First Timers Dilemma : HDB BTO or Resale Flat?

Should first -timers buy a HDB Build to Order (BTO) Flat or Resale Flats?

In Singapore, HDB (Housing and Development Board) is the main developer of public homes. High rise apartments, or better known to those living in Singapore as HDB Flats, is home to more than eighty percent of Singaporeans.

Each Singapore Citizen married couple (or Singaporeans within accepted criteria) is given 2 chances to purchase apartments directly from HDB. These apartments or flats are subsidized and are better known as Build-To-Order (BTO) Flats.

Which is better BTO or resale

For newly married couples excited to begin their lives, there’s always the choice between buying a new HDB BTO or a resale flat. Until recently, resale flats in the open market have been too expensive for most first timers, with COVs ( Cash Over Valuations i.e. the cash premium above and beyond the flat’s valuation) going for an average of $30 000 to highs of $100 000. It is not likely that these young couples have that amount of spare cash, especially if you consider wedding and other expenses. COVs have been falling to the point that it is no longer a norm, however it may still exist if you purchase a flat above the valuation price.

(Confused? Don’t worry, we break it down in this article. Does $0 cov mean no cash upfront?  If you need more info regarding the steps to buying a resale flat, read this, " Buying a HDB resale flat ")

However, for new couples, settling into your own home as soon as possible can be one of the single most crucial steps in life. Unless you’ve been living together prior to marriage, a practice not very common to Asians, you would treasure the privacy that a new home provides, allowing you and your new spouse the opportunity to negotiate simple things in married life (like who cooks and does the dishes) and slowly work on constructing your lives.

If you are one of those still undecided about if you should be buying a HDB BTO or a HDB Resale Flat, these are some facts you can consider.

HDB BTO 

Resale Flats

Waiting Time

The waiting times have an average of 2-4 years depending on the developer’s schedule.

Once you decide on a house and exercise the option to purchase, it would take about 3 months to the point you receive keys to the flat.

Privacy

Living with either set of parents can result in a lack of privacy, having to meet the expectations of the In-laws etc.

The privacy that comes with your own space, having a room with an en suite is most ideal

Flat Sizes

New Flats are typically smaller in size.

Resale HDB flats are much larger in size

Settling on one with an Size and Ideal Position.

Buying a BTO is similar to buying an item virtually or online. You view it on a screen, put in you order and be patient until its delivered.


Unfortunately for HDB BTO, there is no return policy if you are not fully satisfied with it.

When buying a resale flat, you would put in an offer to purchase the flat if you are totally satisfied with it. This includes being satisfied with the size, the location and the position of the flat i.e. the direction it is facing, the view, etc.

Cost

The cost of a Build to Order flat is subsidized by HDB which means that it is cheaper.



This means that you will not be able to utilize your first timer grants. ( $40k - $70 k )



However if the total income of you and your spouse is less than $6500, (depending on the size and location of the flat you select), you will be eligible for the

Additional Housing Grant and the Special Housing Grant.

Also, if your order for the BTO is not put in at the initial launch, i.e. you buy it at the SBF (Sale of Balance Flat) Exercise, the price may have risen substantially to be similar to flats in the resale market.

Resale Flats prices are pegged to the market rate of houses in the area and the current Real estate prices at that point in time.

For first time buyers, HDB provides a grant of $40 000 - $50 000 or more depending on your household income.

This is not inclusive of the $20 000 Proximity grant that you can get if you pick a flat close to your parents/ parents-in-law

You may also qualify for the Additional Housing Grant  of up to $40 000 if your combined income is less than $5k.







Additional Housing Grant

Renovation Costs

New BTO flats come unfurnished and you have to factor in renovation costs.



However, as they do not have existing floorings, cabinets etc, you can save quite a lot on hacking costs. You basically have a blank canvas to create your ideal living space.



Another positive point for new couples is that buying a flat that would only be ready in the future enables you to save up for renovation costs instead of paying additional interest on loans

With regards to Renovation Costs, there 2 are scenarios which can happen.

A) You can select an apartment in good condition and save time and effort and money.

B) If you want to redo the flat, you would need to spend more on hacking and tearing down the current furnishings.

Old homes may also come with defects that form over time, for example leakage in pipes, crack in ceilings etc.

Amenities

New flats in new estates usually do not have established amenities in the neighbourhood.

Mature housing estates have amenities conveniently within the neighbourhood

If you are ready to purchase a resale flat but you are not sure where to start, you may find this article useful : Buying a resale flat.

HDB Resale Flat - Where to start
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Siti Zubeidah is a Marketing Director with ERA Realty Network Pte Ltd. (CEA No.: R050625J) She has a Bachelors Degree in Informations Communications and Sociology from the National University of Singapore (NUS) and a Masters of Mass Communications from Nanyang Technological University (NTU). With vast experience in the HDB market, Private and Landed Properties in Singapore, she is confident that she can assist you to make the correct decision regarding the purchase of your dream home as well as to get you the best price on the sale of your property. She can be contacted at 96918885 or at askus@propertyrocking.com.

Comments

  1. Hi, I would like to ask: if my first flat is a resale flat, am I still applicable for two BTOs in future? Thank you for this informative site!

    • Hi Ariel, Thanks for your msg! It depends on if you are taking a grant. If you are taking a grant – that would be considered your first subsidized property which is the same as one BTO ‘opportunity’ – you will also have to pay the resale levy when you buy a BTO after that.
      Also, another thing you should consider is whether you will be using a HDB loan for your purchase, which is separate from your grants.
      You can WA me at 96918885 if you need more info! Thanks!

  2. nicolas ong says:

    going to 35 years old and single. wish to have own house. looking into 3room BTO as in 2rm is too small.

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