My flat just MOP (minimum occupation period), what are my options?

HDB Resale Minimum Occupation Period (MOP)

Congratulations on your HDB flat reaching the Minimum Occupation Period or the MOP !

If you got a BTO, it's probably been 8 - 9 years since you applied for one. (i.e. 5 years since you collected your keys, 2-3 years since you got a ballot queue number and about a year applying for and getting the news that you have a queue number to select a flat) and hey you deserve more than a pat on the back for your patience ! BTO flats usually appreciate by the time they reach the MOP (unless you are one of the unfortunate ones hit by HDB's racial quota policies) and owners who choose to sell their BTO would probably be able to get some cash out of their investment after deducting the outstanding loan and the CPF refund. 

For resale flats, it's probably around 5-6 years since you've decided to get one. Profits, however, depends on how long ago you purchased the flat and the price that you paid for it. Demand for resale flats are picking up although prices are not as high as during the peak. 

But enough about the state of the HDB market . 

Although the end of the MOP signals that you can sell off your flat, the focus should not just be on how much cash you can get out of it. Instead, the focus should be on how to use what you have to profit further, or at least put it into another investment which can give you better returns.

HDB MOP Minimum Occupation Period

You've hit the MOP - What's next?

You may be confused about the choices that you have. Should you upgrade, should you downgrade? Will you get the same kind of profit appreciation if you stay put? Is there a chance that your profit might decrease?
Are there any other housing types which will allow you to experience the same kind of appreciation that you got with that BTO? 

So many questions, so many options.

 If these are your concerns and you’re wondering, “ What should I do next?”, read on. We've listed below some of the next steps you can take once your flat reaches MOP. Of course, not every option is available to every on as it is dependent on a few factors. Some of these important factors include. 

A) Cash sales proceeds (if any)

Will you get any cash proceeds from the sale of your flat or is it a negative sale? Does your unit face ethnic quota restrictions which might affect your cash proceeds or how fast you can sell your flat.

B) Your current CPF Balance and your minimum sum amount. 

CPF can be used for the downpayment of your unit as well as other expenses like legal fees and stamp duty. Even if you are young and will not be approaching retirement age very soon, you need to know about your minimum sum amount if you want to use it to fund the purchase of your second property. 

C) Cash for downpayment

You will need some cash if you plan on taking a bank loan. If you are planning to take a loan, the minimum amount is 5% of the property price. If you have an existing mortage, the amount can be up to 25% of the price of the next property. 

D) Resale Levy

For some people, the resale levy payable by cash is a game changer. The resale levy is applicable to the next subsidised flat or EC, if you took a first-timer HDB grant on if your first purchase. The amount you need to pay depends on the size of your first flat. 

E) The loan you can get for your next purchase

The amount of loan depends on your current salary, your age, and the number properties you own that is still under a mortgage. This is known as the LTV or the (loan-to-valuation).

F) Your Timeline

One of the main determinants for getting a BTO, new launch or resale property is your timeline.  Appreciation is usually larger when you purchase a unit at a new launch rather than one that's ready for occupation. 

G) Other plans 

For some parents, factors like primary school enrolment is a factor to move house. 

We understand that selling your property is a huge investment. If you are still unclear about what to do next, we are here to help. Send us a msg at 96918885 if you'd like to find out more about the following : 

1) Current valuation of your flat 

2) Which step would be most suitable for you and your family? 

Even if you still haven't made up your mind regarding what to do next, don't worry about it. We are here to answer your queries.  

Some options you can take after your flat reaches MOP

1) Review your family situation ( and finances) to see if there is a need to rightsize /upgrade /downgrade to a bigger or smaller flat.

HDB resale calculations

For most of our clients, having a comfortable home for their family is the priority. Since the time you bought the flat, your family size and structure may be very different from what it is now. Whether it's because your family has grown, whether its because your children have left the nest, or that your parents have moved in with you, we understand your need for a change. ( If you just want to move closer to family and take advantage of the Proximity Grant, we've covered that in point 2) 

If you are looking for a bigger flat to accommodate a growing family or so that you can bring your parents to live with you, you might want to consider a resale flat in a mature estate. The size of a resale flat is typically larger in a mature estate where you would see flat types like Executive Apartments, Maisonettes, or even 5A size flats that suit your growing family. On the flip side, if you are downgrading, you might want to consider 3 room flats in a mature estate or even a 2-room flexi direct from HDB

2) Move closer to your parents and enjoy a $20 000 discount off your next resale flat (i.e. the Proximity Grant)

Proximity Grant HDB

Even if your parents aren’t keen to move out of their home, you can do them a favour and move closer to them. In fact, the Government encourages this and is willing to put their money where their mouth is.

