Monday 9 December 2013

Impacts on New EC Measures 9 Dec 2013

The Government will implement three measures for Executive Condominium (EC) developments to bring the terms for ECs closer to that for public housing, and help support a stable and sustainable EC market. This follows a review by MND on the EC Housing Scheme, taking into account feedback from the Our Singapore Conversation on Housing. 


I. Reduce EC Cancellation Fees
2   First, we will reduce the cancellation fees for ECs from 20% to 5% of the purchase price. This will relieve the financial burden of buyers who have to cancel their EC bookings after signing the Sale & Purchase Agreement. The new cancellation fee will be applied to EC land sales which are launched on or after 9 Dec 2013, including those where the tenders have not closed.
3   The cancellation fee for ECs is currently set at 20% of the purchase price, similar to those for private housing. However, unlike buyers of private housing, buyers of EC units cannot sub-sell their units if they cannot complete their purchase, and have to pay the cancellation fee. This has especially imposed significant financial burden on young couples who subsequently are not able to proceed with their marriage and hence the EC purchase.
4   We will therefore align the cancellation fees for EC units with that for HDB Build-to-Order (BTO) flats, and reduce them from 20% to 5% of the purchase price.

Implications:  
Developers will then be open to more risk of cancellation cases. 20% based on a 1 Mil property is $200K vs 5% which is $50K.

 II. Resale Levy for Second-Timer Applicants
5   Second, we will now require second-timer applicants who buy EC units directly from property developers to pay a resale levy, similar to second-timer applicants who buy BTO flats. The new requirement will be applied to EC land sales which are launched on or after 9 Dec 2013, including those where the tenders have not closed.
6   Currently, second-timer applicants who buy EC units directly from property developers benefit from the lower EC prices arising from the initial eligibility and ownership restrictions imposed on EC purchases. However, they do not need to pay a resale levy. The alignment of treatment with second-timer applicants who buy BTO flats will ensure greater parity. 

Implications
Firstly, existing EC projects will probably move off the shelf faster as they are still not being impact by Resale Levy for 2nd timers. Borderline 2nd timers who might be waiting for 2014 projects might make up their mind to go for current projects to escape Resale Levy. 

Secondly, 2nd timers might seriously consider BTOs as versus ECs in the future as main perk of no Resale Levy has been abolished.

III. Revision of Mortgage Loan Terms
7   Third, the Monetary Authority of Singapore (MAS) will cap the Mortgage Servicing Ratio (MSR) for housing loans granted by financial institutions for EC units bought directly from property developers at 30% of a borrower’s gross monthly income. This is in line with earlier measures introduced by the HDB and MAS to encourage financial prudence among buyers of public housing. It discourages EC buyers from over-stretching their finances and supports an affordable and sustainable EC market.
8   The 30% MSR cap will apply to EC purchases where the Option to Purchase is granted on or after 10 Dec 2013.

Implications
Firstly, as EC income cap is still set at $12K per month, it means that buyers will be limited to using 30% of their income for servicing monthly mortgage. That will drastically bring down the quantum of loan that a buyer can get to purchase EC. In the long run if the income cap is still not lifted higher and escalating land prices, we could be seeing compact or even mickey mouse size EC units being built in order for the developers to bring down the quantum of their project.
Secondly, as more local buyers hit the wall against the MSR cap, they might consider buying another low quantum small private condo for investment purposes. This is because private condo are not subjected to MSR and when the buyers have cleared their existing HDB loan, they still can get up to potential 80% loan after being subjected to TDSR. In short, buyers can get a much higher loan quantum for a private condo as compared to EC if they don't have any existing housing loan.

Existing ECs:
Sea Horizons @ Pasir Ris
Skypark Residences @ Sembawang
Waterwoods @ Punggol

Upcoming ECs for 2014!
New EC @ Yuan Ching (Jurong)

Tuesday 27 August 2013

Summary of New HDB Measures 27 Aug 2013


1. Adjustment of MSR for HDB Loans - Mortgage Service Ratio (MSR) for HDB loan is now 30 per cent of their gross monthly income down from 35 per cent.

