- New Prime Location Public Housing model
- The Minimum Occupation Period (MOP) for Build-To-Order (BTO) flats in these areas will be 10 years, double that of existing typical projects
- Additional subsidies will be provided for buyers of these flats; those who sell their BTOs will need to repay a percentage of the resale price to the Housing & Development Board (HDB)
- The criteria for resale buyers of these units will be stricter than for typical resale units
Authorities said on Wednesday (Oct 27) that future BTO buyers in prime locations will face a longer Minimum Occupation Period (MOP) of 10 years, as part of a new model to give all Singaporeans a chance to afford homes in prime locations.
This 10-year Minimum Occupation Period is the period an owner must live in the flat before they can sell it on the open market. This period is double that of current BTO projects.
Under the new model, buyers of these flats will also receive additional subsidies, but owners who eventually sell their units will have to repay a percentage of the resale price to the HDB.
The implementation of this system comes more than two years after the government first announced that thousands of HDB flats would be built in the prime Greater Southern Waterfront area, a location that requires a new public housing model.
Minister for National Development (MND) Desmond Lee said at a media briefing that if left entirely to the forces of the resale market, these prime locations would become expensive and exclusive, affordable only to the wealthy.
Minister Lee said: “We see this happening in many cities around the world… but we will absolutely not let this happen in Singapore.”
The government introduced a series of stricter regulations for the new Prime Location Public Housing (PLH) model after 10 months of public engagement.
This model will only be implemented in future projects—the first project will be launched at the Rochor BTO sales exercise in November.
Subsidy Recovery
As HDB flats in these prime locations “will naturally command higher market values”, they will be priced with additional subsidies on top of all current BTOs.
HDB and MND said in a press release: “This will make the prices affordable for many Singaporeans.”
However, when owners of such flats sell them in the future, they will pay a percentage of the resale price to HDB so that the authorities can “fairly recover these additional subsidies”.
Minister Lee stated that this would address concerns about additional subsidies leading to “excessive windfall profits” and whether this is fair to BTO buyers in other parts of Singapore.
In response to queries, MND said: “The subsidy recovery rate will reflect the extent of the additional subsidies provided at launch, and this rate will apply regardless of when the flat is resold in the future.”
More details will be announced when the BTO project is launched in November, but Minister Lee added that the percentage for other projects might be adjusted in the future based on market conditions and the subsidies required.
Reduced Quotas for Priority Schemes
The eligibility criteria for buying a BTO in a prime location will be the same as for buying a BTO elsewhere.
But the allocation quota for the Married Child Priority Scheme will be reduced.
Currently, the scheme reserves 30% of BTO units for those who want to live with or near their parents or children.
In the future, the quota for PLH projects will be adjusted based on their location.
10-Year Minimum Occupation Period (MOP)
Owners of PLH flats will need to complete a 10-year MOP before they can sell their units on the open market or invest in private residential property.
In addition, owners are not allowed to rent out the entire unit at any time, even after the 10-year MOP has passed. Owners can only rent out spare rooms.
These regulations must be adhered to by both buyers who purchase a BTO from HDB and subsequent buyers who purchase a resale unit.
Minister Lee said: “These policies help to reinforce the intent of public housing for owner-occupation, curb speculative demand and moderate resale prices.”
He added that the authorities will review appeals from those who genuinely face extenuating circumstances on a case-by-case basis.
Stricter Rules for Buying Resale Flats
Furthermore, the resale of these units will be restricted to individuals who meet the eligibility criteria for purchasing a BTO flat.
These conditions include meeting the household income ceiling (currently set at S$14,000) and forming an eligible family nucleus, such as a married couple.
Minister Lee said: “Without these restrictions, the resale prices of these prime location flats could rise over time, becoming unaffordable for many Singaporeans.”
“Therefore, we will maintain the resale restrictions for at least half of the 99-year lease, after which we will consider whether to reassess them.”
Prime Locations
The press release stated that the PLH model will apply to selected public housing projects in prime and central locations, such as the city center and surrounding areas, including the Greater Southern Waterfront.
The first project to be launched under the PLH model will be at a site in Rochor.
The project, located along Kelantan Road and Weld Road, will have 960 units of three-room and four-room flats, as well as 40 two-room rental flats, which will be integrated within the same block.
In response to queries, MND mentioned that HDB will launch at least one PLH project per year, though the specific number each year and their proportion of the total new flat supply may vary, depending on factors such as site availability.
“Willing Buyer, Willing Seller“
When asked how authorities would prevent BTO buyers from raising the future selling price of their flats to factor in the subsidy recovery, MND stated that the resale market operates on a “willing-buyer, willing-seller basis,” and that sellers will need to have “realistic expectations.”
Furthermore, MND mentioned that the model has built-in features to slow the pace of price increases, such as restrictions on eligible resale buyers.
“Sellers who try to factor the recovery subsidy into their selling price to maximize their proceeds may find that they have a smaller pool of potential buyers.”
The ministry added that buyers of resale PLH units will need to “consider the implications of the additional ownership conditions,” such as the longer MOP and the restriction on renting out the entire unit.
“Not Set in Stone“
Minister Lee also emphasized that, like other policies, the PLH model is “not set in stone”.
“This is a brand-new project, and we will continue to evaluate it based on our experience with the projects we launch along the way.”
“We will make adjustments as necessary to ensure the model achieves our objectives and meets the needs of Singaporeans.”
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