The $20 000 Proximity Housing Grant (PHG) is a one time grant for eligible Singapore Citizens who move within 2km to their parents or to the estate where their parents live in. (Singles, we're sorry, a different set of rules apply to you for the PHG)
Can't decide between which parent to move closer to? Move closer to one set of parents and then move your in-laws closer to you, just because parents can also receive the $20 000 grant by moving close to their married children! This solution is perfect if one set of parents wants to downgrade - however, not all estate have smaller flats, so do your planning first. For e.g, Pasir Ris Estate does not have 3 room flats apart from the ones in Pasir Ris One.

3) Apply for another BTO

Once you have reached the MOP, you are able to apply for another BTO ( all Singaporeans are eligible for 2 new units). However take note of the following restrictions. 

  • You would have to pay a resale levy in cash. The amount ranges from between $15 000 to $ 55 000 depending on your first flat size.
  • If you choose to take a second HDB loan, half of the cash proceeds (if its more than $ 40 000) from the sale of your first flat, will have to go to paying for the second flat. 

4) Upgrade to an EC while there still are ECs without the Resale Levy

EC without Resale Levy Executive Condo

If you want to upgrade your lifestyle by living in a development with facilities, but do not want to be tied down with a huge mortgage, you might want to consider getting an EC. Since you have purchased a flat directly from HDB , you will be subjected to the resale levy of between $15000 to $55 000.  

Why should you consider purchasing an EC? Apart from the facilities, you enjoy a fully renovated & move in ready unit in a brand new development. Prices of ECs also usually rise substantially after the 5 and 10 year mark, making it a good alternative for property appreciation compared to stagnant resale HDB prices. 

2019 Update : ECs with No Resale Levies have completely been sold out and the supplies of ECs in general are very limited.  Check in with us for an updated list of available EC units. Meanwhile,  read more about Executive Condos here. 

5) Get an investment property while the private market is stagnant

We Asians love our properties. In fact, it is usually the ultimate dream to grow our wealth by owning multiple properties and renting it out for passive income.

If this is your goal as well, you might want to take a look at the available properties on sale while the market is cool. 

If you've been keeping up with the Singapore property news, you should know that the cooling measures (latest one in July 2018) has done its job pretty well to keep the market stable. Prices of property have not drastically dropped and doesnt look like it will anytime soon. In fact, the cooling measures show that demand of property in Singapore is still going on strong. 

This might be your opportunity to get an investment property while the market is cool. You may also choose to purchase a condo or a landed property for your family to live in while  you rent out your HDB.

Worried about the slow rental market? Get a new launch condo to ride it out and pay only a fraction of the monthly mortgage i.e the progressive payment plan (see below), while the development is still under construction.

Progressive payment schedule for new launches

Example of a progressive payment plan based on a $700 000 unit at an interest rate of 1.8%.

6) Stay put and enjoy the capital appreciation of your flat! 

If you bought the BTO during the launch, it is highly likely that you have enjoyed capital appreciation, i.e. the value of your flat has risen and you will be able to make a profit when you sell it off.  Since this remains 'virtual money' until you cash it out, some might prefer to sell and use the profits for another property which would experience another capital appreciation

If this is not your strategy, then sit back and enjoy the capital appreciation ! However, we strongly don't recommend using your HDB as a retirement plan as the HDB market might not appreciate enough to cover the accrued interest that has to be paid back to your CPF account. Click here to read more about this.

We understand that real estate is a huge investment. If you are still unclear about what to do next, we are here to help. 

Send us a msg at 96918885 if you'd like to find out more about the following : 

1) Current valuation of your flat 

2) Which step would be most suitable for you and your family? 

Even if you still haven't made up your mind regarding what to do next, don't worry about it. We are here to answer your queries.  

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Zubz Kadir is the founder of PropertyRocking.SG She believes that real estate is the biggest purchase one can make and such a decision should not be taken lightly. Knowledge can make or break a purchase. Zubz graduated from National University of Singapore (NUS) Bachelors with a Degree in Informations Communications and Sociology from the and a Masters of Mass Communications from Nanyang Technological University (NTU).