Updated: Jan 13
Feeling lost where should upgrade to?
During an impromptu meetup with a HDB upgrader recently, after doing detailed financial calculation, the couple actually has no idea where they want to upgrade to! They are like lost sheep as they don't really know what options they have.
Like most Singaporeans, your first home is very likely Build To Order (BTO) or Executive Condominium (EC) flat. However it will not be the home forever. At different stages in life, the needs towards life will grow or shrink, there will be several occasions your houses will be changing hand in the course of your life.
Back to Basic : What is your need at this moment?
After living in BTO / EC for more than 5 years, you may be ready for an upgrade. This will make sense as most owners may have increament in salary, has landed in better paying jobs or have sufficient saving from work or investment. The dream is to upgrade lives in every owner whenever they are capable to do so financially.
Before exploring the possible options, lets look at the common needs for owners to upgrade:
1. For better location: Most BTO / EC are built in less matured estates with less attractive amenities. This result more commuting time to working place, parents house, kids' educational institutions or shopping belt, some owners decided to upgrade to be as near as possible to those places.
2. For better educational institutions: Some owners upgrade to live near to their choice primary schools for the higher chance of getting in the schools amidst the competition.
If there is balloting involved in getting a spot in the school, the proximity between hole and school can be a deciding factor.
3. For more space: House will be outgrown with more family members (parents-in-law, sister-in-law, brother-in-law, kids, maid or dog), with the current BTO size, it is quite a challenge for big family to be under one roof.
4. For better lifestyle: Some owners, who have climbed to higher corporate ladder or higher status in society, would consider to upgrade to condominium to enjoy the facilities and quality time with family and friends.
...“Today I am going to share 5 possible options you could look into after selling your BTO / EC”
Based on the needs above, you can better craft out a moving-out plan for your family. Different options come with different pros and cons. If the pros outweigh the cons and the chosen option can meet your immediate needs, by all means please go ahead with the chosen option with no regret.
Option 1: Resale Executive Maisonette / Executive Apartment
This is the cheapest and easiest option by going for Executive Maisonette (EM) or Executive Apartment (EA) in the open resale market. Housing Development Board (HDB) is no longer building EA / EM because they are deemed to take up more space which can be better maximized to build more 4-room or 3-room to better meet the demand of small younger family. EA can easily has luxury space of 1350-1550 sqft whereas EM can be expected to be in the range of 1600-1800 sqft depending on their locations across Singapore.
Going from HDB to HDB may not seem like an upgrade, but older resale flats especially EA / EM in more mature estates like Bishan and Queenstown are very spacious and situated in better locations than newer BTOs. If you are eyeing a better educational institution for your kids, EA / EM can be one possible option for your family. However if you are looking to move to near CBD, EA / EM at extreme North (Woodlands / Yishun), extreme West (Jurong West) or extreme East (Tampines / Pasir Ris) would not be suitable.
Also, the Government is promoting living with / near parents or children by giving out
$10 000 to $30 000 Proximity Housing Grant (PHG) to those who are eligible. It is a one time grant for those who move within 4km to their parents / kids or to the same estate. This PHG has given a good reason for upgraders to choose EA / EM.
Option 2: Resale Condo Constructed in 2019 - 2020
Resale condominium Is a very popular choice among HDB / EC upgraders because of some owners' appetite for higher social status with the increase in their salary. The price range for resale private condominium is much more higher than resale HDB. You can expect 3-bedroom family-sized unit starting from $1.3 million.
Some owners will choose resale condominium to have back-to-back transactions for their sale of HDB / EC and their purchase. If you are buying a resale condo, this means that you can start doing renovation and living in it immediately after the sale of HDB / EC with proper timeline planning.
There are also potential benefits for choosing resale condo. You can gauge potential issues which may arise before buying with a thorough inspection. The purchase is potentially less risky as you are able to experience and feel the surrounding. Sometimes, you might be able to get good deal as the purchase price can go below the property market value depending on the sellers' motivation to sell. The only setback is the resale condo that you have purchased might has a certain age with more worn down facilities. You will expecting to have higher maintenance costs depending on the financial status of the condo management.
Option 3: Resale or New Executive Condominium
Another upgrading option for you is to purchase an Executive Condominium (EC) either from resale market or from HDB directly. ECs are comparable to condominiums and can be sold on the open market after owners fulfilling their 5-year Miniumum Occupation Period (MOP). Buying resale EC is similar to buying resale condominium from open resale market.
If you want to upgrade your lifestyle by living in a development with facilities, but do not wish to be tied down with huge housing mortgage, you might want to consider getting an EC directly from HDB. You can easily gauge when to start marketing your house by taking into account of the 3-year construction period. Furthermore, you will be getting an unit in move-in condition upon key collection. You just need to furnish the house with furnitures, lightings and curtain.
Do take note that EC purchasers will need to present signed Undertaking Letter to complete the sale of existing property within stipulated period, so that they can be granted full loan from financial institutions. This would mean that you will need to time the sale of house nicely to avoid competition from other sellers. As EC is considered a subsidized housing from HDB, ex-BTO owners will be subjected to the resale levy of between $15000 to $55 000.
Option 4: New Launches TOP Beyond 2022
You can also consider to buy a new launch condominium. Not only can you enjoy early bird discount during its launch period, you can also enjoy its appreciation in value in the future. Buying directly from the new launch developer will mean all owners will have the starting line in terms of purchase price and most will be selling higher than the initial purchase price.
Unlike resale condo in which full fledged loan kicks in, you only need to start making payments of small installments of 5-10% every 6 months up to the moment you receive Temporary Occupation Permit (TOP) notice for new launch condominium. Other than the fact that you will need to wait for around 3 years until it is ready to be lived in which means you need to have temporary place to stay, you can only know any potential unknown issues with the unit such as bad neighbours, blocked view etc after you have gotten the keys.
Option 5: New BTO / Sales of Balance Flats from HDB Directly
It is possible to ballot for BTO again or choose flats under construction under Sales of Balance (SBF) even if you have already owned a HDB flat. Most would hardly see this as an “upgrade”. However, some will just do future planning in buying to buy BTO at their preferred locations to be near to parents or near to schools when BTO is ready in another 3 to 4 years.
As new BTO flat supply is set aside in terms of priority to first-time applicants, therefore second-timers like yourself will have a lower chance in getting an unit. However, with the sheer amount of flats being built by HDB at the moment, there is still a possibility that you might be able to get one. Do take note that you will need to pay resale levy depending on the type of HDB you are holding. You will need to gauge if it is worth to pay the amount of resale levy to get BTO again with new fresh 99-year lease.
Different options above provide meeting different family's needs and requirements. There is no absolute answer to the question "Where should I upgrade to". It is also not a must that you must pick to live in condominium like most of the upgraders.
Need more advice which option to choose and where to choose?
If you have a plan in mind but not sure if it works well – do share with me or let me know.
I will do my best to assist you to make sure you look at your plan from multiple angles and ensure you have a very clear picture on what’s going on.
Drop me a HI! in whatsapp and share with me your top most concern in the property upgrading journey.
JJ Wong is the founder of MOPUpgraders.sg and has been a Property Wealth Planner in the real estate market for the past 6 years. He has helped many clients achieve their aspirations with the right financial planning and sound timeline planning. He is the man behind upgrading case studies of those who are holding on property under 10 years.