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HDB Sers replacement flat owners may see ‘longer wait before resale’ with change in occupancy rule

SINGAPORE — Residents affected by a government rehousing scheme will only be allowed to sell their replacement flats five years after they collect their keys, beginning with those who are undergoing this exercise in Ang Mo Kio.
Property hunters who buy government-built flats have to occupy them for a set period before they could be put up for sale, and this is typically five years from the date of key collection.
Property hunters who buy government-built flats have to occupy them for a set period before they could be put up for sale, and this is typically five years from the date of key collection.
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  • HDB recently revised rules for flat owners under its Selective En bloc Redevelopment Scheme
  • Owners will only be able to sell their replacement flats five years after collecting their keys
  • It used to be seven years after selecting a replacement flat or five years after collecting keys, whichever came earlier
  • This rule change took effect from April 7

SINGAPORE — Residents affected by a government rehousing scheme will only be allowed to sell their replacement flats five years after they collect their keys, beginning with those who are undergoing this exercise in Ang Mo Kio.

The Housing and Development Board (HDB) recently changed the minimum occupancy rule for its Selective En bloc Redevelopment Scheme (Sers) to ensure consistency.

In response to TODAY’s queries, HDB said that the change streamlines the criteria for the minimum occupation period to be the same for Sers flat owners — regardless of whether they are buying a flat at the designated replacement site or elsewhere using their rehousing benefits.

“This ensures consistency of treatment for all Sers flat owners, regardless of the replacement flats they buy,” it added.

HDB also said that this new occupancy criterion was made known to flat owners of blocks 562 to 565 on Ang Mo Kio Avenue 3 in the information package given to them on April 7 — the day it was announced that their blocks were chosen for Sers.

Some of these Ang Mo Kio residents, who had earlier expressed their unhappiness with the Sers exercise in a TODAY report, said they did not notice that HDB had changed the occupancy rule when they first read the information package given.

Property analysts largely agreed that the change of rule was likely to align it with the rule for the majority of new and resale HDB flats.

Mr Ismail Gafoor, chief executive officer of real estate firm PropNex Realty, said this means that owners of Sers replacement flats will have to live in their new flats longer before they are allowed to sell them in the open market — now that construction time is not part of the equation and the occupancy period starts from the key collection date.

Before the change of rule, homeowners could sell their replacement flats seven years after they selected it — which would include construction time — or five years from when they collected their keys, whichever came earlier.

Property hunters who buy their flats from HDB are required to occupy their flats for a set period before they could be put up for sale. 

This is known as the “minimum occupation period” and for most flats, it lasts five years from the date of key collection.

The exceptions are flats under the relatively new Prime Location Public Housing scheme, where the wait is 10 years, and for flats bought under the new Fresh Start Housing Scheme, which is 20 years.

For Sers, HDB tears down old housing blocks and offers residents housing options in nearby estates. Flat owners will get rehousing benefits as well as compensation based on the market value of their flats at the time of the Sers announcement.

Professor Sing Tien Foo, director at the Institute of Real Estate and Urban Studies, told TODAY on Saturday (June 18) that the reason for the initial difference in the rule for Sers replacement flat owners is likely because these replacements flats are often planned well in advance and keys will often already be available for collection when pen meets paper.  

“So the difference between five years and seven years is very small,” Prof Sing said. 

This is in contrast to HDB's Build-To-Order projects, which have relatively later construction schedules compared to those for replacement flats. 

However, the Covid-19 pandemic affected the completion timeline for even replacement flats. 

“With Covid, many of these projects were delayed, even replacement flats,” he said.

Prof Sing, who is also the head of the department of real estate at the National University of Singapore, said that if a project is delayed for long enough, “the seven years can happen before the building is completed”.

“I think HDB probably wants to reduce some of these inconsistencies.” 

WHAT THE CHANGE MEANS FOR OWNERS

Before the rule change, assuming construction takes four years, for instance, residents in Sers replacement flats who want to resell the property would need to live in the new flat for just three years after collecting their keys, in order to meet the seven-years-after-selection criterion.

This was why flats at the City Vue@Henderson project near Bukit Merah have been sold in the resale market since November last year despite its construction completing only in 2018, as pointed out in an article by real estate firm 99.co, which first reported the rule change.

“Therefore, the headstart in minimum occupation period and younger age of the flat would allow owners to sell their flats earlier, at a higher price,” the 99.co article stated, referring to how a flat at City Vue@Henderson was sold at S$1.4 million last month and broke the record to be the most expensive resale flat transaction by far.

Property expert Lee Nai Jia told TODAY he does not think that the new minimum occupancy rule will have much of an impact on the Ang Mo Kio residents being rehoused, given that they would be subjected to a five-year minimum occupation period anyway if they bought another flat located outside the replacement site. 

Dr Lee, who is deputy director of the Institute of Real Estate and Urban Studies at the National University of Singapore, added that among the Ang Mo Kio residents who may be affected by the new rule are those facing special circumstances such as divorce or financial troubles.

However, such cases are often resolved on a case-by-case basis through appeals to HDB.

For some of the Ang Mo Kio residents undergoing Sers, this was another piece of news that they have to digest should they plan to sell their flat in future. However, it was secondary to their concerns over having to top up five- to six-figure sums of money for a similar-sized replacement flat, they said.

Credit analyst Rachel Chua, 40, for one, noted that if she were to sell her replacement flat in future, it will be in 10 years' time. Residents are expected to move in or get their keys in 2027. "Is this being fair to us?" she asked.

A 43-year-old administrative executive who lives at Block 562 and gave her name as just Ms Chen said: “My intention of buying a flat is to live there till the day I die. I’m not keen on property flipping… so, this occupancy rule doesn’t bother me.”

Another resident, 37-year-old project manager Leonard Goh, said: “I don’t want to think about this any more. When the time comes, we’ll just move. 

“If we need to top up, we’ll just top up. If we need to renovate, we’ll start saving now. Just let (HDB officials) do whatever they want.”

Related topics

HDB flat HDB Sers Ang Mo Kio resale minimum occupation period

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