Implications - In short, it means HDB loan borrower will have a lesser permissible percentage of their income capped usable to service their monthly mortgage loan. Ultimately, this brings down the loan quantum offered by HDB. With a lower loan quantum eligible, buyers can either fork out more cash/CPF when doing purchase or look for cheaper housing alternatives within their means.

2. Adjustment of max loan repayment for HDB housing - The maximum repayment period for HDB housing loans will also be lowered from 30 to 25 years, and from 35 to 30 years for bank loans taken to buy HDB flats, including DBSS.

Implications - Obviously with a lower loan repayment tenure, it means that borrower will not be able to spread out loan repayment further to bring down monthly installments and with MSR cap, it may also bring down the loan quantum permissible by HDB or financial institutions. With a lower loan quantum eligible, buyers can either fork out more cash/CPF when doing purchase or look for cheaper housing alternatives within their means.

3. Launch of New three-generation flat(3Gen Flats), features four bedrooms and three bathrooms, with a floor area of 115 sq m. First project will be launched in Yishun in the upcoming September BTO exercise.

To be eligible for 3Gen flats, applicants must form a multi-generation family comprising a married or courting couple and their parents. To prevent abuse of the scheme, subletting of rooms will not be allowed during the five-year minimum occupation period. After fulfilling the minimum occupation period, the flats can only be resold in the open market to other eligible multi-generation families.

Personal 2 cents worth -  Personally feels that the traditional multi-generation (Jumbo) flats are still more attractive because of their much larger floor area and non restriction of non multi-generation resale purchasers.

4. Multi-Generation Priority Scheme allows the older set of parents to buy to a three-room flat.

5. Special Housing Grant (SHG) income limit will now be $6,500, a sharp increase from the previous $2,500. (Limited to BTO or sale of balance flats)

6. BTO's Step Up Grant of $15,000 to the sellers' of two-room homes when they upgrade to three-room flats.

7. Singles who earn up to $3,250 a month, instead of the current income cap of $1,125, can now also get the SHG when they apply for two-room flats on their own.

8. New 3-year waiting period for permanent residents to buy resale flats after receiving their PR status applies to resale applications received on or after 5.30pm on Tuesday.

Implications - New PRs will now either have to seek rental alternatives or seek private residential options. Potentially, HDB resale market might be affected, pushing away a group of new PR buyers to the rental or private market.


Saturday 29 June 2013

Summary Of New MAS Debt Servicing Framework for Property Loans 28 June 2013



Summary Of Bank guide line on new application

1. Approval will have to take in all liabilities, even credit cards. Documentation will have to be provided to proof the liability amount


2. Approval based on 3.5% calculation of monthly instalment instead of the current 2.8%


3. 60% of your monthly income max should be used for monthly instalment. Nothing more than that.


4. To recognise only 70% of bonuses and rental incomes


5. Borrowers can only be the owners of the house


6. Guarantors must be borrowers


7. To use income weighted age of borrowers. No longer based on youngest borrowers


Example:
Husband aged 40 earns $5,000 monthly. Wife aged 30 earns $3,000 monthly.

In order to calculate income weighted aged, apply the following:

Income weighted Age = (40 x 5000) + (30 x 3000)
                                        5000 + 3000
                               =   36.25 (Round to next whole digit) = 37

Max Loan Period = 65 - 37 =28 years

Click this link for the full press release from MAS.



       

Monday 1 April 2013

New HDB Loan Option from POSB?




With reference from Channel NewsAsia, starting April 1, there will be a new loan option for HDB home buyers. The new POSB HDB Loan will offer a floating interest rate capped below the HDB's concessionary rates for ten years.

The HDB concessionary interest rate is pegged at 0.1 percentage point above the prevailing CPF interest rate. DBS said the POSB HDB Loan allows buyers to benefit from the current low interest rates and at the same time, gives a ten-year protection against rising interest rates.

Click to read the full report .

Effectively, what alternative does this new loan option present to the market?

The rates for this option can be likely 0.3 per cent to 0.6 per cent higher than what's in the market rate, but the compromise is there is an interest rate cap at the CPF Ordinary Account level.

