In Singapore, buying your first Build-To-Order (BTO) flat with your soon-to-be partner is an indirect way of asking, “Will you marry me?” It is unromantic yet at the same time, totally pragmatic.
Over the past years, we have met and spoke to people who have different takes on when a couple should apply for a BTO flat, or if they should even consider one. To help with that, we explore some of the pros and cons of buying a BTO flat to help with your buying decision.
1. Much lower price
A BTO flat will always be cheaper compared to the resale flats around the same area. For example, a 4-room flat at Tampines during the May 2015 BTO launch sold from $281,000. The medium price of a 4-room resale flat in Tampines is $425,000 as at 2nd quarter 2015.
Older folks in Singapore love to lament on how small the size of the new HDB flats are. In all fairness, they are right. The 4-room flats today are indeed smaller at about 90 Sqm (968 square feet), compared to older flats, which are about 104 Sqm (1119 square feet). So while the total quantum for a new BTO flat is indeed cheaper, the price per square feet that you are actually paying is far closer than you originally thought.
2. Much better layout
In our opinion, the standard layouts of new HDB flats are much better compared to the layout of the older HDB flats. For a typical 4-room flat today, you now have the living and dining space in the living hall alongside the kitchen. A small walkway separates where the 3 bedrooms are thus providing some privacy. Having the common bathroom nearer to the bedrooms as opposed to being situated in the kitchen also makes a lot more sense to us.
With wide, open space, older HDB flats actually provide more options for couples that are intending to customise the layout of their homes differently. If you have a large budget and a good interior designer, you might be able to plan your space in a way that you prefer. Also, the small walkway, while providing more privacy, is technically “wasted space” as well.
3. Longer lease
New flats have a fresh 99-year lease. What that means is that your children are likely to be able to continue staying in the flat for the duration of their lifetime compared to older flats. Flats in older estates such as Ang Mo Kio could easily have leases with less than 70 years remaining.
None on this. Having a fresh 99-year lease is definitely better than buying a resale flat that has a shorter remaining lease.
4. “Cheaper” renovation cost
Assuming you are redoing your entire home regardless of whether it is a new flat or a resale flat, the renovation cost for the BTO flat would be cheaper due to the absence of hacking required. For a resale flat, you will need to incur the additional hacking cost of tiles and existing spaces that might have been built by the previous owner.
A brand new BTO flat comes empty. That means no matter what, you would need to spend some money renovating it. For resale units, you could possibly move in with minimal renovation needed assuming you are satisfied with the condition of the existing home.
Unless you are lucky, it is likely that the location of your selected BTO would not be your most ideal choice. This is because most of the “prime locations” in Singapore have already been taken up a long time ago by existing developments.
For a resale flat, it is pretty straightforward. You can get a unit anywhere you want (including Pinnacle @ Duxton) as long you are prepared to pay for it.
6. Waiting Time
The average waiting time for a BTO flat to be built is about 3 years. This could stretch even longer should the main contractor delays the project.
For a resale flat, there is no waiting period. You can move in as soon as you take over the flat.
Unless you are ineligible to apply for a BTO flat, we suggest going for one. To us, getting a BTO flat makes the most financial sense especially in our expensive country.
Not only do you pay less, but you also get a brand new unit with a fresh 99-year lease. The downside for a BTO flat is that you have to wait about 3 years for its completion. You can risk applying first before getting married, and hope that you and your soon-to-be-partner in life do indeed proceed ahead with the wedding in the future.
DollarsAndSense.sg is a website that aims to help people make better financial decisions.
Image from Benjamin Lim