With the upcoming May BTO 2023, you may be feeling the pressure of deciding on a unit in a Singapore new launch condo that would best suit your needs and lifestyle. As a practical consumer, it is essential to do your due diligence before upgrading from an HDB flat. That includes being well-informed about the HDB Minimum Occupation Period Rule (MOP) for your chosen flat.
HDB MOP for most HDB Flats
The MOP for most HDB flats is set to five years from the date when keys are collected. This means that owners can only sell their HDB flat after they have been living there for five years. This restriction helps to deter speculation in the public housing market and promote long-term occupancy of flats by genuine homeowners who wish to stay in their homes for the long term.
HDB MOP for Prime Location Public Housing (PLH) Flats
Prime Location Public Housing (PLH) flats have a higher MOP than regular HDB flats because they are in desirable neighbourhoods with easy access to amenities such as shopping malls, schools, and hospitals. PLH flats usually come with additional facilities such as indoor gyms and swimming pools. The 10-year MOP discourages speculators from buying these units so that genuine buyers who are willing to live there long-term can benefit from these prime location properties.
HDB MOP for Fresh Start Housing Scheme
The Fresh Start Housing Scheme was launched in August 2020 as part of an effort to help second-timer families who are financially disadvantaged start anew with a new home. The scheme offers second-timer families and divorcees priority in applying for new two-room flexi flats at heavily subsidised prices, but with a much longer MOP of 20 years instead of the usual 5- or 10-year period. This is done to ensure that those who need this assistance can continue staying in their homes without needing to worry about resale restrictions during their recovery stage after financial hardships have concluded.
This comprehensive guide will tackle everything you need to know about HDB MOP- the dos, don’ts, and exclusions associated with HDB MOP.
So, What is HDB MOP?
HDB Minimum Occupation Period (MOP) is the amount of time that you must stay in your flat before you are allowed to sell it or sublet it. Depending on the type of flat and when it was purchased, the MOP might vary from five years, 10 years, or even 20 years.
It is crucial to remember that while your flat is under MOP, you will not be permitted to purchase any form of private property. By logic, this means that upgrade from HDB flat to private condo will not be possible while under MOP rules.
The MOP policy was implemented specifically to discourage the reselling of newly purchased flats, and to deter flat owners from reaping a quick profit from their property investments. Special considerations are considered when determining a flat owner’s MOP start date and period. Any period when the flat is vacant or unoccupied due to renovation work or any other reasons will not be counted into a flat owner’s MOP.
The government’s primary objective for establishing this policy was to minimize the lottery effect – an occurrence where select HDB owners with flats located in prime locations can benefit disproportionately at the expense of other flat owners. This policy is seen as part of protective housing measures implemented by the government.
Here’s an example of how MOP works. If you have resided in your HDB flat for three years and gained temporary residence overseas for two years, the rule states that the MOP still stands for two more years upon your return. This means that you must live for another two years at your HDB before finally selling or subletting your entire flat, as well as having the opportunity to purchase a private property.
When purchasing a flat, it is important to consider all the individual factors that may affect your Minimum Occupation Period (MOP). These factors can vary depending on the type of flat you purchase and how you choose to apply for it. Additionally, the date of your flat application could potentially dictate the length of MOP you must serve.
What Activities are Permitted Before your HDB MOP Expires?
Subletting your spare rooms may seem attractive in the short term, however it is important to be aware of certain regulations. HDB tenants who wish to sublet must first comply with the prevailing rental and tenancy rules. Unlike private housing, you cannot rent out all the rooms as sublets. Instead, you must continue to reside in one room at least of your HDB flat.
If you are found to be locking up one of the bedrooms, claiming you are occupying it when in fact, you are not, this will be considered illegal and can result in serious penalties and fines. Lastly, be mindful that under HDB MOP rules, you are prohibited from acquiring private property while living in your HDB flat.
What Activities are Permitted Upon the Expiration of your HDB’s MOP?