Quoting an example of 1.7 per cent market rate, the initial loan per cent might be anything between 2.0 to 2.3 per cent but capped to the CPF OA level of 2.5 per cent.

This is certainly attractive when placed in direct comparison with HDB's current concessionary of 2.6 per cent, which is pegged to 0.1 per cent on top of the CPF OA interest rate. Not forgetting POSB HDB Loan is also giveing a ten-year protection against rising interest rates.

However, loan takers do have to bear in mind the initial minimum higher cash layout of 5% of property valuation and the long term commitment they have to make towards a bank loan.

Ultimately, this new POSB HDB Loan does offer an interesting alternative to loan seekers and I'll be glad to discuss further or introduce a POSB mortgage banker if you can drop me an email.

Saturday 23 March 2013

What impact does the revised Property Tax Structure has on me?

The recently announced and unveiled Budget 2013 included a segment on a new residential property tax structure that would take effect by 1 January 2014. This tax structure features progressive tax rates for all property, based on their Annual Value. A further increase of 1% for the upper tiers is slated for 1 January 2015. In addition to increasing tax for higher-value properties, a different, higher-tax structure will also be put in place for non-owner-occupied residences.  

Non-owner-occupied residential property is the category for all residences in which the owner does not reside in. The most common example of this is a landlord who rents out an entire residential property to another  party. Even vacant properties will now fall under this category, with effect from 1 January 2014. Effectively, that means vacant properties will incur the same taxes as if it were rented out.

For a clearer impact of the new measure across all property types, do refer to the table with examples as per below:

*Refer to this IRAS link for the various calculators for property tax calculations.
 
Illustration of impact of property tax changes to owner-occupied residential property:
  Illustration of impact of property tax changes to non-owner-occupied residential property:




What are the possible Market reactions to these changes?

A possible market reaction would be for landlords to try pass the increased tax cost on to their tenants
However, the market can only absorb a finite amount of increase. Once these landlords realise that their properties are lying vacant due to overpriced rent, their asking price will tend to come back down. Moreover, these landlords will feel a greater urgency to rent out, as they have to pay the property tax whether the property is vacant or not. As such, holding the property to wait for a higher rent is no longer as attractive a proposition, especially for the higher value properties. The result might even be lower rents in the long run, as landlords with fallow properties attempt to make up for the additional taxes they have to pay due to this new tax structure. Eventually, this could exert downward pressure on property prices in general.

Therefore, when we look at the middle tier investors who will be seeing less profit, it may dampen their enthusiasm, discouraging some of them from buying units purely to seek rent. It may even cause some existing ones to pull out. This might have a temporary dampening effect on property prices which may well be a positive influence on the realty market in the long run. Investors will be thinking twice before dabbing into the market beyond their financial means and we can look into some immediate taming of the fast escalating property market.

However, when we look up the scale to the high end investors focusing on luxury properties. The absolute quantum of a couple of thousands of dollars in relation to the few millions which they were already willing to spend might not form much deterrence to their buying decisions. Therefore, I think this structural change might have minimal impact on this end of the market.

As we look forward to 2014 when the new structure comes in place, let us observe further on the ground to see how the market forces is shifting especially towards the 2nd half of 2013.

Tuesday 19 March 2013

Usage of CPF to purchase Property (Including HDB properties) with Remaining Lease of at least 30 years, but below 60 years?

* Please note that MLP will apply for HDB properties as well as of 1 July 2013 to tighten the terms for granting HDB loans and the use of CPF funds for the purchase of HDB flats with remaining leases of less than 60 year.

Minimum Lease Period (MLP) refers to a flat/property with a remaining lease of at least 30 years but below 60 years. CPF can be used to purchase HDB flats/properties with MLP. However, there are additional conditions that buyers must meet in order to use CPF for flats/properties with a remaining lease of at least 30 years but below 60 years.
First, to use CPF for such flats/properties, an owner’s age plus the remaining lease of the flat/property must be at least 80 years. This is to ensure that the flat/property will last the owner until he/she is at least 80 years old, which is roughly the average life span of Singaporeans at birth.
Second, the total CPF that can be used by all owners who are eligible to use CPF is capped at a pro-rated Valuation Limit of the flat/property (the Withdrawal Limit). The pro-ration is determined by the ratio of the remaining lease of the flat/property when the youngest owner who can use CPF is 55 years old, to the lease at the point of purchase.
* Note: setting of minimum sum does not apply for such situations.

