Is Buying A Resale Flat Without Using Housing Grants To Protect Your First-Timer Option Ever A Good Idea

With Singapore’s limited land, access to public housing becomes a premium. That is why the Housing and Development Board (HDB) has implemented several housing policies that benefit first-time homebuyers and keep HDB flats affordable, especially for this group. For example, CPF housing grants are often given to eligible homebuyers buying new Build-To-Order (BTO) flats directly from HDB, or resale flats from the open market. When applying for a BTO flat, first-time homebuyers also enjoy greater priority and additional ballot chances.

Benefits Of First-Time Homebuyers

HDB recognises that first-timers often have more pressing housing needs. That is why up to 90% of 4-room or larger flats in a BTO launch are set aside for first-timer families. Up to 80% of 3-room flats in a BTO launch are set aside for first-timer families, while up to 65% of 2-room Flexi flats set aside for non-seniors are allocated to first-timer singles.

Read Also: Complete Guide To Priority Schemes For HDB BTO Flats

What Is A First-Time Homebuyer

According to HDB, first-time homebuyers are those who have never received a housing subsidy before. Previous housing subsidies include:

• Buying a flat directly from HDB. This refers to BTO flats, which are sold at heavily subsidised prices.
• A resale flat bought on the open market with CPF housing grants.
• A Design, Build And Sell Scheme flat or Executive Condominium (EC) unit bought from a property developer
• Other forms of housing subsidy, including benefits from the Selective En bloc Redevelopment Scheme (SERS).

However, this creates an interesting scenario: a homeowner who bought a resale flat without applying for any CPF housing grants would still be considered a first-timer when applying for a BTO flat.

Such homebuyers might be waiting for their ideal BTO location to launch and would like to reserve their first-timer priority benefits and privileges for that location. They may therefore take advantage of the fact that buying a resale flat without applying for the CPF housing grant preserves their first-timer status to be used when their ideal BTO project is finally launched.

Read Also: Increase Your BTO Ballot Chances With Married Child Priority Scheme (MCPS) and Multi-Generation Priority Scheme (MGPS)

However, homebuyers contemplating this scenario should also consider several factors.

#1 Minimum Occupation Period

Since you will need to sell the resale flat before applying for a BTO unit, you will first need to have completed the Minimum Occupation Period (MOP). This is typically five years, though some MOPs will eventually become ten years once flats classified as Plus or Prime enter the resale market.

Since you will therefore not be eligible to apply for a BTO unit during this time, the Minimum Occupation Period may become a disadvantage if your ideal BTO project is launched during these five or ten years.

#2 Resale Levy

If the homebuyer has previously taken a housing subsidy and then wishes to purchase a BTO flat, a resale levy is applied. The resale levy is meant to reduce the housing subsidy of the second subsidised flat. This ensures a fairer allocation of housing subsidies among flat buyers, who will now be treated as second-timers when buying a flat from HDB. Depending on the flat size, the resale levy is between $15,000 and $55,000 for families.

Read Also: What Happens To Your Money After You Sell Your Flat In Singapore

Homebuyers who do not use CPF housing grant when buying a resale flat will therefore not be subject to a resale levy when subsequently applying for a BTO, as they are considered first-timers.

#3 Housing Grants Are Meant To Make Housing More Affordable

The purpose of the CPF housing grants is to provide more support for first-time homebuyers, especially as the prices of resale flats can often far exceed that of BTO flat prices.

Eligible first-timer families qualify for $80,000 grant when purchasing 2-room to 4-room resale flats, and $50,000 grant when purchasing 5-room or larger resale flats. These housing grants can go a long way in subsidising the price of a resale flat.

Homebuyers will need to carefully consider if missing out on these grants are worth the first-timer benefits of a BTO unit in the future.

Read Also: Complete Guide To HDB Housing Grants In Singapore For Different Types Of Flats

#4 Income Ceilings And Enhanced CPF Housing Grants

The HDB BTO income ceiling has recently been increased to $16,000, and the corresponding increase means that recipients of the Enhanced CPF Housing Grant (EHG) earning $9,000 or less are now eligible. First-timer families may qualify for an EHG of up to $120,000 depending on their income.

However, homebuyers who choose to buy a resale flat first, even without CPF housing grants, may find themselves receiving less grants should their incomes increase significantly over the five years of the MOP.

#5 Couples Comprising A First-Timer And Second-Timer Are Treated As First-Timer Families

One last consideration is that HDB treats a couple made up of a first-timer and a second-timer as a first-timer family and gives them the same priority benefits and privileges.

This avoids penalising one half of the couple if the other half has previously received a housing grant. In this specific circumstance, it would be fine for one half of the couple to have bought a resale flat, or even a BTO flat, while using housing grants, as long as the other still remains a first-timer.

Read Also: HDB Income Ceiling At $16,000: Which BTO And How Much Can A Couple Earning This Amount Afford