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Max Amount For First Time Home Buyers – Wondering which HDB flats to buy in Singapore? Here is a wide range of accommodation types and benefits that you can find!
A statutory body under the Ministry of National Development (MND), the Housing and Development Board (HDB) is Singapore’s housing authority responsible for the planning and development of affordable public housing for Singaporeans. The HDB was established on 1 February 1960 and since then has built more than 1 million houses, housing 80% of the country’s population.
Max Amount For First Time Home Buyers
HDB currently offers Singaporeans three 99-year lease options, namely Build-To-Order (BTO), Design, Build and Sell Scheme (DBSS) and Executive Condominiums (EC) to suit housing needs and budgets.
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HDB announced a series of new measures in September to help first-time owners buy new flats and sell them. As of September 11, 2019, the following steps have been taken:
The monthly household income ceiling for eligible first-time buyers of HDB single flats aged 35 and above will be increased from US$6,000 to US$7,000. Eligible singles can choose to buy new two-bedroom flats or resale flats (up to 5 bedrooms) with Singles’ Housing Benefit on the open market.
That’s good news if you’re currently single and your next step is to get your own HDB flat. Finally, you can avoid direct questions from your parents. Or you can be pushed to the #adultstairs.
HDB will raise the monthly household income ceiling for households starting to get their new or resale HDB flats from $12,000 to $14,000.
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The EHG will replace two previous schemes, supplementary housing allowance and special housing allowance. The EHG contribution amount will be linked to your salary class. The lower your income, the higher the contribution. The EHG amount for first-time buyers purchasing new or resale flats under the Single Singapore Citizen Scheme will be up to $40,000 (relevant household income increased to $4,500) up to $80,000 for first-time households , or single people who buy condominiums or/apartments for sale (the qualifying family income is increased to $9,000).
To be eligible for EHG, applicants or their spouses must be employed continuously for at least 12 months, as with other HDB schemes including the Special Housing Allowance.
They also buy flats that they can call home for up to 95 years (based on the HDB maximum rent of 99 years). Those whose apartments do not comply with this condition will be given their subsidy based on the amount of the remaining flat agreement that can cover them until those years.
First, you must be a Singapore citizen, at least 35 years old to apply as a single or divorced person. Only when you are an orphan without siblings; you can apply for your apartment when you are 21 years old under the Orphan Scheme.
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Unrelated single citizens aged 35 and above can jointly apply for an HDB flat, up to 4 such people can jointly own a flat in this way under the Joint Singles Scheme.
Another eligibility requirement is the Ethnic Integration Policy (EIP) and the Singapore Permanent Resident (SPR) quota (used to promote and maintain community partnerships). However, this is more likely to affect the location of your apartment, rather than acting as a barrier to your eligibility to request another one.
As a single buyer, you have 2 options when it comes to HDB flats – a 2-room HDB BTO flexi flat in an undeveloped property, or an HDB resale flat. The table below shows a quick summary of the pros and cons of both options.
The biggest benefit of getting a BTO flat is financial – BTOs are much cheaper than those on the resale market. But singles are restricted to 2* flexi units only in non-senior areas, even if there are many applicants.
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With 1 bedroom and 1 living room, the total area of these units varies from 35 sqm to 49 sqm.
Obviously, a 2-room apartment is small, but if you apply under the BTO system, you will get a new apartment that you can renovate to suit your needs. For example, the current model of 36 square meters has a sliding wall instead of a solid wall, which allows you to create an open plan.
In November 2020, HDB BTO activity saw 2,564 applicants for 2-bedroom Flexi units (2.6 applicants per unit), and 23,691 applicants for 3-bedroom and larger units (4.9 applicants per unit).
But beware of the waiting time. Even if you are lucky enough to win your HDB BTO vote, you still have to wait about 3 to 4 years for your flat to be built before you can move in.
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Coaching Tip: When referring to HDB flats, always subtract one from the name to determine how many rooms you get. So a 3 bedroom apartment means 2 bedrooms + 1 living room, a 4 bedroom apartment means 3 bedrooms + 1 living room, etc.
If the option (and expectation) of a 2-room HDB BTO flexi unit doesn’t appeal to you, try looking for a suitable flat in the resale market. Singles – individually or together – can buy any type of HDB property they want, as long as they can afford it.
The biggest downside to buying a second home is the cost. Currently, and probably for the next 30 years or so, the smallest HDB you can buy is a 3-room unit. (HDB flats have a minimum tenure of 5 years, and with the current supply still meeting demand, it’s unlikely you’ll find a 2-bedroom flat on the resale market anytime soon).
The prices of HDB flats for sale are constantly falling, due to the government’s cooling measures. This has helped put apartments for sale within the reach of many buyers. However, you should still expect to pay around $238,000 – $407,000 for a three-room HDB retail unit.
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If your resale condo has less than 60 years on the lease, you are limited in how long you can use your property to pay off your loan. The most recent update from May 2019 states that the amount you can use to pay off your home is calculated based on how much remaining rent can cover a young homeowner until age 95.
This means that when you borrow your money, you have to pay more money out of pocket. Keep this in mind when planning your finances.
The latest update of May 2019 also states that it can only be used to finance your property if its remaining rent can cover the youngest buyer up to 95 years old. If this rule is not followed, its use will be limited.
This means that the rent must cover the youngest client until the age of 95. The buyer can use a deposit on the property up to its assessment limit if the criteria are met. If not, the use of will be appropriate. None can be used if the remaining lease is less than 20 years
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After finding and buying your own HDB resale flat, you need to do a lot of maintenance work. Anecdotal evidence suggests that you should budget $30,000 for a three-bedroom home, $40,000 for a four-bedroom home, and $50,000 for a five-bedroom home to fix up.
As a single home owner, you will undoubtedly find resale property very expensive to own. But a commercial unit gives you a financial benefit that a 2 room BTO does not have.
If you don’t need extra rooms, you can rent them for extra income. Of course, there are pros and cons to sharing your home with tenants, but don’t underestimate the financial opportunities that renting can open up.
Owning your own property in Singapore is a big decision because of the amount of money involved. Whether you have an apartment at 35 through the Singles Scheme or the Joint Singles Scheme, it is important to check the eligibility criteria for each scheme.
Several Useful First Time Home Buyer Options And Resources
By being informed about these grants and loans that you can apply for, you can find ways to reduce the cost of buying your home – so that you can fully enjoy the freedom that comes with being a home owner. Don’t miss out on these 3 great tax breaks or benefits when buying your first home
First-time home buyers are entitled to three different tax deductions. Be sure to enjoy each one!
Whether you are buying or selling a property, we can advise you on estate planning advice that can reduce your tax obligations. See more information about our services here.
Shira Kalfa is the founder of Kalfa Law Firm. Shira’s practice focuses on corporate and tax law, including corporate restructuring, corporate restructuring, mergers and acquisitions, commercial finance, secured lending and transactional law. Shira graduated from York University, receiving the highest academic honor Summa Cum Laude in 2012. He graduated from Western Lawin in 2015, majoring in Business Law. Shira is licensed to practice by the Law Society of Ontario. She is also a member of the Ontario Bar Association, the Canadian Tax Foundation, the Women’s Legal Association of Ontario and the Jewish Law Society of Toronto.
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The above provides general information only. This does not constitute legal advice. Every transaction or situation is different, and specific legal advice is needed to meet your specific needs. If you have
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