MND announces stricter ownership criteria for HDB flats in prime locations, including 10-year minimum occupancy period

• Home buyers of new HDB flats in prime locations will have to occupy their units for at least 10 years
• They cannot put up the flat for rent for as long as they own it, even after the first 10 years
• The Government will give extra subsidies for the first buyer but will also claw them back when the flat is sold
• The profile of buyers looking to buy these flats in the resale market will be more restricted than typical resale flats

SINGAPORE — The Government is setting tighter criteria for ownership of new Housing and Development Board (HDB) flats to be built in prime locations such as the Greater Southern Waterfront and the city centre and towns surrounding it. 

One, they will have to be occupied for a minimum of 10 years before their owners can sell them, unlike the prevailing condition of five years for existing flats. 

Owners of these HDB flats will also not be allowed to put the whole flat up for rent after 10 years, even though flat owners are permitted to do so after five years under current rules. 

Given the high land cost of these locations, the Government will be providing more subsidies to buyers of these flats, but also claw them back if they do sell it after completing the minimum occupation period. 

To ensure that the resale prices of flats in these areas are kept affordable, the authorities will be limiting the profile of buyers eligible to buy these flats in the resale market. 

Singles, for example, will not be allowed to buy them even if they have turned 35 years old. This is in contrast to prevailing rules that do not place any limitations on singles above the age of 35 buying resale flats. 

To be eligible, households cannot earn more than the prevailing income ceiling, which is set at S$14,000.

Existing HDB projects in and around the city centre will not be subjected to these new requirements.  

The first public housing project to be launched next month under this new Prime Location Public Housing (PLH) scheme will be in the Rochor Road district.

This new model, announced by the Ministry of National Development (MND) and HDB on Wednesday (Oct 27), is part of wide-ranging changes to Singapore’s public housing system and is aimed at mitigating its “lottery effect”.

This refers to how people who manage to ballot for and buy a flat, through the Build-to-Order sales exercises, in prime locations are often able to sell them in the resale market at high prices once they fulfil the minimum occupation period of five years. 

Since the Covid-19 pandemic, the number of HDB resale transactions that cross the million-dollar mark has been on the rise, and these flats are usually concentrated in the city centre. 

Speaking to the media at a briefing on Tuesday, National Development Minister Desmond Lee said that without government intervention, only the well-to-do would be able to afford housing in attractive locations, as such properties tend to be very expensive. 

And this is a problem in many cities around the world where there are distinct enclaves between wealthier households and average-income families. 

“But we are determined not to let this happen in Singapore. We want to keep our city inclusive. To do this, we recognise that we are acting against very powerful social and economic forces that drive stratification and segregation in every society, especially in successful cities,” Mr Lee said. 

He added that the new PLH model is “not cast in stone” and that the authorities will continue to review its parameters over time. 

It came about after almost a year of public consultation, and there will be PLH projects among the 17,000 new public housing flats that are in the pipeline for next year, though Mr Lee said these flats would not be the majority.

The following are other key measures under the new housing scheme:

1. Location 

Public housing projects built in the city centre and towns surrounding it, as well as the Greater Southern Waterfront, will come under the PLH model. 

The Greater Southern Waterfront covers 30km of coastline that stretches from the Gardens by the Bay East area to Pasir Panjang and comprises 2,000ha of prime land that is equivalent to six times the size of Marina Bay and double the size of Punggol town. 

However, it is not the case where all new public housing projects in districts or housing estates near the city centre will be placed under the new housing scheme. 

Mr Lee said that the attributes of projects in the city fringes will also be taken into account. 

Ms Charlene Han, director of homeownership at MND’s housing division, said: “When we say prime location, like the city centre, it is not the entire area… It will be applied to specific projects within the location.”

Mr Lee did confirm that Bishan and Toa Payoh, which have seen sky-high resale flat transactions, will not be locations where PLH projects will be built, because there are other resale flats selling at lower prices in these two estates due to less attractive attributes. 

