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Your HDB has reached Minimum Occupation Period (MOP). Now what?

Hdb-has-reached-Minimum-Occupation-Period-(MOP)
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I often encounter clients reaching out to me for advise when their Singapore HDB flat approaches the minimum occupation period.

The MOP is usually 5 years for most HDB properties including Executive Condominiums. Until you have reached this MOP, you are obliged not to sell your property on the open market or rent out the entire unit.

Additionally, HDB property owners cannot buy private residential properties before reaching this MOP.

And so, a majority of them reach out to me when their HDB BTO flat is approaching the MOP and is concerned that their flat price will drop if they don’t let go of their flat quick enough.

Table of Contents

what-to-do-after-mop

No clear-cut strategies once HDB flat MOP is up

At present, there are no clear-cut strategies on the best move homeowners can take once their property has passed the MOP.

It really depends on your personal goals. Some may consider their home an ideal location to live near their workplace, school or in proximity to loved ones.

Others may view their properties as assets or investments that will potentially provide steady rental income or substantial sale profits in the future.

In this article, I’ll provide insights on some of the popular options available to homeowners and some tips on how to determine the best option that fits your plans and current situations.

Continue staying in the HDB flat after MOP

The first option is to remain an occupant in the flat; however it is advisable to check the degree of depreciation of your property value.

For Build-to-order (BTO) flats, it is usually between the first to third year after MOP where you can sell at a ‘premium’ price and obtain a higher profit.

The main reason, is the assumed good condition of the flat because it is still new and also of the longer balance lease of the flat, within this time-frame.

This is still on a case-by-case basis, please consult a realtor for more accurate facts and figures.

Check Your Home Price Indication

Buy a Private Property and rent out HDB flat

property Loan to value
Table: Loan amount eligibility
ABSD
Additional Buyer Stamp Duty rates

The second most preferred option is to buy a private property and rent out either property.

In this instance, one must not forget the Additional Buyer Stamp Duty (ABSD) which is mandatory when homeowners buy a second property.

Be warned that if you have an existing outstanding housing loan when you buy the second property, you will only be entitled to 45% housing loan funding for your second property.

The main drawback of this option is that it requires strong financial capital to be feasible.

Sell your HDB and upgrade to a Private Property

what to do after mop hdb

The third option is to sell your flat and upgrade to a private property.

You can choose to buy the second property before selling your HDB flat.

This strategy eliminates the need for temporary accommodations in between the buying and selling of your properties.

Again, do bear in mind the ABSD, and the possibility that you may be rushing for time to sell your existing home.

Applying for ABSD remission may be applicable to legally married couples who purchase a second residential property jointly, only if the remission conditions are met.

It is important to remember that the couple must consist of at least one Singapore Citizen and the property must be purchased specifically under both names of the couple.

It is also mandatory to sell your first residential property within 6 months after purchasing the second one.

More details can be found on Inland Revenue Authority of Singapore’s (IRAS) website (www.iras.gov.sg). Alternatively, you can consult your property agent on this.

Expanding on the latter option, it is also plausible to sell your HDB flat first and use your CPF returns or cash proceeds to buy a private property.

I wish to highlight that this is a delicate process where your property agent must meticulously plan for the smooth transition and ensure proper accommodation for homeowners.

Sell your HDB and buy 2 Private Properties

Some homeowners can also consider the option of selling their HDB property to buy two private properties.

The key to this is proper financial calculation and planning. In short, the CPF amount and sale proceeds after selling the first HDB flat must be enough for both owners to make their individual purchases.

It is recommended for homeowners to buy a private property for their own accommodation while the second private property serves as an investment, either in the form of rental income or capital appreciation.

I will elaborate more on the Sell One Buy Two tactic in my upcoming articles, so stay tuned.

Let’s look at some genuine case studies:

Let’s look at how I helped my clients after their Hdb Mop (after their flats reach 5 years)  

Case Study 1

Mr Ang has been staying in a 4 room flat in Punggol with his family.

One month before the property reaches MOP in 2017, Mr Ang contacted us to find out more about his options and in essence, I have gathered that their goals were to:

 

1) Invest in a property with potential appreciation as their main priority

2) Utilise a low risk investment approach

3) Wait for the right opportunity

 

With the understanding that they do not require an immediate place to stay, I proceeded to work out both short-term and long-term plans for them.

With my recommendation, we sold the Punggol flat and went ahead to purchase a brand new 2-bedroom condo at Parc Riviera with Mrs Ang as the sole owner; at this point in time, we have not decided whether this property will be for own-stay after its TOP or for rental purposes.

Then in 2019, after going through detailed financial assessments and planning for Mr Ang, he also bought a 1-bedroom resale condo with an existing tenancy to generate immediate rental income.