The end of your HDB flat's Minimum Occupation Period (MOP) marks an exciting milestone in the life of a homeowner. Upon completion of your MOP, you are then permitted to execute the following:
Sell your HDB flat
Rent or lease the entire HDB flat
Acquire another private property
Restrictions for Central Locations and PLHs
When your HDB flat belongs to the PLH model, it is not possible to rent out the entire unit even if you have fulfilled the 10-year Minimum Occupation Period. This rule is only applicable to HDB flat owners in central locations. In addition, this restriction includes prime HDB flats sold during the BTO launched in November 2021. If you purchase an HDB flat after November 2021 in a central location or not, you will be subject to this restriction.
In contrast, those who bought their home before November 2021 are not required to adhere to this restriction. They may rent out their entire unit once their MOP is complete. Thus far, there has been no official word on when or if these restrictions will be lifted for those residing in central locations or prime locations purchased after November 2021.
If you are looking for an HBD upgrade to condo after meeting MOP’s requirements, it is recommended to research the step-by-step process of selling your HDB flat.
Restrictions for Central Locations and PLHs
When your HDB flat belongs to the PLH model, it is not possible to rent out the entire unit even if you have fulfilled the 10-year Minimum Occupation Period. This rule is only applicable to HDB flat owners in central locations. In addition, this restriction includes prime HDB flats sold during the BTO launched in November 2021. If you purchase an HDB flat after November 2021 in a central location or not, you will be subject to this restriction.
In contrast, those who bought their home before November 2021 are not required to adhere to this restriction. They may rent out their entire unit once their MOP is complete. Thus far, there has been no official word on when or if these restrictions will be lifted for those residing in central locations or prime locations purchased after November 2021.
If you are looking for an HBD upgrade to condo after meeting MOP’s requirements, it is recommended to research the step-by-step process of selling your HDB flat.
Knowing your HDB MOP- Why Is It Relevant?
Singapore's Housing and Development Board (HDB) has been at the forefront of providing quality public housing for Singaporeans. In recent years, however, an issue of individuals forming property investment opportunities has arisen in the form of purchasing HDB flats to later resell for profit.
To resolve this situation, the government introduced the Minimum Occupation Period (MOP) to ensure that people are not taking advantage of HDB flats as a profitable venture. This is critical since this could drive up prices, making it more difficult for those looking to buy an HDB flat for their own use. With this innovative system, public housing will remain affordable and accessible to those who seek it.
The Prime Location Housing (PLH) Model introduced by the HDB is a clear sign that the government remains committed to ensuring the affordability of the country’s HDB flats. The PLH Model has given homeowners an insight into how an HDB Minimum Occupation Period (MOP) criteria can be tailored to specific expectations - a point made abundantly apparent by the 10-year MOP currently imposed on new buyers of properties in prime locations.
Not only does this extended MOP work towards promoting more purposeful ownership, but it’s also a strong deterrent to property ‘flipping’ which can artificially inflate market prices.
What are the Exceptions to Standard HDB MOP Rules?
Selling a HDB flat back to HDB while being under MOP is not as uncommon as you might think. Although you are is obliged to wait out the MOP period before it can be sold, there are special circumstances that can be deemed acceptable by HDB where they will allow early resale of a flat.
If you are considering selling for bankruptcy or divorce reasons, you must fulfill a few additional requirements in order to be successful. Each case will be different and having an expert by your side to guide you through the process can help ensure that the outcome is favorable. With the right knowledge and skills set, it's possible for HDB MOP exceptions to benefit you when you are looking to sell your HDB before MOP requirements are met.
Bankruptcy
HDB flat ownership laws are in place to ensure that the assets belonging to citizens of Singapore are managed properly. The Official Assignee plays an important role in this since they will check whether the proposed sale of an HDB flat is beneficial to its owners.
In the case of bankruptcy, if none of the flat owners are non-Singaporeans, obtaining consent from the Official Assignee is a must before placing it on the market. On the other hand, there is no need for such approval if one or more of its owners are citizens of Singapore. This way, local citizens can be assured that their essential asset is being handled with due consideration and care.
