Source: Unsplash
According to data from HDB, resale transactions hit an eight-year high in 2020, with the number of transactions increasing by 4.4% over the previous year.
For the whole of 2020, 24,748 resale units exchanged hands, which is the highest number since 2012 when 25,094 resale units were sold. Industry experts expect the resale market to continue to see a flurry of activity this year.
In this article, we will look at buying a resale flat, the requirements, financing and fees involved.
What Is A HDB Resale Flat?
HDB resale flats are sold on the open market, usually after the expiry of the Minimum Occupation Period (MOP), which is typically five years. A resale flat is bought from the previous owner and not directly from HDB.
This means that you are able to takeover the property as soon as the transaction is completed, unlike brand new Built to Order (BTO) flats, where you have to wait for the buildings to be completed, usually about 5 years after you applied to the HDB for one.
The other difference is that brand new BTO flats comes with a 99 year lease, whereas resale flats’ remaining lease is dependant on how old the flat is. Therefore, it is important to know what the remaining lease is as it will then determine the value and price of the property.
Another important factor to consider is the amount of renovation needed when buying a resale property. Almost all resale properties have been lived in for years and things get old and in most cases, faults are found i.e. leaking pipes, walls cracked and paint peeling. So you will need to consider the amount of money needed for renovation in addition to the cost of buying the flat.
Requirements Of Buying A Resale Flat
Buying a resale flat is in a way less complicated than applying for a BTO.
Applicants for BTO flats must meet the houehold income ceiling criteria of not more than $14,000 for families and not more than $21,000 for extended or multi-generation families and $7,000 for singles.
For resale flats, there is no income ceiling limit. However, it's not a free-for-all when buying a resale flat. There are certain criterias that must be met and they are:
At least one family member is a Singapore Citizen (SC) or both buyers are Singapore Permanent Residents (PRs)
At least 21 years and above if you're buying in an approved family nucleus, or 35 years if you're buying as a single
Within the Ethnic Integration Policy and Singapore Permanent Resident quota of the block/neighbourhood
Not own any other residential properties or any houses/buildings/land whether locally or overseas, or have disposed of them in 6 months before the resale flat application
If you meet the above criterias, there are several schemes for you to purchase a resale flat and they are:
Public Scheme: You can buy a resale flat with a family member, i.e with a spouse, children, parents, siblings etc.
Fiancé/ Fiancée Scheme: You can buy with your fiance.fiancee
Single Singaporean Citizen Scheme: You need to be above 35 years old for the unmarried or divorced. If you are widowed or an orphan, you must be above 21 years old.
Housing Grant Options & Eligibility
For BTO applicants, they are eligible for the Enhanced CPF Housing Grant (EHG) of up to $80,000.
Resale flats buyers get the EHG as well, plus they can apply for the Family Grant of up to $50,000, and a Proximity Housing Grant of up to $30,000. This means the total grant amount that resale flat buyers can get is $160,000.
(i) Family Grant
The Family Grant is to provide financial assistance to married or engaged couples, or families who are first-timer applicants buying an HDB resale flat. The amount that they can receive is as follows:
Source: HDB
(ii) Half-Housing Grant
For eligible first-time applicant whose spouse or fiance/fiancee that had previously enjoyed any housing subsidy, can apply for the Half-Housing Grant. The amount they can receive is $25,000 if buying a 2 to 4 room flat or $20,000 if they are buying a 5 room or bigger flat.
(iii) Step-Up CPF Housing Grant
The Step-Up CPF Housing Grant is available to eligible second-timers who submit a resale application on or after 22 May 2019.
To qualify for the above grant, the following conditions must be met:
Source: HDB
(iv) Proximity Housing Grant (PHG)
The Proximity Housing Grant (PHG) was introduced to help families buy a resale flat to live with, or close to each other for mutual care and support. The following can apply for this grant:
Married/ engaged couples or families who are buying an HDB resale flat to live with or near their parents/ child;
Singles buying an HDB resale flat to live with or near their parents.
The amount they can get is as follows:
Source: HDB
(v) Joint Singles Scheme or Orphans Scheme
Eligible first-timers aged 35 and above may apply and receive the Singles Grant and the Enhanced CPF Housing Grant (EHG). The amount they can receive is:
Source: HDB
So, while many are applying for brand new BTOs, buying a resale flat could be an attractive option, given the subsidies they can receive. BTO flats are mostly in non-mature estates such as Tengah, Punggol and Sengkang with very few launches in the city area. Buying a resale flat allows you to buy a flat in the location of your choice especially if you have kids and want to live closer to your parents, for them to have easy access to their grandkids.
Just remember to look out for the ethnic quota of the block or neighbourhood you are keen on and if you are a non-Malaysian PR, you will also have to ensure that the quota for PRs has not been exceeded. HDB updates the ethnic and PR quotas on the first of every month, therefore you can check on your eligibility on the HDB self serve portal.