Withdrawal Limit
(The remaining lease of flat/property when the youngest owner is 55 years old)  x  Valuation Limit*
(The lease of the flat/property at the point of purchase)
The Withdrawal Limit (WL) is set at a level that covers the estimated depreciated value of the flat/property when the youngest member using CPF reaches the CPF withdrawal age of 55 years. This is to ensure prudent use of members’ CPF savings towards the purchase of flat/property with shorter remaining lease.
An example of how the WL is determined is shown below:
Example:
A 35 year old member buys a flat/property with 50 years of lease remaining. When the member turns 55 years old, the flat/property will have 30 years of lease remaining.
The pro-ration in this case is 30/50 = 0.6 (or 60%)
The applicable WL = Pro-rated Valuation Limit = 60% of Valuation Limit*
* Valuation Limit is the lower of the purchase price or the value of the flat/property at the time of purchase.
If you are buying the property with other co-owners, the age of the youngest co-owner (who is eligible to use CPF) will be used to determine the WL for the property.
Example:
A, B and C are buying a property with 50 years of lease remaining. A is 35 years old, B is 30 years old, and C is 25 years old.

In this case, C is not allowed to use his CPF savings for the property as the remaining lease of 50 years will not last him till 80 years. Only A and B can use their CPF for the property, but the WL will be a pro-rated Valuation Limit (VL)*. The pro-ration is the ratio of the remaining lease when B (the younger of the two) is 55 years old to the lease at the point of purchase.
Hence, the pro-ration is 25/50 (or 50%) and the WL is 50% of VL.
* Valuation Limit is the lower of the purchase price or the value of the property at the time of purchase. 

For easier reference, please refer to the attached diagram:
 

Monday 18 March 2013

Setting Your CPF Minimum Sum?

You might have probably heard of CPF Minimum Sum but when would one actually need to set aside this amount in their CPF when dealing with Singapore properties?
1. You will need to aside the Minimum Sum when you reach 55 ensures that you have some regular income from age 65 to live on in your retirement.

When you reach age 55, a portion of your OA and SA savings will be transferred to your RA to meet the MS. If there is a still a MS shortfall in your Retirement Account, a portion of the new inflows like contributions, voluntary contributions, government top-ups and/or other refunds received after 55 will be used to make up the shortfall upon your subsequent CPF withdrawals. In lay man terms, it means that one will not be able to utilize his/her CPF contributions to offset loan installments until they meet their MS. You may pledge your property for up to 50% of the MS after you have obtained the consent from all other co-owners to do so. Based on current policy, when the property is sold or otherwise disposed of, you need to refund the MS deficiency, or the principal CPF withdrawn for the property plus the accrued interest, whichever is lower. The MS deficiency is the CPF MS applicable to you when you turn 55 less the balance in your Retirement Account (excluding the interest earned).
The amount that you can pledge depends on
  • HDB’s quarterly average median resale prices for HDB flats or valuation price for private properties;
  • Outstanding housing loan amount (including non-housing loan for private properties);
  • Co-owner’s CPF usage (for joint-ownership cases); and
  • Your share of the property.
Examples illustrating the amounts that can be pledged:
EXAMPLE 1

Where the co-owner’s CPF usage is less than 50% of the residual value of the property
HDB’s average valuation price :$300,000
Less outstanding HDB loan :$150,000
Residual value : :$150,000
Co-owner's CPF usage : :$ 40,000
Member's share : :$ 75,000

In example 1 above, as the co-owner's CPF usage is less than 50% of the residual value, the member’s share of the property would be based on 50% (assuming that the property has only two owners with 50% share each) of the residual value. He can pledge the property up to the maximum limit of $69,500 if the Minimum Sum applicable to him is $139,000(Before 1 Jul 2013). With effect of 1 Jul 2013, this Minimum Sum will be raised to S$148,000 in accordance to inflation rates. *Note: the 50% property pledge will be raised to S$74,000 accordingly.
EXAMPLE 2