Divorce
Sellers who are in the process of a divorce and looking to sell their HDB before MOP should make sure to submit the right documents for the sale to be approved. This includes submitting either a Divorce Certificate (for Muslims) or an Interim Judgment and Certificate of Making Interim Judgment Final, as well as a Writ for Judicial Separation, if necessary.
If any Order of Court has also been issued surrounding the divorce proceedings, it is important that this too is submitted for consideration. To ensure the process runs smoothly and your sale can proceed, be certain to double check all required documents have been submitted correctly.
If you are looking for options after MDB MOP or keeping your flat following a divorce, click here.
How Do I Know my HDB’s MOP?
If you are unsure about your HDB flat’s MOP, you may log in to your MyHDB Page using your SingPass. Under My Flat, you should then go under the Purchased Flat. Once you arrive at the Purchased Flat page, click Flat Details where you can view your Minimum Occupancy Period.
I’ve Fulfilled my HDB MOP Requirements and Want to Sell My Flat, What’s Next?
Before you can upgrade from HBD to condo in SG, it is essential to determine whether you fulfil all aspects of the Ethnic Integration Policy (EIP) and Singapore Permanent Resident Quotas. These policies aim to ensure a balanced distribution of ethnicity across public housing estates while also providing homes for suitably qualified Singaporean Permanent Residents.
All residence types, including flats are subjected to EIP quotas and certain HDB rules at the time a resale transaction is performed. Ensuring that you meet these criteria is critical as any differences may negatively impact the sale or purchase of your flat. Accordingly, it is imperative to understand if you meet these criteria prior to marketing your flat for you to have a smooth selling process.
What is Ethnic Integration Policy or EIP Quota?
The Ethnic Integration Policy (EIP) was a resolute initiative taken by the Government of Singapore in 1989 to safeguard and uphold racial harmony and integration. This policy established a quota for each ethnic group, allowing for their balanced presence across all HDB estates. Since its implementation in 1989, this policy has been praised as one of the most progressive initiatives toward fostering a cohesive multicultural society.
The EIP encourages cultural exchange, collaboration, and unity between all groups, under the auspices of shared living spaces. Consequently, this has helped pave the way for an appreciation of diversity while impressing upon younger generations the importance of being neighbourly and united despite any existing differences among them.
On January 6, 1989, former Minister of National Development, S. Dhanabalan, addressed community leaders on the forming of ethnic enclaves in many HDB estates. He offered examples such as the Chinese population occupying more than ninety percent of Hougang, and the Malay households comprising more than thirty percent in both Bedok and Tampines Estates.
In light of this emerging communal clustering, the government introduced policies to regulate an even spread of ethnicity within neighbourhoods, thereby helping to promote racial and social unity. By implementing these balanced living guidelines from an early stage, Singapore has become known for its harmonious relationship between members from various cultural backgrounds
What is Singapore Permanent Resident or SPR Quota?
The Singapore Permanent Resident Quota is an extremely effective way to manage the natural influx of other nationalities into the country, by ensuring they become citizens, as well as feel welcomed and included in the local neighbourhoods. It promotes integration in a way that preserves the distinct character of Singapore and fosters inclusivity amongst the different nationalities.
In addition, this platform is also an invaluable opportunity for newcomers to become true citizens of this nation and experience all that they have to offer, while still preserving their unique heritage. With a balanced approach, this mechanism effectively promotes both cultural diversity and national unity.
It is also crucial to remember that the MOP for HDB is applicable to all BTO flats. When you apply for the upcoming May 2023 BTO for an HBD upgrade to EC, they will begin collecting payment from you on the day you collect your key and not when the development is built. This arrangement gives you more certainty and confidence purchasing a new executive condo in SG or any other private property. You can feel confident knowing that there’s no need to worry about any potential hidden costs arising from unexpected construction delays.
After successfully registering your Intent to Sell, you may proceed to determine the EIP and/or SPR quota of your flat on HDB’s Resale Portal.
If you are looking for the latest condo launch in Singapore in the upcoming BTO on May 2023, click here.
We understand that financial planning can be a daunting task, and we're here to simplify it for you speak with us.
If you have a plan in mind but not sure if it works well – do share with us or let us know.
We will do our 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.