Purchasing an HDB flat, especially resale flat units, is a way for some people to downsize their home after selling their private property. For some elderly residents, it may be a way to fix their retirement plan by moving into a space that accommodates a more affordable budget, and a smaller area to clean.
For others, moving from a condo to a private property may be a way to get rid of excess expenditures, like association fees and amenities fees, that typically come with the high price tag of a private property. For any reason, moving from a private unit to an HDB flat is a common practice among Singapore residents looking to scale down on their unit size.
The answer is yes. There are little to no limitations for homeowners to sell their private property and opt to purchase an HDB flat instead. For the most part, the main limitation would be the eligibility of the homeowner, as well as the timeframe it takes to move into a Built-to-Order (BTO) flat.
Although known as a public housing scheme, HDB builds apartments and flats in several styles and sizes, accommodating nearly every social-economic class in the area. You can choose to go minimalistic and purchase an affordable one-bedroom flat, or buy a spacious 5-bedroom apartment if you have a large household.
In any case, soon-to-be HDB apartment homeowners will need to make a sale on their private unit within six (6) months of purchasing a HDB unit, as citizens are not allowed to own private properties after purchasing a HDB unit for practical reasons.
A resale HDB flat is on a leasehold, meaning that the owner of the unit and the owner of the land (HDB) are completely separate entities. As long as your Intent to Buy is approved by HDB, and you can find a unit of choice where the owner agrees to sell you the HDB flat, then you can purchase a flat just as well as any other citizen.
However, BTO flats may work differently. As its name suggests, a BTO flat is built to order - meaning that the flat is not readily available for moving in until the deed of sale has been completed.
Additionally, private homeowners will need to sell their unit before they can purchase a BTO HDB unit, so homeowners purchasing a BTO unit will need to wait some time before moving in. Elderly homeowners aged 55 and above, however, can purchase a BTO unit immediately, but only for a short-term lease set to the time frame wherein the youngest owner would age to 95.
Take note that you don’t have ownership rights to any HDB housing grants, or HDB loan within thirty (30) days of selling your private property. You also cannot have any existing private property whether locally or outside the country.
Additionally, you cannot own a private property for a minimum of five (5) years after you have purchased your HDB property, according to the HDB housing loan requirements. You also cannot purchase an HDB unit within a building that has been announced to undergo reconstruction under SERS.
Depending on your budget and type of unit, you may need to apply for a bank loan instead. However, any outstanding loan you may have will affect your Loan-to-Value ratio, which will make securing residential properties, even resale HDB flats, more difficult.
Ultimately, you will need to undergo careful timeline and budget planning when selling your private property to buy an HDB subsidised flat. Theoretically, moving from a private property to an HDB home may sound as straightforward as any real estate transaction, but because HDB was built to provide affordable subsidised housing, it may not be as simple.
Planning your Budget
First, plan your budget. Figure out how much of the revenue you get from selling your private property will go into the new unit. Especially for residents who are buying an HDB unit for retirement, you have probably considered setting part of the sale price aside for savings and future expenses needed in the future.
You will also need to consider the fees that go alongside purchasing a property. Real estate agent or property agent fees, option fees, and application fees should all be considered in your financial planning. Consider the maximum loan amount you’re willing to apply for as well as the purchase price of the unit, and any other resale levy.
Planning your Timeline
Second, you will need to focus on a roadmap of when you will be selling your private property, entering the property market, and buying a HDB unit. You may need the help of an agent in figuring out the typical timeline for these types of transactions.
Of course, consider the 30-day period for BTO units, 21-day period for the Option to Purchase, and the 5-year MOP upon flat application. Together with your moving in and out planning, plan the payment scheme for the bank loans you need to pay, as well as any home loans that you have been approved for.
Moving in and out of any home is time consuming and exhausting, but sometimes, these are necessary steps to continue with a comfortable way of living. For many elderly residents, a large private property is just not practical anymore for one or two persons, and a smaller, more affordable HDB unit is just right for their retirement plan.
As with any property sale, it may be a confusing and long process, but moving from a private unit to a subsidised one can be beneficial. An agent will surely help with the whole process, but ultimately, the decision will always be up to the individual homeowners as they attempt to downsize their home to a more minimalistic living space.