Where the co-owner’s CPF usage is more than 50% of the residual value of the property
HDB’s average valuation price :$300,000
Less outstanding HDB loan :$200,000
Residual value : :$100,000
Co-owner's CPF usage : :$ 80,000
Member's share : :$ 20,000

In example 2 above, as the co-owner's CPF usage is greater than 50% of the residual value, the member's share of the property would be the residual value less the co-owner's CPF usage. The member can only pledge an amount of $20,000(i.e. $100,000 less $80,000).
EXAMPLE 3
Where the co-owner did not use his CPF for the property and has 50% share ownership
HDB’s average valuation price :$300,000
Less outstanding HDB loan :$250,000
Residual value : :$ 50,000
Co-owner's CPF usage : :$         0
Member's share : :$ 25,000

In example 3 above, as the co-owner did not use his CPF for the property and the member has 50% share of the property, the amount that the member can pledge is $25,000 only.

In the scenarios quoted above, you will be required to set aside MS of ($139,000 - pledge amount) or ($148,000 - pledge amount from 1st Jul 2013 onwards)* before you can utilize any further CPF on your property.


2. When you use your CPF to purchase more than one property.

If you already own a property (HDB flat or private property) bought with your CPF savings and wish to buy another property with CPF savings after 1 July 2006, you must set aside half of the prevailing Minimum Sum before you can use the excess savings in your Ordinary Account for the second/subsequent property.  Savings in the Special Account (including the amount used for investments) and Ordinary Account can be used to meet this required amount.
Please note that as the Minimum Sum will be raised in July each year, the amount you need to set aside will be adjusted accordingly. 
If you currently own more than one property bought with CPF savings before 1 July 2006, you need not set aside half of the prevailing Minimum Sum unless you subsequently buy another property using your CPF savings on or after 1 July 2006.
Please note that this is not applicable if you are applying to use your CPF to purchase a second or subsequent property with non-related singles.  Non-related singles can only jointly use their CPF to purchase one property (HDB flat or private property).

 
3. When you hit your CPF Withdrawal Limit.

The Withdrawal Limit (WL) is the maximum amount of CPF beyond the Valuation Limit (VL) (the lower of the purchase price of property or valuation of preoperty at time of purchase) that you and your co-owner(s) can use for the property. Once the WL is reached, no further withdrawal of CPF by any owner will be allowed. If the housing loan is still outstanding, you and your co-owner(s) will have to service it fully with cash unless you have the Available Housing Withdrawal Limit (AHWL). Use this CPF calculator to estimate your CPF Withdrawal Limit and Valuation Limit.

Avaliable Housing Withdrawal Limit (AHWL)
For those below 55, the AHWL is the balance available after setting aside the Minimum Sum component. Savings in the OA, SA and amounts withdrawn for investment can be used to meet the prevailing Minimum Sum cash component.
CPF has a calculator that helps you estimate your AHWL.

The WL is not applicable to new or resale HDB flats financed with HDB concessionary loan. The WL is determined by the date of purchase or refinancing of loan as follows:
Date of Purchase (i.e. Sales & Purchase agreement) / Refinancing of Housing Loan Withdrawal Limit
1 Jan 2006 – 31 Dec 2006 132% of VL
1 Jan 2007 – 31 Dec 2007 126% of VL
1 Jan 2008 onwards 120% of VL

Saturday 16 March 2013

Selling your HDB flat directly back to HDB?

This recent hot topic was spiced up by National Development Minister Khaw Boon Wan relating to the new slew of cooling measures which MND is considering implementing.

It sparked discussion and panic among existing HDB property owners thinking that HDB might totally curb COV and buy back their HDB at valuation.

Subsequently Mr Khaw issued another statement to address more depth on the related measure under consideration. The content stated that the "no resale in the open market" proposal was simply one of the suggested restrictions on possible new housing options that are cheaper than today's BTO.

Although this new measure has not been officially released, I am writing this post to analyse the possible impacts of this measure.

Likely, HDB will separate this class of cheaper BTO from the existing batches of BTO. The target class will probably be young couples with limited combined income resources. How much cheaper would these BTO be from the existing BTO?

