five-year mark unless you buy a completed or resale property. If you’re eyeing a new BTO flat or EC, the timeline is likely to be like this:
- Five years in the first BTO
- Apply for a second BTO or new EC
- Continue living in your first BTO until the new property is ready
- Move to the new property
- Sell your existing flat
3. Can I Buy a Private Property Before I Sell My HDB Flat?
Yes, however, there will be certain ramifications to the loan limit and cash outlay for your private property purchase.
Firstly, if you have an outstanding loan for your HDB flat, then your maximum borrowing limit for the private property will be limited to 45% of its value rather than 75%.
This equates to a much higher cash outlay for your down payment. Since there’ll be a period between when you have two housing loans (after you buy the new property, but before you sell the old one), you’d also have to ensure you fall within the Total Debt Servicing Ratio (TDSR), where the amount of monthly loan repayments you have to make is less than 55% of your gross monthly income.
The second issue is the potential Additional Buyer’s Stamp Duty (ABSD) incurred. Let’s say you’re looking to buy an investment property. Given that this is your second property and you’re a Singapore citizen, you will incur a 20% ABSD.
But if you’re intending to sell your HDB flat and live in the private property, you would be eligible for a remission of the ABSD amount if you sell the first property within six months. However, you will still have to cough up the cash for the ABSD tax first.
4. How Much Money Do I Need to Refund Into My CPF OA?
When you want to upgrade to a bigger home, you typically need to pay a larger downpayment as it will be more expensive. This is when you may start calculating whether you would have enough cash for the down payment and renovation costs after refunding your CPF.
In general, you will have to refund any funds used for your purchase. This may include the initial downpayment, administrative fees and stamp duty, monthly mortgage repayments, government housing grants, as well as accrued interest on all of the funds used. This may significantly deplete the amount of cash you think you’d get in hand.
Not to worry though, you would probably be able to use the bulk of your refunds for your next property purchase. The only concern would be how much cash in hand you’d get to retain.
5. Must I Pay HDB Resale Levy When Upgrading to a Private Property?
If you are selling your current subsidised flat to either purchase another subsidised flat directly from HDB or an EC you are required to pay the HDB resale levy.
HDB Resale Levy Amount
However, if you are upgrading to a resale HDB flat or private property, you don’t have to fork out any HDB resale levy. And as always, before you upgrade your property, do make sure to plan your budget carefully. You want to factor in all these upfront costs, have extra just in case an unexpected expense occurs, and ensure you are not too financially stretched.
6. What Is the Timeline for the Sale of HDB Flat?
For most people, you would look to sell your HDB flat first before upgrading to a private property as this means you don’t have to pay any ABSD taxes, you can use the sales profits for your next downpayment and you will still qualify for the higher loan limit (first mortgage).
In such a scenario, the following outlines the steps required to complete the sale of your HDB home and to buy your private property.
Selling the HDB Flat
- Register Intent to Sell and finds an interested buyer
- Buyer signs Option-To-Purchase (OTP)
- Buyer exercises OTP
- Seller and buyer submit HDB resale application
- HDB accepts the application
- The sale is completed and the handover begins
Buying the Private Property
- Find preferred private property to buy
- Buyer sign OTP
- Buyer exercises OTP
- The sale is completed and the handover begins
The exact timeline of selling your HDB flat to buying and moving into your private property is hard to specify. But typically, it takes anywhere from two to six months. It could be longer if you cannot find a buyer or preferred home, or if there are administrative delays. If you prefer, you can read how one of our writers sold her freshly MOP-ed BTO flat to buy a resale condo and what she learnt from the experience.
7. How Much Can I Get for My HDB Flat and How Much Are Other Resale HDB Flats?
To know whether you are getting a good price for your flat, you need to know where the property cycle is. HDB resale flat prices dipped and held relatively steady after reaching an all-time high in 2013.
But the COVID-19 pandemic saw many construction delays, which pushed many buyers into the resale market. In turn, prices for HDB resale flats started to pick up and increase sharply from the Circuit Breaker onwards. This surge in demand could mean you may be able to turn a tidy profit from the sale of your first home, especially if it is a BTO flat.
To get a sense of what property price transactions are in your vicinity, you can search for similar flats on PropertyGuru. After clicking into a listing, you can scroll down to the ‘Pricing Insights’ section, where you’ll see recent price trends and transaction details.
From these figures, you can make a good ‘guesstimate’ on how much to sell your current property for and how much to offer for a new one.
8. Is Now a Good Time to Upgrade to a Bigger Flat or Private Property?
Many people have aspirations of upgrading, but most simply stay on the sidelines wondering when to bite the bullet as property prices climb higher and higher beyond their reach.
You may have noticed that both HDB and private property prices in Singapore tend to rise. Over the years, what’s considered the ‘new low’ is likely to still be higher than the previous low. Likewise, the ‘new high’ is expected to be higher than the previous high. Following this logic, wouldn’t every time be a good time to buy?
As you can see, it’s hard for anyone to tell you when exactly is the best time. So instead of trying to time the market, we encourage you to assess your finances and work out your personal priorities before making a decision. Currently, HDB resale flat and private property prices are at a high. If you sell high now, it’s a good chance you’re also buying high, so you may need to calculate your options carefully.
For those who intend to buy an HDB flat, apply for your HDB Flat Eligibility (HFE) letter. At the stage where you’re doing a preliminary HFE check, you will get information on your housing eligibility and financing options, including how much grant amount you are eligible for. This information will help with flat budget planning for your next home.
If you need more help, you can always reach out to our PropertyGuru Finance Mortgage Experts. From choosing the ‘best’ property loan to providing tailored home financing advice, they can guide you every step of the way – all at no cost!
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