If you’re in the market for a new home, you’ve probably noticed that HDB has just released the sale of over 9000 Built – To –Order (BTO) Flats and Sale of Balance Flats (SBF May 2015).
9431 units all around Singapore to be exact. This is part of the Government’s drive to increase the supply and possibly to drive down prices to make HDB flats more affordable.
The price of new flats are certainly very tempting, but before you submit an application for a unit, here are a few factors you need to consider.
Contents
1. Resale Levy
A lot of prospective buyers of new flats are not aware that they would need to pay a resale levy if this is their Second Subsidized HDB Flat.
What is a subsidized HDB flat?
It is one of the following
A) A flat that you purchased directly from HDB either from a previous BTO or SBF or if you’ve purchased it a while ago, from the ‘Walk-In Selection’ scheme that HDB used to have. Flats bought directly from HDB are typically cheaper than those bought on the open market.
B)A resale flat purchased using a grant, typically the first timer grant of $30 k or a family grant of $40k.
According to HDB, the resale levy is “ meant to reduce the subsidy on the second subsidised flat so as to maintain a fair allocation of public housing subsidies between first- and second-timer citizen families.”
This ensures that owners of subsidized properties cannot or shouldn’t profit excessively from the sale of the first flat.
How much Resale Levy do I need to pay?
The amount of resale levy you pay depends on the size of your first flat.
[Please take note that you might also be affected by the old resale levy policy that was in force before 3rd March 2006. ]
3)Loan amount you are entitled to.
The method of calculating the HDB loan amount you are entitled to or the MSR has changed as part of the Government cooling measures. Even if your income situation has not changed since your last Housing Loan Eligibility (HLE), you may not be eligible for the same loan amount.
As of 9 December 2013, based on the new MSR rule, your HDB or EC loan cannot be more than 30% of your salary. The loan tenure has also been reduced to 25 years.
You should also take note of the no of years left that you are eligible to take a HDB loan.
4) Nearing Retirement age and Minimum Sum
If the purchase of the second BTO takes place while you are nearing 55, you should be aware that you would need to set aside half of the minimum sum in your retirement account (RA), so you would need to plan your timeline properly to avoid being in a situation where you do not have sufficient funds to pay for the BTO/SBF.
4) Miscellaneous costs for renovation
Although getting a BTO may seem like a great deal, you should factor in miscellaneous costs like renovation, furniture etc . Certain developments may come with built in wardrobes, toilet accessories, but you may want to also hire your own contractors.
You should also read our article on the comparison between BTOs and Resale Flats
5) The falling prices of flats
The introduction of new flats in the market is meant to stabilize the demand and supply. High Demand and insufficient supply led to sky high prices and the Government is working hard to stabilize prices though the injection of supply.
However, this also means that the price of your current flat might fall. Falling prices does not mean that you should not sell your flat. It just means that you should include a buffer amount when doing the calculations to determine your profit.
Good Luck!
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