Well, probably the officials might launch these BTO cheaper at a rate of the average resale COV in the market.

The reason is because upon fulfillment of MOP, these properties can only be resold back to HDB at valuation pricing without COV. Therefore it might only seem fair that there is this trade off.

With this clear segregation, a new entity will be created which is clearly separated from the Resale Market and not impacting the Resale Market. And by creating this entity, HDB might also instill lower tenures tagged to the housing so that initial pricing can be pushed down even lower, say 60 years instead of the normal 99 years.

Bottomline, the reason for this new class of housing is to help young couples who are priced out of the market to at least purchase a new house comfortably and build their family. Buyers should not come in with a mentality on profit after MOP as I seriously do not think its worthwhile with all the restrictions built in.



EC? What's In For Me?

Executive Condominiums, EC, for short are a class of residential property right stacked in the middle tier of HDB public housing and private residential. They cater especially for young graduates and professionals who can afford more than an HDB flat but find private property to be out of their reach. The income sandwiched class.
ECs are comparable in design and facilities to private condominiums as they are developed and sold by the private developers.” Essentially, an EC has most if not all the facilities of most condos but are initially tied back to the rules and regulations of HDB.

Who is eligible to buy an EC?
I am appending all the criteria listed by HDB for your easy reference.


Age
  • You must be at least 21 years old at the time of application
  • If you are buying an Executive Condominium (EC) under the Joint Singles Scheme, you must be at least 35 years old.   

Family Nucleus
You must form a proper family nucleus under one of the following schemes:

Type of SchemeFamily Nucleus Requirement
PublicYou, the applicant and;
  • Your spouse, and children (if any)
  • Your parents, and siblings (if any)
  • Your children under your legal custody, care and control (for widowed/ divorced)
Fiancé/Fiancée Additional InformationYou, the applicant and your fiancé/fiancée
Orphan
Additional Information
You, the applicant and;
  • Your unmarried siblings, or
  • Another single unrelated orphan
Joint Singles
Additional Information
You, the applicant and another single person

You may buy a dual-key EC units offered by the developer if you form a multi-generation family as follows:
(i) Married couple with parents/grandparents
(ii) Fiancé and fiancée couple with parents/grandparents
(iii) Widowed/divorced with children and parents/grandparents


Income Ceiling
Your average gross monthly household income must not exceed $12,000.


Am I eligible for any further housing grant?
* Applicable only for first timer
EC Buyer with Average Gross Monthly Household Income up to $10,000







Type of Grant Available
Amount
SC / SC Household
SC / SPR Household
CPF Housing Grant for Family
$30,000
$20,000#
Half Housing Grant
  • If you are a first-timer citizen and your spouse has previously enjoyed a housing subsidy


$15,000
#If you are from an SC/SPR household, you can enjoy the full housing subsidy by applying for the Citizen Top-Up when your SPR family takes up Singapore Citizenship or when you have an SC child.


EC Buyer with Average Gross Monthly Household Income from $10,001 to $11,000
From 15 Aug 2011, first-timer households with monthly income between $10,001 and $11,000 may buy new ECs with a CPF Housing Grant of $20,000. This revision is only applicable to EC projects launched for public sale on or after 15 Aug 2011.
Type of Grant Available
Amount
SC / SC Household
SC / SPR Household
CPF Housing Grant for Family
$20,000
$10,000#
Half Housing Grant
  • If you are a first-timer citizen and your spouse has previously enjoyed a housing subsidy


$10,000
#If you are from an SC/SPR household, you can enjoy the full housing subsidy by applying for the Citizen Top-Up when your SPR family takes up Singapore Citizenship or when you have an SC child.


EC Buyer with Average Gross Monthly Household Income from $11,001 to $12,000
From 15 Aug 2011, first-timer households with monthly income between $11,001 and $12,000 may buy new ECs with a CPF Housing Grant of $10,000. This revision is only applicable to EC projects launched for public sale on or after 15 Aug 2011.
Type of Grant Available
Amount
SC / SC Household
SC / SPR Household
CPF Housing Grant for Family
$10,000
$0#
Half Housing Grant
  • If you are a first-timer citizen and your spouse has previously enjoyed a housing subsidy


$5,000
#If you are from an SC/SPR household, you can enjoy the full housing subsidy by applying for the Citizen Top-Up when your SPR family takes up Singapore Citizenship or when you have an SC child.

