FAQ #1: Private property owners and HDB

(Part of “The Almost Complete Goondu’s Guide to Buying a HDB Flat in Singapore” series.)

The Housing Development Board (HDB) provides affordable public housing, which essentially equates to tons of rules and regulations you have to abide to. Even with the massive load of information available on their website, it can get pretty confusing. Once you understand their underlying rational, the answers become quite straight-forward.

I’ll be posting scenarios that I’ve come across, starting with questions pertaining to private and hdb ownership.

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SCENARIO 1:

Ten years ago, May’s parents bought a private property. They decided to include May’s name as a co-owner. Now, May is all grown up, has met Tom, a guy she wants to marry, and they are deciding to get a HDB flat. They want to know:

– Can they apply for a new flat from HDB?
No. HDB does not allow private property owners to buy new flats. Since May is a co-owner of a private property, she does not qualify.

– Can they buy a resale flat from the open market?
Yes. But they would have to take a bank loan, as private property owners are not eligible for HDB loans.
(Note: With the recent changes in rules (Aug’10), with immediate effect, if May and Tom were to buy a resale flat, she would have to remove her name from the private property, or sell it within 6 months.)

– Are they eligible for the $30k family grant or $40k family living near parents grant? No. Private property owners are not eligible for grants. Tom is not eligible for any half-housing grants either, cause married couples are seen as one entity.

– What if May removes her name from the private property?
HDB states that if a private property owner disposes his/her property, he/she can only purchase a new flat or apply for a grant 30 months later. So if May does so, she and her husband will be eligible to apply for a new flat, or get a resale flat with grant 30 months later, provided their combined income then is still $8k and below.

Conclusion: May’s parents must have had valid reasons for wanting to include her name in the private property. Perhaps they are worried that should something happen to them, at least the property is still in her name. However, parents should take note that by doing so, it might pose problems for their kids in future.

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SCENARIO 2:

June and Peter are about to get married. They want to get a HDB flat under the family nucleus scheme. They are also considering buying a condo for investment purposes. Currently, their combine income is $9.5k.

– Can they buy a new flat?
No. Their current income is above $8k, and thus are not eligible for new HDB flats. However, they are eligible to buy an Executive Condo (EC) from HDB, and still qualify for the $30k grant, as their current salary meets the $10k and below requirement for ECs.

– Can they buy a resale flat from the open market?
Yes. However, since their current income is above $8k, they are not eligible for any housing grants, nor can they take a HDB loan. They must take a bank loan.
(Note: With the recent changes in rules (Aug’10), with immediate effect, June and Peter would have to wait for 5 years after getting the keys to their flat before they can buy a private property for investment.)

– Then can they buy the condo first, then buy the resale flat later?
Yes. Normally people buy a hdb first, then private so they can get the hdb grant and/or loan. Since neither applies to them, it would make sense for them to get a condo first if they can afford it. However, note that if they buy a resale flat later, they are required to live in it for the 1st 3 years.
(Note: With the recent changes in rules (Aug’10), with immediate effect, any owners of private property who purchase a resale HDB flat must dispose of their private property within 6 months.)

*The above names are fictional for obvious reasons.