In Part 1, we looked at we look at why BTO flats are financially attractive for first time homeowners. In this second part, we examine some considerations to think about when buying a BTO flat.
Time taken to be ready
A BTO typically have a waiting period of about 3 years upon purchase. That means a buyer who needs to find a place immediately will have to rent for the time being. If rental is at $2000 a month, than a 3 years rental would cost an additional $72000. If you include this amount, the resale flat could seem cheaper by comparision.
Married Couple only
To be eligible for a BTO flat, you would need to be married or be married by the time you received the keys for your flat. This may turn out to be a rather risky proposition should anything go wrong between the time of purchase and the time of completion.
The total income for both the joint applicants (husband and wife) cannot exceed $10,000. This would commonly become a problem for couples who are buying in their 30s as their combine salary could have exceeded the cap.
Minimum occupancy period (MOP)
Any BTO flat buyers would have to stay in their flat for a minimum period of 5 years before being allowed to sell or rent out the flat. If you include the time taken for the flat to be built, that is a total of about 8 years. That means if along the 8 years period you have a change of heart on where you want to stay or want to upgrade to a private property…well you can’t!
Ownership of private property
If for any reason you have existing properties under your name (both in Singapore or overseas). You will need to dispose of the property AND wait an additional 30months before being eligible to apply for a BTO. Suddenly that property in Australia that your dad bought under your name doesn’t seem like that smart an idea anymore huh? In addition, during that 5-year MOP you will not be allowed to purchase any other residential properties as well. Thank goodness for REITS!
There are actually a lot more regulations that potential BTO buyers have to take note of. For example, if you cancelled your purchase after selection, you are barred from applying for 1 year. If for some reason you do not get married after applying the flat and getting the keys, well let’s just say that you and your ex-fiancé would have quite a bit of explaining to do.
For full details of all the regulation, please visit www.hdb.gov.sg/
Original photo by Benjamin Lim. Used with permission.
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