What are the down payment schemes which I have to note?
If you are eligible for a loan ceiling of 80%, you will have to pay the initial payment of
  • 5% in cash
  • balance 15% using CPF savings, CPF Housing Grant or cash

If you are eligible for a loan ceiling of 60%, you will have to pay the initial payment of

  • 10% in cash
  • balance using CPF savings, CPF Housing Grant or cash
If you are eligible for a loan ceiling of 50% or lower, you will have to pay the initial payment of
  • 25% in cash 
 
Can I purchase an EC as a second timer?
For existing HDB property owners who have fulfilled their Minimum Occupation Period(MOP), you will be eligible to apply for an EC if you can fulfill firstly the criterias mentioned earlier and secondly if you have not exhausted 2 opportunities to get a subsidized flat. (Resale Unit + housing grant is considered as one chance)  

You will not need to pay back Resale Levy to HDB as you are not eligible for any grant either. However, you must dispose of your existing flat within 6 months from the date of issuance of the Temporary Occupation Permit in respect of the Executive Condominium (EC). 

If you intend to apply to purchase an EC where the Temporary Occupation Permit for the EC has been issued, you will be required to dispose of your existing HDB / DBSS flat within 6 months from the date the Developer serves the Notice of Vacant Possession on you.



Are there other important information which I need to note?
Minimum Occupation Period (MOP)
Sale of EC

You have to occupy the EC for 5 years before you can sell it in the open market.


Essential occupiers in EC
Occupiers who are essential in the forming of a family nucleus with you in the EC application must continue to be listed in the application and stay in the EC during the 5-year Minimum Occupation Period (MOP).
They cannot make a separate application, or to be listed as occupiers in another application to purchase an HDB flat or another EC within the MOP.

Renting out your EC
Renting out the whole EC unit

Renting out of whole EC unit within the 5-year Minimum Occupation Period (MOP) is not allowed, unless for valid reasons and subject to HDB’s written approval.


Renting out rooms
No prior approval from HDB is required if you rent out your bedroom(s) in the EC within the MOP. However, with effect from 1 Feb 2010, you must register the subletting of bedrooms with HDB within 7 days of doing so. You are also required to notify HDB when you renew or terminate the subletting of bedrooms, and when there are changes to your subtenants’ particulars. You may approach the HDB Branch managing your EC to register the subletting.

Buying another subsidised housing
After selling your EC in the open market, you must wait for 30 months before you can submit an application to buy:
    1. a new flat from HDB; or
    2. an apartment under the Design, Build and Sell Scheme (DBSS) from developers; or
    3. another EC from developers.

Resale Levy
The resale levy is meant to reduce the housing subsidy that can be enjoyed by flat buyers in the purchase of their second subsidised flat from HDB. It also ensures a fairer allocation of housing subsidies among flat buyers.

You are liable to pay a resale levy of $55,000 when you buy a second subsidised flat from HDB or take over ownership of a subsidised HDB flat after selling the EC bought under the CPF Housing Grant Scheme (after meeting the 5-year Minimum Occupation Period (MOP) and the 30-month period).

If you do not intend to buy a second subsidised flat from HDB, for example, if you are buying a resale flat, a new DBSS flat, an EC from the developer, or a private residential property, you need not pay the resale levy.

Interest in Private Property
You cannot invest in private residential property during the 5-year minimum occupation period.
Executive Condominium (EC) owners who have occupied their EC and met the 5-year minimum occupation period (MOP) can sell their EC in the open market. The 5-year MOP is computed from the date of issuance of Temporary Occupation Permit (TOP) in respect of each EC.
After the 5-year MOP, from 6th to 10th year, EC can be sold in the open market to those who can meet the HDB eligibility conditions.

From 11th year, all restrictions will be lifted. Foreigners and corporate bodies can buy ECs in the open market from 11th year of the EC project. 


Please feel free to drop me an email for further queries or clarifications.