HDB upgraders in Singapore brainstorm a lot for a second home purchase regarding the pros and cons of upgrading to Executive Condos or private condos and they need the right advice to save costs and ensure the long-term viability of their investment decisions on EC or private condominium.
In the Singapore housing market, MOP stands for Minimum Occupation Period (MOP) is a mandatory requirement by state-owned Housing Development Board (HDB) units. However, MOP periods differ in various schemes.
HDB upgrade to EC gets a price advantage as it is 20 percent cheaper than a private condominium. But the price cushion meets with a lock-in period in the form of MOP or minimum occupancy period restraining sale or renting during that period.
In the case of buying an EC, the amenities will be almost the same as in private condominiums. You can get security, a gym, swimming pools, clubs, and other cozy amenities. You can show off the luxury by hosting friends over BBQ meals and playing your favorite games with them.
Property experts especially Mop upgraders are plenty in Singapore who will tender the correct advice on how to sell HDB after Mop and they present an array of options too.
The EC option attracts HDB homeowners who have crossed Mop period because EC is considered an HBD property in the first 10 years until it is declared private property after the Mop is fit for sale in the open market.
Developers offer ECs at a cheaper price because the Government supplied land at a lower rate to develop exclusive EC projects. One more positive about buying ECs as an upgrade from HDB flats will be that you will not have to pay the additional buyer stamp duty (ABSD). This comfort stays even if you have bought the EC before selling the existing HDB property.
That privilege will not be allowed when upgrading to a private condominium by an HDB flat owner after mop because buying a private property before selling the current HDB property will be considered possessing a second property at the time of purchase and you have to pay ABSD right away.
MOP mandates owners must physically occupy the flat before becoming eligible to sell that flat, rent it out in whole or parts, or invest in private properties in the local market or overseas. The MOP period will not cover any period in which the owner had been away from the flat on overseas work or was staying with their parents.
The rationale of MOP is the Singapore government’s decision for fair play in the housing market with the intent that every citizen should afford a roof over their head. The HDB flats are conceived as affordable housing, not as investment tools. But there is the liberty to sell HDB after the mop phase.
The MOP requirement prevents owners from buying flats and reselling in pursuit of profit and higher prices. The MOP bar has worked as a restraint on flat owners from abusing the HDB as an income-generating tool. The MOP requirement binds Executive Condominium (EC) owners too.
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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.