Private Properties

Private Condominium

Ahhh, private properties. Whats the big deal about owning one? A one-bedroom condominium unit costs at least half a million dollars in Singapore, and at this price price it’ll probably be a resale one too. A normal BTO flat that has 3 bedrooms are usually under $400,000 less those in more desirable locations. So why would you want a Private property?

Let’s discover the difference between Private and public housing.

First things first, in this post private property refers to Apartments, Condominiums, Landed property in Singapore. We’ll leave executive condominiums out for now, as they are some sort of a hybrid between public and private housing. You can read more about Executive Condominiums here.

Loan Restrictions

For public housing like HDB, there’s a choice of using HDB loan to finance, or a bank loan. But for private housing, there’s just one choice, Bank loans. Whether good or bad, we’ll leave it to you to decide (at this point bank loan rates are hovering around 1.6% and HDB loan is always at 2.6%).

Loan interest rate structures

Loan packages from banks always revert to floating interest rates after a certain fixed rate period.

HDB loan can give you a perpetual fixed rate at 2.6% but note that this is more expensive than bank loans over the last 5 years, compared to a average of 1.6%~1.7% among banks.

Still uncertain? We can advise you on home loan matters too, it’s free. Contact us here.

Cash requirements (down payments)

For HDB flats, you can borrow up to a max of 90% of the flat value. And the rest can be paid by CPF and in the end it might even be possible with $0 cash upfront.

Private housing loans can only lend you up to a maximum of 80% (of the purchase price). There’s a component of 5% that you have to pay in cash. Cash requirements would be substantially higher when compared to buying a HDB flat.

Selling or Renting out your property

This part is probably why you keep hearing your rich friend/relative who is constantly “moving house“. How can they do that? Well, HDB owners can’t.

Public housing comes with a 5 years minimum occupancy period (MOP). Owners have to live in it for 5 years before you could sell it, or rent out the whole unit. Please do not flout this rule, as your subsidized flat might be repossess by HDB.

“HDB has stepped up enforcement against unauthorised subletting since 2010.
It carried out 7,000 flat inspections each year in 2010 and 2011,up from 3,000 inspections in 2009.

In 2011, HDB took action against 56 flat owners for unauthorised subletting. Actions included compulsory acquisition of the flats and imposing financial penalties. Of the 56 penalised flat owners, HDB has initiated compulsory acquisition action against 18 flat owners for blatantly infringing subletting rules”

Private property owners on the other hand, could sell or rent as soon as their property has finished construction. There’s no restriction in this aspect.

However, do note that for selling, owners would need to pay Seller Stamp Duties (SSD). If a residential property is purchased on or after 20 Feb 2010, SSD is payable if the residential property is sold within the holding period.

Details from IRAS website on SSD rates and computation. For simplicity sake, we will only write about private properties bought on and after 11 March 2017.

On and afterter 11 Mar 2017 Up to 1 year  12%
More than 1 year and up to 2 years  8%
More than 2 years and up to 3 years 4%
 More than 3 years  No SSD payable

Source: IRAS 

Property Tenure

There’s 99 year, 999 year, and freehold. HDB flats are all on 99 year leasehold. At the end of the tenures, the value of property will depreciate to zero. This part is guaranteed. more info here on HDB 99-year leasehold flats.

Private owners who want to continue living in their homes, they can apply to the Singapore Land Authority (SLA) to top the lease back up to 99 years. It requires SLA approval and premium will be determined by its chief Valuer.

And there’s also the hot topic of enbloc or collective sale. Private property owners can also collectively sell 2 or more units to willing buyers e.g. property developers.

In the public housing counterpart, this is known as Selective En bloc Redevelopment Scheme (SERS). Some flats in older estates may be selected for redevelopment but majority will likely see the end of their leases. HDB homeowner cannot initiate any collective sales, it is an initiative by the Singapore Government only.

However, only four percent of HDB units (about 40,000 out of a million) have been targeted for HDB SERS since 1995.

Housing Grants

This part is easy, private housing zero grants. Executive condos however, can get grants ranging from $5,000 up to $30,000, based on income level. To know your eligibility and the latest E.C launch RiverCove click here.

Landed Properties

Only Singapore Citizens have the privilege of owning a piece of land in Singapore. Foreigners need the government’s permission to buy landed property and this comes from the Land Dealings (Approval) Unit also known as the LDAU. Foreigners also cannot purchase HDB flats unless their spouse is a Singapore Citizen.

Upgrading to an Executive Condo.

When upgrading to an EC, banks can grant buyers with a “conditional 80%” loan. This means that buyers can be granted the full 80% loan today despite they are still holding onto their HDB flat. However, they must sell off the current flat within 6 months of the new EC’s TOP date. There are several complex procedures and key factors to consider before committing to purchase a unit. If you need our assistance, please fill up the form at the bottom of page or just use the whatsapp button.

Upgrading to an Private property.

This part is tricky, when purchasing a under construction private property, an HDB owner with existing home loan with current HDB flat cannot obtain 80% loan for the new Private property they are eyeing on. There are also Total debt servicing ratio (TDSR) and Additional buyer’s stamp duty (ABSD) to comply with. We’ll talk more about in another post.

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