Thereafter, with the good rental yields, the Angs decided to focus both properties for investments, reaching their final goal of low-risk investment and asset progression.

Mr Ang
Mr Ang
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As a investor interested in taking advantage of the booming property market in Singapore, I needed a realtor with in-depth knowledge of the local market. Using his understanding of the various sectors of the market, Rick generated a investment progression report and we decided to buy a condominium in a choice area with huge potential for multiple returns in the future. Thanks Rick, I will definitely be doing business with you for a long time!

Case Study 2

I met Mr and Mrs Chua in 2019. Their 4-room HDB flat in Kim Tian had passed MOP for a year and they were wondering about their next move.

I analysed and shared property transaction trends in their neighbourhood and together, we decided it was time to move on.

Their main priority is:

 

1)To stay closer to their parents and at the same time, nearer to the city.

 

Based on their requirements, I evaluated their personal finances and planned their property move such that they did not have to fork out any cash during the entire transaction period.

Eventually, the whole selling and buying transaction process was successfully completed within a month and with my guidance on proper timeline planning and coordination, they did not have to move to a temporary home in between.

Mr Eddie
Mr Eddie
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"In short, Rick did an amazing job. He sold our house at a higher than initially discussed price and got us a good deal for our purchase. Both my wife and I are impressed with his professional yet friendly approach. We will definitely work with him again and recommend him to anyone."

Conclusion

In a nutshell, whether you are staying or moving away from your current home, proper planning and financial knowledge is essential to ensure a fuss-free transaction.

I have successfully advised and helped many of my clients, both property owners and investors alike, to upgrade their lifestyle and build-up their property portfolio.

I too, am grateful for the continuous opportunity to value-add in their property journey.

It does not take much and starts with just a simple phone call.

Turn your dream into reality!

Talk To Me Today!

I will provide: 

-An IN-DEPTH Financial calculation

-Highly relevant investment insights

-A curated list of the best buys in today’s market with good upside potential and minimal risks

-Proven methods and steps

Lets get in touch today to kickstart your property wealth planning journey.

Testimonials

I have successfully helped hundreds of homeowners just like you since 2010

Mr Ang
Mr Ang
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As a investor interested in taking advantage of the booming property market in Singapore, I needed a realtor with in-depth knowledge of the local market. Using his understanding of the various sectors of the market, Rick generated a investment progression report and we decided to buy a condominium in a choice area with huge potential for multiple returns in the future. Thanks Rick, I will definitely be doing business with you for a long time!
Ms Claire
Ms Claire
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I am writing in to compliment Rick Huang for his invaluable service, for the sale of my Esparina Residences. The process was complicated but he was able to empathize with my situation and also provide brilliant advice that ensure the smooth transaction. In all, I am appreciative with his professionalism and human touch in this journey. Thank you!
Ms Ho
Ms Ho
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I was sceptical about engaging a friend to sell our house. However, Rick has put himself out on so many levels just to ensure everything went smoothly, promptly and correctly at every stage. I trust Rick and would surely recommend him to anybody seeking to buy or sell a home! I do not usually post reviews but this is worth investing my time. Thanks once again..
Ms Malar
Ms Malar
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His service is beyond my expectations. Always going the extra miles to serve his clients.
Ms Jo
Ms Jo
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My husband and I started our home-search by ourselves but was met with issues soon enough as we were unsure of the important things and areas to look out for and we were also not experienced in the negotiation process with the seller’s representing agent. Soon after hearing our problems, I was introduced to Rick by a friend. The entire buying process quickly became swift and smooth; Rick understands our needs, puts our personal interest first, seals us a good deal and educated us along the way about the important things and areas to pay attention to. Thumbs up to Rick and we will recommend him to anyone for their home-search
Mr Eddie
Mr Eddie
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"In short, Rick did an amazing job. He sold our house at a higher than initially discussed price and got us a good deal for our purchase. Both my wife and I are impressed with his professional yet friendly approach. We will definitely work with him again and recommend him to anyone."
Mr Liew
Mr Liew
Read More
Rick is a very down to earth person. No hard sell or pushy technique. He helped us in planning for upgrade and showing us how to invest in property with in depth property analysis report.
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Self Introduction

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Rick Huang, Associate Deputy Group Director of OrangeTee & Tie, has been in the Real Estate industry for a decade.

He is driven, committed and is enthusiastic about real estate investments.

Today, he leads Team Youhome.sg, and together, he aims to provide his clients with the best experience in their property journey.

The team focuses on understanding the client’s finances and needs and is determined about delivering the best solutions and results for them.

Amidst the hustle and bustle, Rick enjoys quiet time and indulge himself in the intricate art of tea-brewing and teapot appreciation.

He would also take this chance to energize himself and reflect on his personal development and areas of improvement.

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