Your HDB has reached Minimum Occupation Period (MOP) in year 2023. Now what?
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.
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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
Option 1
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.
Buy a Private Property and rent out HDB flat
Option 2
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
Option 3
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
Option 4
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 one of my popular articles.
Do you know that HDB prices had increase more than 26% since 2020.
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.
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!
Mr Tony
Buyer - Parc Riviera
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.
“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.”
Eddie
Seller - Blk 127 Kim tian road
Conclusion
When it comes to buying or selling a home, planning and financial know-how are key to making it a smooth and stress-free process.
While you're busy trying to time the market, your friends might already be reaping the rewards of their investment profits.
Bonus for my readers
Don’t miss out on the opportunity to take advantage of the current market.
Schedule a consultation with me today and find out if it’s the right time to sell your home after MOP.
With just one click of the shiny “GET YOUR FREE CONSULTATION” button, you can access my top-notch consultation services and gain the knowledge and confidence you need to make informed choices about your property.
Don’t let your burning questions go unanswered – let me help you today!
Who should apply?
MOP owners who are considering selling their HDB flat after fulfilling the Minimum Occupation Period (MOP) of five years.
First-time homebuyers who are interested in purchasing an HDB flat in Singapore and want to learn more about the process of selling a flat after MOP.
Anyone interested in the Singapore property market and wants to learn more about the HDB flat resale market.
Awards and Accolades
I have successfully helped hundreds of homeowners just like you since 2010
Property agent review - What my clients say about me
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Self Introduction
Greetings! My name is Rick Long, and I am proud to serve as the Associate Division Director of Huttons Asia Pte Ltd, with over a decade of experience in the real estate industry.
My passion for helping clients find their dream homes has grown exponentially during my tenure in the field. As a graduate of Singapore Polytechnic, I have always valued the importance of hard work and determination.
My prior experience serving in the airforce instilled in me the value of teamwork, perseverance, and discipline.
Over the years, I have been privileged to receive several accolades for providing exceptional service and dedication to my clients.
My ultimate goal is to ensure that each individual I work with has the best possible experience, whether they are buying or selling a property.
One of the most rewarding aspects of my work is receiving glowing five-star reviews from satisfied clients.
Knowing that I have positively impacted someone’s life is truly humbling, and it motivates me to continue striving for excellence every day.
When I am not working, I enjoy spending quality time with my loved ones, indulging my passion for sports, and exploring the rich and diverse culinary landscape of Singapore.
Amidst the bustling pace of life, I relish moments of calm by immersing myself in the art of tea-brewing and teapot appreciation.
My commitment to delivering exceptional results to my clients is anchored on my extensive knowledge and experience in the real estate industry.
Above all, I always strive to be kind, respectful, and approachable.
Thank you for taking the time to learn a little more about me. I look forward to the opportunity of working with you.
Additionally, Rick is a proud fur daddy to two rescue kitties and loves spending his free time with his wife and furbabies. He believes in giving back to the community and volunteers his time to animal welfare causes whenever possible.
Related Articles:
Ever wonder if you are suitable for Sell one buy two investment concept? – Read more (Sell one buy two)
Is buying new launch or resale condo have better returns? – Read more (New Launch vs Resale condo)
Looking to upgrade from Hdb to condo? – Read more (Sell Hdb buy condo)
What to take note when selling Hdb resale flat? – Read more (Hdb Resale Process)
Buying another Hdb flat, and using the fund from current home? – Read more (Hdb contra)
Why do some Hdb flat price depreciate so much? – Read more (Hdb depreciation curve)
What is one of the most common reason for property negative sales? – Read more (Cpf accrued interest)
Financial calculation for selling a Hdb flat? – Read more (Hdb resale calculator)
Buying EC before selling your HDB? – Read more (Upgrade to EC before selling your HDB)
Should you sell your EC after 5 years? – Read more (Selling EC)