2. Type of flats 

Public rental flats will be built at PLH sites, wherever possible, to ensure that public housing is kept inclusive and diverse. 

For the upcoming Rochor project, there will be 960 three-room and four-room units, as well as 40 rental flats. 

Mr Lee said that the decision to build three- and four-room flats was to give families the option to live in the city centre and that the ministry is not ruling out any housing types.

Future projects may have two-room flexi units, which are the only type of HDB flats that singles can buy from the Government, and five-room units.  

3. Subsidies 

Given the high cost of land in prime locations, the Government will provide more subsidies on top of existing ones already given out to BTO flat buyers, to households who successfully ballot for a unit under the new scheme.

The amount of extra subsidy will be determined by market conditions, the attributes of the PLH sites and the type of HDB flat.  

However, if these flat owners decide to sell their unit after 10 years of living in it, they will have to pay a percentage of their flat’s resale price to HDB, in what the Government calls “subsidy recovery”.

This is to ensure parity with other BTO flat owners who do not enjoy these extra subsidies and is a means for the Government to recover them. 

MND and HDB said in their news release: “The subsidy recovery percentage will commensurate with the extent of the initial additional subsidy provided.”

Mr Lee said that it will be a fixed percentage of the resale price and will be decided once the project has been finalised. This percentage will apply to all units within the PLH development and will not be adjusted as the additional subsidies disbursed would have been decided when pricing the flat. 

On the risk of sellers marking up their resale price to cover the subsidy recovery, Mr Lee said that the Government has put in place strict eligibility conditions for resale buyers to reduce its pool. 

The buyer will also have to take into account the conditions that he has to fulfil for resale, he added. 

As for existing housing grants, home buyers under the new scheme may continue to tap them.

4. Eligibility of buyers 

The eligibility conditions to buy PLH flats from HDB will be the same as current ones for three- to five-room BTO flats. 

This means that at least one applicant has to be a Singapore citizen. Permanent residents may buy it only if they are buying it with a Singapore citizen. 

Applicants must also form a family nucleus and have a combined income of S$14,000 or less.

The conditions for resale of these flats will also be the same. 

Typically, for resale flats, they are open to a wider pool of buyers such as permanent residents and singles. There is also no income ceiling. 

These eligibility conditions are put in place to restrict the pool of buyers so that the resale prices will not rise beyond the reach of many Singaporeans, MND and HDB said. 

These resale restrictions will be maintained for at least half of the 99-year lease of PLH flats before the Government will consider reviewing them. 

When asked why singles are being excluded given that they already do not have as much access to public housing, Mr Lee said that there will be very few flats in prime locations to start with and the Government wants to cater first to families. 

However, the eligibility criteria will be reviewed. 

5. Allocation of flats

The Government may also reduce the proportion of flats in new prime location projects that are set aside for applicants who live near their parents or children. 

“This is because priority schemes like the Married Child Priority Scheme could give buyers an added advantage in the balloting process if their families are more well-off or are already living in or near these prime locations,” Mr Lee said. 

The ethnic quota will also apply to projects under the new model. This quota ensures that the proportion of flats in each HDB housing block and neighbourhood that can be owned by households of each ethnic group is capped.

6. Conditions to sell  

HDB flats under the new scheme can only be sold in the resale market after 10 years.  

Although homeowners cannot lease the whole flat after 10 years, they may do so for individual rooms, similar to the existing scheme. 

This will apply to the first and subsequent buyers. 

Mr Lee said that extending the minimum occupation period and not allowing the rental of an entire flat reduce the risk of speculative demand, where property hunters buy these flats in the hope of making a profit down the road.

It also ensures that people who buy these flats have the intent of occupying them and living there.

“We don't want these flats to be just rented out to people. We want people to live, we want real Singaporean communities to live in the heart of our city,” he added. 

Homeowners who may have to move out before the 10-year mark may appeal to HDB, which will review the appeals on a case-by-case basis.