Should first -timers buy a HDB Build to Order (BTO) Flat, HDB ROF (Re-offer of Balance 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 include HDB BTO ( Built- to - Order), SBF (Sales of Balance Flat), ROF ( Re-offer of Balance Flats) as well as Executive Condominiums (ECs). Flats purchased from HDB are usually 'subsidised' or relatively cheaper compared to the existing developments in the area. However waiting time can be substantially longer as you purchase them while they are being developed. The exact duration you have to wait depends on if you purchase a BTO, SBF, ROF Flat.

Most Built- to -Order flats (BTOs), Sales of Balance Flats (SBF) and Re-offer of Balance Flat (ROF) start out at the same point. HDB releases a site, and invites Singaporeans to purchase a unit. Singaporeans enter their names in a ballot for a BTO and they are able to select a flat based on their ballot numbers. ( The number of times your name is entered in a ballot depends on the priority schemes you are entitled to. ) 

Unselected flats from that round will be put in the pool for the next SBF. Eligible Singaporeans apply for the SBF and if there are flats that are still unselected, it would end up in the ROF pool. The ROF was previously held twice a year but HDB has recently announced that they will offer the ROF flats throughout the year.  This would reduce the waiting time for a ROF, because the flat would probably be ready for key collection by then. 

However, HDB has also started to offer resale flats which have been returned to them for various reasons ( divorce, death, inability to pay mortgage, unable to sell on the open market etc). These flats are also included in the pool of SBF but the reasons are not disclosed during the sale. You are also unable to see or check out the condition of these flats before you purchase. 

Simply put, ROF flats are flats that have not been selected by previous potential buyers because of their attributes. This should be a critical factor for Singaporeans who wants to buy a new flat for its potential appreciation.

For newly married couples excited to begin their lives, there’s always the choice between buying a new HDB (BTO,SBF or ROF) 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. With other expenses to consider like wedding, furniture, renovation etc, the COV can be a deterrent to young couples. 

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 flat directly from HDB (BTO or ROF) or a HDB Resale Flat, these are some facts you can consider.